<a href='http://telecoms.com/resource-centre/view/deutsche-telekom/' title='Deutsche Telekom on Telecoms.com'>Deutsche Telekom</a> records strong performance

Deutsche Telekom records strong performance

German carrier Deutsche Telekom demonstrated its resilience to market forces on Friday, turning in

financial results that beat expectations on both the top and bottom lines.

Fourth quarter net loss improved from Eur750m in the last period of 2007 to Eur730m in 2008, while full year profits rocketed to Eur1.48bn, compared to Eur571m in 2007.

Fourth quarter revenues jumped 2 per cent to Eur16.1bn, while full year revenues were down 1.4 per cent to Eur61.6bn.

Once again, T-Mobile USA delivered the goods, continuing to post double digit growth rates, with revenue rising by 13.5 per cent year on year to $21.9bn. The US subsidiary’s customer base grew by 4.1 million over the course of the year, of which almost 3 million were gained organically. As a result, T-Mobile USA had 32.8 million customers at year end 2008.

On the fixed line side, domestic operation T-Home performed well, adding around 352,000 DSL net adds in the fourth quarter of 2008, giving it a retail customer base of 10.6 million. The carrier reckons revenue decline in this operating segment slowed down to 5.1 per cent in 2008, compared with 8 per cent in the prior year.

Commenting on the results, Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities, said that at first glance, the results look decent enough given the top line and bottom line beats. “It is clear that Deutsche Telekom has the scale to currently deliver resiliency in the face of macro-economic pressure,” he said. But warned that the company still appears “particularly exposed to a heavy dependence on its US operations for financial support. Now that a choice appears to have been made in the short term to reinvest cash into US operations at the expense of dividend progression, we would expect the value of US operations to become a focal point of discussion for investors.”

Pricing pressures and the spectre of net neutrality and other potentially value decretive issues hanging in the shadows also mean that the near term outlook for the US mobile market looks less than certain, Kovacocy said.