News
German incumbent reports solid figures for 2016, driven in no small part by T-Mobile US.
Deutsche Telekom posted a sizeable decline in reported net profit last year, impacted by a multi-billion-euro writedown of the value of its stake in BT, but its U.S. business drove strong revenue and earnings growth and the telco talked up a positive year for fixed broadband in Germany.
The German incumbent generated net profit of €2.7 billion in 2016, down by 17.8% on the previous year, having written down its 12% stake in its U.K. counterpart BT to the tune of €2.2 billion. The move came as a result of a decline in BT’s share price following revelations about malpractice at BT Italy, and in the value of the pound following the U.K.’s decision to exit the European Union.
However, adjusted net profit came in at €4.1 billion, flat compared with 2015.
The Bonn-based telco group reported a 22.6% increase in EBITDA last year to €22.5 billion, but earnings slid by 5.2% to €4.8 billion in the fourth quarter. Full-year adjusted EBITDA was up by 7.6% to €21.4 billion.
As has become the norm, earnings were driven by T-Mobile US. The operator’s U.S. business posted EBITDA of €9 billion, up 44% on-year, while adjusted EBITDA came in at €8.6 billion, up 28.7%.
The U.S. firm was also a strong driver of revenue growth. It generated turnover of €33.7 billion up 16.6%; in Q4 U.S. revenue grew by 25.6% to €9.4 billion.
At group level Deutsche Telekom generated €73.1 billion in revenue last year, up 5.6%. Fourth-quarter revenue was €19.5 billion, up 9.4%.
In Germany revenue slid by 1.7% in the full year and by 0.5% in Q4 to €22 billion and €5.63 billion respectively.
The full-year decline resulted from lower mobile terminal equipment revenue and the ongoing slide in the traditional fixed business. Broadband growth was not quite enough to compensate for the traditional business decline. Excluding the impact of the terminal business, revenue in Germany was more or less stable, Deutsche Telekom said.
The telco described 2016 as a "very special year" for its domestic broadband business.
"The company achieved its highest ever sales of fibre-optic-based lines (FTTH, FTTC, vectoring), with 674,000 net additions in the fourth quarter," the telco said. "The number of fibre-optic lines increased by 2.4 million year-on-year – up 56% compared with the end of 2015."
Deutsche Telekom ended 2016 with 18.79 million fixed network lines in Germany, including 4.25 million fibre lines. Its domestic mobile customers numbered 41.85 million, thanks to the addition of 388,000 during the fourth quarter.
T-Mobile US added 2.1 million mobile customers in Q4 to take its year-end total to 71.46 million.
At its wider European business the telco lost 512,000 mobile customers in Q4, to end 2016 with 51.7 million. It added 96,000 fixed network lines to reach 8.7 million.
"The basis of our strong growth remains the high investment in our networks," said Deutsche Telekom CEO Tim Höttges.
The telco’s cash capex excluding mobile spectrum costs came in at €11 billion last year, up 1.3%.
Free cash flow for the year came in at €4.94 billion, up 8.6% on 2015.
In 2017 the operator expects to increase adjusted EBITDA by just under 4% to around €22.2 billion, driven by revenue growth. It forecasts €5.5 billion in free cash flow, up 12% on last year.
