Deutsche Telekom reported a decrease of 6.8 percent in revenues for the second quarter to EUR 14.48 billion. The revenues excluding T-Mobile USA, which is reported as a discontinued operation after the agreement to sell the unit to AT&T, decreased by 3.3 percent year-on-year to EUR 10.97 billion. This includes a 5 percent drop to EUR 4.36 billion in international revenues and EUR 6.61 billion in domestic revenues in Germany, down 2.2 percent year-on-year. The adjusted EBITDA for the group fell by 6.5 percent to EUR 4.69 billion, and adjusted EBITDA for continuing operations amounted to EUR 3.79 billion, down 2.6 percent year-on-year. Deutsche Telekom reported a quarterly adjusted net profit of EUR 951 million from all operations, growing by 16.8 percent year-on-year. Including one-time items such as almost EUR 300 million in costs for the ongoing staff reorganization, the net profit for the second quarter dropped by 26.7 percent year-on year to EUR 348 million. The group had a free cash flow of EUR 1.8 billion in the quarter, before dividend payments, spectrum investment and the PTC transaction.
CEO Rene Obermann said that he is confident the group will achieve its targets and is now also seeing light at the end of the tunnel in southeastern Europe. The main growth driver in Q2 was mobile internet, with revenues up 13 percent to EUR 1.2 billion. The constant growth in the use of smartphones contributed to this increase. Smartphones now account for 46 percent of all devices sold by the European operators in the group, compared with 21 percent a year before. There was also a significant increase in the number of smartphones in the T-Mobile USA network, up by over 50 percent to almost 10 million within a year. Deutsche Telekom confirmed its targets for the full year. Expectations for adjusted EBITDA from continuing operations remain unchanged at approximately EUR 14.9 billion. The forecast for the US remains around USD 5.5 billion, which equates to approximately EUR 4.2 billion based on an exchange rate of USD 1.33 to the euro. The company expects at least EUR 6.5 billion in free cash flow.
The national companies combined within the Europe operating segment recorded total revenue of EUR 3.8 billion, down by 5.5 percent year-on-year. The decrease in the first quarter, adjusted to take into account the deconsolidation of T-Mobile UK, had still amounted to 8 percent. The situation is similar for adjusted EBITDA, which fell by 8 percent year-on-year in the second quarter to EUR 1.32 billion, while the decrease in the first quarter of this year had still stood at 13 percent. The best performers were Croatia, with an adjusted EBITDA margin of 45.4 percent, and the Magyar Telekom Group, with a margin of 43.9 percent, adjusted for the influence of the special tax in Hungary. A margin of 38.9 percent was achieved for mobile business in Poland, where the T-Mobile brand was launched in the second quarter in a nationwide campaign. The economic situation in Greece and Romania remains difficult and continues to put noticeable strain on the business of the OTE Group, where revenue and earnings have fallen significantly. Regardless of this fact, some positive trends have emerged in the Greek mobile business. Adjusted EBITDA stabilised and the churn rate was significantly reduced. All in all, the OTE Group's earnings remained largely stable despite the difficult economic environment, with an adjusted EBITDA margin of 33.4 percent. The number of mobile subscribers in Europe increased by 3 percent year-on-year to 26.6 million and the broadband lines grew 10 percent to 4.75 million. A year-on-year increase of as much as 42 percent to 730,000 was achieved for internet-based television. The total TV customer base increased by 2.5 percent to 2.59 million on 30 June of this year.
