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UK mobile business drags down Deutsche Telekom's profits

Write-offs at its troubled T-Mobile UK subsidiary helped drag down Deutsche Telekom's profits...

Write-offs at its troubled T-Mobile UK subsidiary helped drag down Deutsche Telekom's profits 77% in 2009.

However, the German telco reported a sales increase of 4.8% to €64.6bn compared with 2008 and higher operating margins that produced earnings before interest, taxes, depreciation and amortisation (EBITDA) 6.2% higher at €20.7bn for 2009.

Unadjusted net profit slipped to €353m from €1.5bn a year ago, due to write-offs worth €2.3bn on goodwill in T-Mobile UK and Southeastern Europe.

Deutsche Telekom and France Telecom have agreed to merge their UK mobile operations. They are awaiting regulatory approval for the deal, which will make the jointly-owned company the biggest UK mobile network operator with some 29.5 million subscribers, knocking Spanish telco Telefonica's O2 into second spot.

Deutsche Telekom's CEO René Obermann said, "After a bumpy start, we rounded 2009 off with good results. Cost discipline was key to getting through economically challenging times. However, we did not save at the expense of the future, but continued to invest heavily."

Deutsche Telekom results confirm the growing consumer switch to mobile and broadband communications at the expense of fixed line telephony. In the full year, Deutsche Telekom's domestic operation lost 2.1 million line losses, almost 17% less than in 2008, as the number of mobile customers grew 1.1% to 17.2 million.

Deutsche Telekom grew its broadband business 15% to 3.8 million broadband lines. It adding 45% net DSL customers and sold one million Entertain packages to cable customers.

Another "pleasing development" was its IPTV business where customers for internet-based TV almost doubled to more than 400,000, the telco said.

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