Deutsche Telekom Q3 boosted by T-Mobile
November 10, 2016
Deutsche Telekom has reported it enjoyed a successful third quarter in 2016, with strong figures from the US and a stable trend in Germany. Net revenue grew by 5.9 per cent compared with the prior-year quarter to €18.1 billion. At the same time, adjusted EBITDA rose 7.2 per cent to €5.5 billion.
“These figures show once again that we are on the right track in our markets,” said Tim Höttges, CEO of Deutsche Telekom. “We are working on the technologies and products of the near and more distant future – on the basis of a convincing strategy.”
There was also clear growth in net profit, which stood at €1.1 billion, compared with €0.8 billion in the third quarter of 2015 – an increase of 30.2 per cent. This was mainly due to higher negative special factors in connection with staff restructuring in the previous year. Adjusted net revenue remained stable at €1 billion.
Based on the financial figures for the first nine months, Deutsche Telekom confirms both its guidance for the full year and its medium-term outlook.
Germany: Leader in fibre-optic lines in Europe
Deutsche Telekom continued its clear growth in the broadband market in the third quarter of 2016. As of the end of the reporting period, the company recorded the largest number of fibre-optic lines (FTTC/vectoring and FTTH) of all European network operators, with more than 6 million lines. The number of fiber-optic broadband lines rose by 526,000 in the third quarter alone. Fibre-optic coverage reached almost 60 per cent of households in Germany at the end of the reporting quarter.
Broadband revenue increased steadily in each quarter of 2016 and was up 1.7 per cent year-on-year as of the end of the third quarter. Deutsche Telekom’s growth on the German broadband market is expected to continue in the fourth quarter: The plan is to make it possible for another 2.7 million households to subscribe to a fibre-optic line by the end of the year.
The number of customers who opted for one of Deutsche Telekom’s MagentaEINS offers also continued to rise. At the end of September, 2.6 million customers were using one of the MagentaEINS bundles, which allow a flexible combination of fixed-network and mobile communications. That is an increase of more than a million customers compared with the third quarter of the prior year.
Deutsche Telekom consolidated its position as the market leader in mobile service revenues in the third quarter of 2016. While revenue in the mobile communications market as a whole declined slightly overall compared with the prior-year quarter, the company’s mobile service revenues increased by 0.2 per cent. This revenue growth was significantly dampened by the reduction in termination rates and the price discounts from the MagentaEINS bundles posted to mobile revenues.
Deutsche Telekom’s mobile business – like the market segment as a whole – was characterized by a sustained change in the usage behavior of customers. The number of call minutes used by Deutsche Telekom contract customers increased by 4.6 per cent compared with the third quarter of 2015, but there was a much greater increase in the data volumes received and sent via mobile devices. Year-on-year, for example, the monthly data usage of consumers with Deutsche Telekom contracts increased by around 80 per cent to almost a gigabyte. This proves the good acceptance of the new rate plans, which include much higher data volumes. Deutsche Telekom facilitated this development by further building out the fast LTE mobile network. As of the end of the third quarter, this broadband infrastructure covered some 92 per cent of the population, an increase of 5 per centage points compared with the prior-year quarter.
United States – Success story continues
In the US, T-Mobile remained the star of the mobile market. The rapid growth continued again in the third quarter of 2016, with almost 2 million customer additions. 969,000 of these new customers were added in the particularly attractive segment of branded postpaid customers. In the prepay segment, the company – supported by the successful brand Metro PCS – won 684,000 new customers.
But T-Mobile US not only won a large number of customers, it also managed to retain them. The churn rate for branded postpaid customers stood at just 1.32 per cent; a year earlier, it was 1.46 per cent; in the third quarter of 2014, it was 1.64 per cent.
Total revenue increased by 17.8 per cent year-on-year to $9.2 billion in the third quarter of 2016. At the same time, adjusted EBITDA increased by 27.1 per cent to $2.4 billion.
Europe – Positive trend in customer numbers
In Europe, investments in networks and markets have paid off in rising numbers of customers. The mobile contract customer base in the European national companies increased by 219,000 in the third quarter. More than 1.2 million customers use the product bundles of fixed network and mobile communications, a year-on-year increase of some 51 per cent. MagentaONE made a significant contribution to this increase. There are now more than 4 million TV customers.
The build-out and modernization of the networks continues. The latest mobile communications standard LTE is now available to 78 per cent of the population, that is more than 101 million people, which is an increase of 16 million compared to a year earlier. More than 55 per cent of lines in the fixed network have now been migrated to IP technology.
In the Europe operating segment, revenue remained stable compared with the prior-year quarter on an organic basis, i.e., excluding exchange rate effects and effects from changes in the composition of the Group, at €3.2 billion. Regulatory effects and higher market investments also resulted in a decrease in adjusted EBITDA in organic terms of 4.7 per cent to €1.1 billion.