International growth rescues Deutsche Telekom results

Deutsche Telekom's second quarter results showed a turnaround from a disasterous first quarter thanks to growth overseas.

The telco's...

Deutsche Telekom's second quarter results showed a turnaround from a disasterous first quarter thanks to growth overseas.

The telco's domestic sales dropped 5% to €6.8bn but revenue from international sales grew 18% to €9.4bn, pushing total sales up 7.4% to €16.2bn. The figures include a €1.5bn top-line contribution from new subsidiary OTE.

Net profits for the quarter were up from €394m to €521m year on year, but results for the first half still showed a €603m loss.

Chairman René Obermann said the "resolute" measures taken in April for the US, UK and Poland were beginning to take effect. Operating costs fell and the EBITDA margin rose in all three countries compared with the first quarter, he said.

"The figures for the second quarter make us confident for the full year. Hence, we confirm our forecast for 2009," he said.

Deutsche Telekom has three main businesses: fixed lines/broadband, mobile telephony, and system solutions (hosted services).

A 7.4% drop in customers for fixed-line services was compensated somewhat by a 7.2% rise in broadband customer to 17.2 million. While domestic sales grew sluggishly, internationals sales were buoyant at more than 20%.

Despite saturated core markets, T-Mobile, Deutsche Telekom's mobile arm, grew 5.7% to just under 150 million customers, about 80% of which are in Europe. The UK operation, which Deutsche Telekom is thinking of selling, lost 206,000 customers to finish with 16.6 million. Expansion in the US saw the mobile customer base grow 6.5% to 33.5 million.

Obermann said Deutsche Telekom's cost-cutting programme will go on. He said the cost base had fallen €4.9bn since 2005, but he expected to save another €84m.

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