Deutsche Telekom results underscore iPhone effect

4th November 2010, Comments 0 comments

German telecommunications operator Deutsche Telekom disappointed investors with third-quarter results on Thursday, and spotlighted the impact on earnings of smartphones such as Apple's iPhone.

Deutsche Telekom reaffirmed its underlying operating profit target for 2010 thanks in part to stronger domestic revenues and reported a 7.9-percent rise in quarterly net profit to 1.035 billion euros (1.46 billion dollars).

The group said it would make an adjusted core operating profit of 20 billion euros for the year as a whole, but its shares fell sharply in midday trading.

Third quarter sales fell by 4.1 percent on a 12-month comparison to 15.6 billion euros after results from the British mobile telecoms unit were stripped out.

This was because that business had been merged with one owned by France Telecom.

The German group also noted that adjusted core earnings lost 14.8 percent to 1.3 billion dollars in the United States, where its T-Mobile USA unit does not offer the popular iPhone, in contrast with rival AT&T.

Chief executive Rene Obermann told a telephone conference that he "did not foresee a partnership with Apple in the near term" in the US.

In Germany, Deutsche Telekom sold a record 400,000 of those phones in the third quarter, but will soon face competition from rivals Vodafone and O2 as they begin to offer the devices as well.

The group's domestic sales were boosted by the growing number of smart phones which incite users to use more telecoms services.

Its results were in line or slightly better than expected by analysts.

Those polled by Dow Jones Newswires forecast a quarterly profit of 913 million euros and 15.57 billion euros in sales.

Deutsche Telekom's adjusted core earnings before interest, tax, depreciation and amortisation (Ebitda), which the company uses in forecasts, fell by 9.02 percent to 5.02 billion euros.

That was also a result of the economic environment in southeastern Europe, where the operator is strongly active and high marketing costs required to stay competitive in the United States, a statement said.

Deutsche Telekom nonetheless reaffirmed its full year adjusted Ebitda target of 20 billion euros and available cash flow position of at least 6.2 billion euros.

"Our forecasts stand. And that is the basis for our dividend," Obermann said.

He stressed that the cash-flow forecast was "a minimum" and thus represented "a more optimistic tone."

But shares in the company plummeted by 2.06 percent to 10.24 euros in midday trading on the Frankfurt stock exchange, while the DAX index of leading stocks was 1.56 percent higher overall.

© 2010 AFP

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