Deutsche Telekom reported a small fall in second-quarter results, hurt by the stronger euro against the dollar. Revenues fell 2.8 percent to EUR 18.4 billion, and adjusted EBITDA was down 0.3 percent to EUR 5.9 billion. On an organic basis, revenues rose 1.3 percent, and adjusted EBITDA improved 3.9 percent. The German operator increased its forecast for full-year growth in adjusted EBITDA, thanks to the strong performance at T-Mobile US.
Telekom expects adjusted EBITDA to grow to around EUR 23.4 billion under the new guidance, better than its forecast for EUR 23.3 billion at the Q1 report and EUR 23.2 billion at the last FY report. The outlook is at constant exchange rates. The guidance for free cash flow in 2018 is unchanged at around EUR 6.2 billion.
In Q2, free cash flow was up 16.4 percent to EUR 1.5 billion. Cash capex increased 0.9 percent, to EUR 3.0 billion excluding costs for mobile spectrum. Adjusted net profit rose 3.3 percent year-on-year to EUR 1.2 billion, while the reported result was down 43.4 percent to EUR 0.5 billion, mainly due to accounting effects from the settlement of the Toll Collect arbitration proceedings, which had a negative impact of EUR 0.6 billion on net profit.
Telekom's underlying growth was again led by the US, where T-Mobile increased sales 3.5 percent in dollars and grew adjusted EBITDA 5.1 percent on an organic basis. In the home market Germany, the drop in revenues improved slightly, to 0.9 percent to EUR 5.3 billion, while cost reductions helped adjusted EBITDA grow 1.9 percent to EUR 2.1 billion. The rest of Europe also remained in positive territory, with revenues up 1.3 percent to EUR 2.9 billion, and adjusted EBITDA growing 0.6 percent to EUR 953 million.
