Deutsche Telekom recorded an adjusted EBITDA of EUR 19.5 billion in 2010, matching the forecast made at the start of 2010 (excluding the deconsolidated T-Mobile UK that accounted for around EUR 0.5 billion). At EUR 6.5 billion, free cash flow was considerably higher than the EUR 6.2 billion originally expected. The full-year revenue increased by 0.4 percent to EUR 62.4 billion, excluding the UK and the adjusted net profit amounted to EUR 3.4 billion, on par with the 2009 figure. The unadjusted net profit grew from EUR 400 million to EUR 1.7 billion. For the fourth quarter of 2010, Deutsche Telekom reports revenues of EUR 15.477 billion, growing by 0.4 percent year-on-year, and an EBITDA of EUR 4.55 billion, down by 7.2 percent. The net loss for the quarter grew from EUR 135 million in 2009 to EUR 607 million in 2010, and the adjusted net profit dropped by 13.3 percent year-on-year to EUR 665 million. The cash capex dropped by 7 percent to EUR 8.6 billion, and the operator also invested an additional EUR 1.3 billion in new spectrum acquired in the frequency auction in Germany. At the same time, the company continued its efforts to improve efficiency with the second part of its Save for Service program. Of the gross savings of EUR 4.2 billion planned for the period 2010 to 2012, savings of EUR 2.4 billion have already been made, which is equivalent to 60 percent of the overall target for the three-year program. The management invested a substantial portion of this in improving the company's position on the market, which still leaves a net cost reduction of EUR 1 billion.
In its operating business, Deutsche Telekom recorded strong growth in broadband lines, IPTV and sales of smartphones. Mobile data revenues increased by 29.2 percent to EUR 4.4 billion in 2010 and revenues from T-Systems’ business with cloud services also grew. Based on these results, the management will be proposing to the shareholders’ meeting a dividend of EUR 0.70 per share for 2010. Including the completed share buy-backs amounting to EUR 400 million in 2010, total shareholder remuneration will amount to EUR 3.4 billion. This is in line with the company’s shareholder remuneration policy for the years through 2012 which was presented a year ago. For this financial year, Deutsche Telekom expects earnings to remain almost stable, again excluding the UK. Adjusted EBITDA is expected approximately on par with the 2010 level and to amount to around EUR 19.1 billion in 2011. Free cash flow is expected to remain at the 2010 level of EUR 6.5 billion at least, or to increase slightly.
The German revenues dropped by 1.1 percent to EUR 25.1 billion for 2010, while growing during the fourth quarter to EUR 6.4 billion, and the adjusted EBITDA grew 0.1 percent to EUR 5.43 billion, while dropping 0.6 percent during the fourth quarter. With regards to customer numbers, Telekom saw growth in broadband lines and mobile internet services plus smartphones. The companies in Deutsche Telekom’s Europe operating segment demonstrated profitability in a difficult environment in 2010. The adjusted EBITDA margin increased by 1.5 percentage points compared with 2009 to 34.1 percent. The new special tax levied in Hungary had a negative impact on this figure, offset by the deconsolidation of T-Mobile UK, which, by contrast, boosted margins. While revenue declined by 14 percent compared with 2009 to EUR 16.8 billion, adjusted EBITDA fell by 10 percent to EUR 5.7 billion on a reported basis. Based on the same composition of the group, revenue decreased by just 4 percent and adjusted EBITDA by 5 percent. The Polish subsidiary PTC and T-Mobile Netherlands were both able to improve their EBITDA margins by more than 2 percent. T-Mobile USA reports stable revenues and a lower EBITDA, but sees a shift to mobile data, which is expected to help increase revenues and EBITDA for last year.
