Deutsche Telekom solid in third quarter

German carrier Deutsche Telekom reported a 7.2 per cent rise in net profit for the third quarter, from €895m in 2008 to €959m in the third quarter of 2009. Revenues climbed 5.2 per cent year on year to €16.3bn.

The US operation continued to be the driving force, with T-Mobile USA delivering a 4.4 per cent increase in profits to €595m.

Europe didn’t fare so well due to the continued decline of fixed line revenues, particularly in Telekom’s domestic market, while revenues were down across the board with T-Mobile in Europe.

In early September, months of speculation about consolidation in the UK mobile market finally came to an end when France Telecom and Deutsche Telecom announced plans to merge their UK mobile businesses, T-Mobile and Orange. The deal is to be conducted as a merger of equals, with T-Mobile and Orange folded into a 50:50 joint venture. This move would create a new market leader, with over 33 million subscribers and a 43 per cent share of the UK market. This represents a 50 per cent leap from current leader O2’s 22.44 million strong user base and 29 per cent market share, according to the latest figures from Informa Telecoms & Media’s WCIS. The new player will also benefit from the inclusion of Orange’s fixed broadband subscriber base and the potential to deliver converged services.

The company’s cost savings and efficiency enhancement program has generated savings totalling €5.4bn so far since its launch in 2005, and CEO Rene Obermann said Deutsche Telekom will continue its cost cutting and address the entire cost base of the group when the financial figures for the full year 2009 are published.
Commenting on the results, Michael Kovacocy, telecoms analyst and sector strategist for Daiwa Securities, said: “Today’s solid set of results underscore our continued positive view on integrated telecom operators. Their ability to insulate the top-line from macro-economic weakness via a mix of fixed and mobile activities has been a strength over the past year. Furthermore, their ability to deliver on the our key telecom theme of 2009 – cost-control – has helped protect shareholder remuneration and bolster sentiment.”

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