Deutsche Telekom lifts FY forecast after US, Europe improve EBITDA in Q3

News General Germany 12 NOV 2020
Deutsche Telekom lifts FY forecast after US, Europe improve EBITDA in Q3

Deutsche Telekom has raised its annual outlook after a strong third quarter. The company said it expects an extra EUR 1 billion in adjusted EBITDA and EUR 500 million in free cash flow compared to its previous forecast for 2020 thanks to the strong performance in the US as well as improving results in Europe. 

In the third quarter, revenues jumped 31.9 percent to EUR 26.4 billion, and adjusted EBITDA AL increased 49.6 percent to EUR 9.7 billion. In organic terms, adjusting for the acquisition of Sprint in the US, revenue rose 2 percent and adjusted EBITDA was up 10 percent. 

The new forecast for 2020 is adjusted EBITDA AL of at least EUR 35 billion and free cash flow AL of at least EUR 6.0 billion. In the first nine months of the year, the figures were respectively EUR 26.1 billion and EUR 5.3 billion. 

Deutsche Telekom confirmed its plans for an unchanged dividend of 60 cents per share for 2020. The operator ended September with net debt of EUR 124.5 billion, up 58.0 percent year-on-year. Cash capex in the first nine months of 2020 reached EUR 12.9 billion, up 14.9 percent year-on-year. 

T-Mobile leads sales growth, EBITDA up in Europe

On a regional basis, T-Mobile US was again responsible for the growth, with a 65.5 percent increase in quarterly revenue to EUR 16.6 billion. Adjusted for the Sprint transaction, revenue grew by 4.0 percent on an organic basis and adjusted EBITDA AL was up 14.6 percent, recovering from the dip in sales seen in Q2. 

In Germany, revenues were still down 1.1 percent to EUR 5.8 billion, hurt by lower equipment sales and the drop in roaming during the pandemic. Nevertheless, DT reported an acceleration in broadband growth, and the adjusted EBITDA AL margin improved by 0.9 percent points year-on-year to 40.6 percent. 

The rest of Europe showed a similar picture, with revenues down 1.7 percent to EUR 2.9 billion, while EBITDA rose 0.3 percent to EUR 1.1 billion. 

Systems Solutions (T-Systems) did less well, with orders down 24.9 percent to EUR 0.7 billion in Q3 due to the effects of the coronavirus crisis. After adjusting for the group restructuring, revenue fell 11.6 percent to EUR 1.0 billion, and adjusted EBITDA AL dropped 16.3 percent year-on-year to EUR 67 million. The underperformance of the traditional IT business due to the pandemic led to an asset impairment charge of EUR 0.5 billion. 

Categories:

General

Companies:

Sprint,  Deutsche Telekom,  T-Mobile US

Regions:

Europe

Countries:

Germany,  United States

Tags:

Financial figures, Wireline, Wireless

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