Deutsche Telekom reported jumps in annual revenue and profit following US unit T-Mobile’s $23 billion takeover of Sprint, while its underlying performance beat market expectations.
KEY POINTS:
- Deutsche Telekom reports a jumps in annual revenue and profit
- US business unit T-Mobile’s $23 billion takeover of Sprint boosted the numbers
- Underlying performance of the company beat market expectations
The telecoms group issued new guidance for core gains to reach 34 billion euros (approximately $40 billion) this year, above market expectations, but cautioned that the cost of integrating Sprint would dent set cash flow.
The Sprint deal, which closed on the 1st of April, has tilted Deutsche Telekom’s centre of gravity towards the United States in which T-Mobile now generates more than three fifths of group earnings and has challenged AT&T as the No 2 mobile carrier.
“The merger in the United States is a historic step for the group,” said Chief Executive Officer Tim Hoettges, forecasting the figures “formidable” while highlighting powerful performance on Deutsche Telekom’s German home market and in Europe.
Group revenue grew by 37.5% to 27 billion euros in the quarter, but after stripping out the impact of the US merger and exchange-rate effects there was a 0.6% decline. Analysts had forecast 25.6 billion, according to a company survey.
Core profit, measured as earnings before interest, taxation, depreciation and amortisation after leases (EBITDA AL), rose by a reported 56.4 percent to 9.8 billion euros. On an organic basis it climbed 8.4%, also beating expectations.
Deutsche Telekom issued new guidance for EBITDA AL to reach around 34 billion euros this year, up from previous guidance for 25.5 billion and about a billion euros above consensus.
It lowered its forecast for free cash flow after leases to 5.5 billion euros, below the average forecast from analysts and down from a previous 8 billion euros to factor in the integration costs of the US merger.
The team at Platform Executive hope you have enjoyed the ‘[post_title]’ article. Initial reporting via our content partners at Thomson Reuters. Reporting by Douglas Busvine. Editing by Maria Sheahan.
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