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August 04, 2011, 1:22 AM EDT
By Cornelius Rahn
Aug. 4 (Bloomberg) -- Deutsche Telekom AG, Europe’s largest phone company, reported a 6.5 percent decline in second-quarter profit before some items, missing analyst estimates, as it lost mobile-phone customers in the U.S. and recorded costs for early retirements in Germany.
Adjusted earnings before interest taxes, depreciation and amortization and were 4.69 billion euros ($6.7 billion), compared with 5.01 billion euros a year earlier, the Bonn-based company said in a statement today. Analysts had expected Ebitda of 4.76 billion euros, according to the average of estimates in a Bloomberg survey. T-Mobile USA lost 281,000 customers. Analysts projected losses of 200,000 accounts.
Chief Executive Officer Rene Obermann is focused on returning its European markets to growth by 2013 and improving profitability at the German unit after agreeing to sell T-Mobile USA to AT&T Inc. for $39 billion in March. He’s also overseeing a shift into areas such as mobile Internet, digital content and health services to help make up for declining revenue from traditional landline and voice services.
Net income was 348 million euros, compared with 475 million euros a year earlier and missing the average estimate of 673 million euros. Revenue slipped to 14.48 billion euros from 15.5 billion euros, trailing the 14.7 billion-euro average estimate.
As rivals including France Telecom SA and Telefonica SA seek growth in emerging economies as they trim costs at home, Deutsche Telekom is profiting from a German economy that’s been the engine of Europe’s recovery. While the CEO has excluded the possibility of larger acquisitions, the company may add assets in European countries to benefit from cross-selling between fixed and mobile offers, Roland Mahler, the interim Europe chief, said in May.
Deutsche Telekom has gained about 6.4 percent this year, the third-best performance on the 21-company Bloomberg Europe Telecommunication Services Index, which lost 6.2 percent in the period. Paris-based France Telecom and Madrid-based Telefonica are each down 11 percent, while Telecom Italia SpA slumped 14 percent.
The German company last month appointed former McKinsey & Co. executive Claudia Nemat to take over as head of the European business excluding Germany, a unit that generated 29 percent of Deutsche Telekom’s sales last year. Nemat will face the challenge of streamlining operations from Athens to Warsaw and gaining back customers wary to commit to phone contracts amid Europe’s sovereign debt crisis.
In June, Deutsche Telekom raised its stake in Hellenic Telecommunications Organization SA to 40 percent from 30 percent after the Greek state exercised a sell option. The company, known as OTE, is trying to convince unions to reduce payroll costs by 300 million euros over four years, abolishing permanent tenure among its employees and cut worker benefits.
--With assistance from Ragnhild Kjetland in Frankfurt. Editors: Kenneth Wong, Simon Thiel.
To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net
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Aug. 4 (Bloomberg) -- Deutsche Telekom AG, Europe’s largest phone company, reported a 6.5 percent decline in second-quarter profit before some items, missing analyst estimates, as it lost mobile-phone customers in the U.S. and recorded costs for early retirements in Germany.
Adjusted earnings before interest taxes, depreciation and amortization and were 4.69 billion euros ($6.7 billion), compared with 5.01 billion euros a year earlier, the Bonn-based company said in a statement today. Analysts had expected Ebitda of 4.76 billion euros, according to the average of estimates in a Bloomberg survey. T-Mobile USA lost 281,000 customers. Analysts projected losses of 200,000 accounts.
Chief Executive Officer Rene Obermann is focused on returning its European markets to growth by 2013 and improving profitability at the German unit after agreeing to sell T-Mobile USA to AT&T Inc. for $39 billion in March. He’s also overseeing a shift into areas such as mobile Internet, digital content and health services to help make up for declining revenue from traditional landline and voice services.
Net income was 348 million euros, compared with 475 million euros a year earlier and missing the average estimate of 673 million euros. Revenue slipped to 14.48 billion euros from 15.5 billion euros, trailing the 14.7 billion-euro average estimate.
As rivals including France Telecom SA and Telefonica SA seek growth in emerging economies as they trim costs at home, Deutsche Telekom is profiting from a German economy that’s been the engine of Europe’s recovery. While the CEO has excluded the possibility of larger acquisitions, the company may add assets in European countries to benefit from cross-selling between fixed and mobile offers, Roland Mahler, the interim Europe chief, said in May.
Deutsche Telekom has gained about 6.4 percent this year, the third-best performance on the 21-company Bloomberg Europe Telecommunication Services Index, which lost 6.2 percent in the period. Paris-based France Telecom and Madrid-based Telefonica are each down 11 percent, while Telecom Italia SpA slumped 14 percent.
The German company last month appointed former McKinsey & Co. executive Claudia Nemat to take over as head of the European business excluding Germany, a unit that generated 29 percent of Deutsche Telekom’s sales last year. Nemat will face the challenge of streamlining operations from Athens to Warsaw and gaining back customers wary to commit to phone contracts amid Europe’s sovereign debt crisis.
In June, Deutsche Telekom raised its stake in Hellenic Telecommunications Organization SA to 40 percent from 30 percent after the Greek state exercised a sell option. The company, known as OTE, is trying to convince unions to reduce payroll costs by 300 million euros over four years, abolishing permanent tenure among its employees and cut worker benefits.
--With assistance from Ragnhild Kjetland in Frankfurt. Editors: Kenneth Wong, Simon Thiel.
To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net
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