Deutsche Telekom has raised its guidance for full-year results following what the company calls "a flying start" to the year. Net revenue in the first quarter rose 32.3 percent to EUR 26.4 billion, and adjusted EBITDA AL increased 41.3 percent to EUR 9.2 billion, driven mainly by the acquisition of Sprint in the US. On an organic basis, revenue increased 7.1 percent and adjusted EBITDA AL was up 8.3 percent.
Deutsche Telekom said it now expects adjusted EBITDA AL for the full year of over EUR 37 billion and free cash flow AL of more than EUR 8 billion. This follows T-Mobile US raising its outlook earlier this month. Outside the US, the annual EBITDA guidance increases to around EUR 14.4 billion from the previous estimate of EUR 14.3 billion, and free cash flow rises to EUR 3.6 billion from EUR 3.5 billion.
In the first quarter, free cash flow AL more than doubled year-on-year, to EUR 2.6 billion. Cash capex excluding spectrum investments amounted to EUR 4.3 billion, up 27.7 percent from a year earlier. The investment went mainly to 5G expansion, as well as FTTH roll-out in Europe, where the operator reached 2.3 million homes passed in Germany and another 4.3 million in its four next largest markets.
Net debt totaled EUR 129.5 billion at the end of March, up by EUR 9.3 billion from the end of 2020 due to EUR 8 billion spent on new spectrum in the US.
Net profit rose a slower 2.2 percent to EUR 936 million, held back by higher interest expenses after the acquisition, higher depreciation, amortization and impairment losses, and greater non-controlling interests.
Revenues flat in Europe, EBITDA higher
Revenue growth was largely down to the US, which increased sales 10.5 percent on an organic basis. In Germany and the rest of Europe, organic sales were flat year-on-year, and revenues in Europe were down 1.1 percent on a reported basis due to negative forex effects. Revenue in the Systems Solutions segment also decreased 4.4 percent, primarily due to the coronavirus-induced contraction of the IT market. The only other growth area was the Group Development segment, where T‑Mobile Netherlands and GD Towers grew 10.5 percent thanks to the takeover of MVNO Simpel and the Austrian cell tower
business.
In EBITDA terms, Germany did better with growth of 3.4 percent, and Europe was up 1.1 percent. Group Development advanced 17.5 percent, and the US business surged 80.6 percent, or 10.7 percent on an organic basis.
