Deutsche Telekom has increased its outlook for full-year EBITDA, after improved results across its business in the first nine months of the year. However, the company cut its planned dividend for the year, to 60 cents from 70 cents last year, citing the costs of the pending merger with Sprint and spectrum auctions.
Telekom said 60 cents per share will be the minimum dividend for the coming years, paid out regardless of whether the takeover of Sprint goes ahead. The decision to lower the dividend is an effort to remove uncertainty over the US deal, Telekom said. It also reflects the "unexpectedly high costs" for the German 5G auction, which the company blamed in part on the "artificial spectrum shortage". In addition, the company said it has greater clarity on several spectrum auctions coming up in the US.
In the third quarter, revenues rose 1.7 percent and EBITDA was up 3.0 percent on an organic basis. On a reported basis, revenues increased 4.8 percent to EUR 20.0 billion, led by growth of 8.4 percent at T-Mobile US. In Germany, revenues rose 0.6 percent, and the rest of Europe grew by 1.0 percent. Adjusted EBITDA after leases increased 5.4 percent to EUR 6.5 billion, with growth of 7.9 percent in the US, 2.4 percent in Germany and 4.0 percent in the rest of Europe.
Deutsche Telekom raised the full-year forecast for adjusted EBITDA after leases by EUR 200 million, to around EUR 24.1 billion. In the first nine months, the figure reached EUR 18.7 billion, up from EUR 17.5 billion a year earlier.
In addition, the company raised its forecast for cash capex in 2019, before spectrum costs, by EUR 200 million to EUR 12.9 billion. This is driven by the accelerated 5G build-out in the US. The guidance for free cash flow remains unchanged at around EUR 6.7 billion. In the first nine months of the year, capex rose 9.8 percent to EUR 10.0 billion, and free cash flow was up 13.8 percent to EUR 5.3 billion.
