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Mobiles save Deutsche Telekom's bottom line

Ian Grant

High-margin income from mobile phone customers rescued Deutsche Telekom's results as revenues stayed flat for the first quarter of 2010, the company reported today.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 1.6% compared with Q1 2009 to €4.9bn. With revenue down 0.6% to €15.8bn, the adjusted EBITDA margin improved by 0.6 percentage points to 30.9%. Adjusted net profit rose 36% year-on-year to €0.9bn while free cash flow trebled from €0.4bn a year ago to €1.4bn

Deutsche Telekom CEO René Obermann highlighted the surge in the profitability of the group's European mobile subsidiaries as well as sustained high demand for 3G-enabled converged devices at T-Mobile USA.

During the quarter Deutsche Telekom bought online payment service provider ClickandBuy, and finalised the merger of its UK mobile operation with France Telecom subsidiary Orange UK. It also launched Telekom Deutschland, now its integrated fixed-network and mobile operations in Germany.

Sales at T-Systems, its outsourcing division, rose 1.2% year-on-year to €2.1bn, driven by 5.7% growth in T-Systems' international business. This included big new deals with the German Aerospace Center (DLR), Deutsche Post DHL, TUI Travel, and Swiss Federal Railways.

The Deutsche Telekom Group at a glance
Q1 2010 €m Q1 2009 €m Change €m Change % FY 2009 m€
Net revenue 15,812 15,902 (90) (0.6) 64,602
- Domestic 6,739 6,943 (204) (2.9) 28,033
- International 9,073 8,959 114 1.3 36,569
Profit (loss) from operations (EBIT) 2,029 244 1,785 n.a. 6,012
Adjusted EBIT 2,230 1,917 313 16.3 9,158
EBITDA 4,690 4,942 (252) (5.1) 19,906
Adjusted EBITDA 4,890 4,812 78 1.6 20,668
Net profit (loss) 767 (1,124) 1,891 n.a. 353
Adjusted net profit (loss) 891 655 236 36.0 3,390
Free cash flow before dividend payments 1,439 416 1,023 n.a. 6,969
Net cash from operating activities 3,271 2,966 305 10.3 15,795
Cash outflows for investments in property, plant and equipment, and intangible assets (excluding goodwill) 1,934 2,611 (677) (25.9) 9,202
Net debt at reporting date 40,418 42,833 (2,415) (5.6) 40,911
Number of employees at reporting date 258,240 260,798 (2,558) (1.0) 259,920


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