Deutsche Telekom Says It’s Investing Record Amounts

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“Deutsche Telekom is really powering ahead,” said CEO Tim Höttges. “Earnings increased in all areas of the group in the first nine months of this year – with some of that growth in the double digits. At the same time, we are investing record amounts.”

Highlights include:

  • Revenue up 4.8 percent in the third quarter to 20.0 billion euros
  • Adjusted EBITDA AL up 5.4 percent to 6.5 billion euros
  • Free cash flow AL up 17.5 percent to 2.1 billion euros
  • Net profit increases to 1.4 billion euros
  • Full-year guidance for adjusted EBITDA AL raised from around 23.9 billion euros to around 24.1 billion euros
  • Group now expects cash capex of 12.9 billion euros in 2019, adjusted from previous guidance of 12.7 billion euros
  • Dividend for 2019 planned to be 0.60 euros

Analyst Vivek Stalam of New Street Research said DT’s guidance was well below expectations, saving the company nearly ~$1BN in annual dividend commitments. “They noted there was ‘greater clarity with respect to several spectrum auctions coming up in the U.S.,’” Stalam said. “In addition, the company’s re-iterated leverage target suggests ~$10-20BN in capacity at T-Mobile for upcoming auctions. We believe this commentary is supportive of our thesis that a C-band auction will raise $50BN and positive for Intelsat and the other C-Band Alliance members,” he said.

Deutsche Telekom continues to grow apace and has raised its guidance for the current financial year. Revenue grew by 4.8 percent in the third quarter of 2019, passing the 20.0-billion-euro mark in a single quarter for the first time in the company’s history. At the same time, adjusted EBITDA AL rose 5.4 percent year-on-year to 6.5 billion euros. In organic terms, i.e., adjusted for exchange rate effects and changes in the composition of the Group, revenue increased by 1.7 percent and adjusted EBITDA AL by 3.0 percent. 

Following the positive trend of the last nine months, the group raised its full-year guidance. Deutsche Telekom now expects to report adjusted EBITDA AL of around 24.1 billion euros, up from the previous guidance of 23.9 billion euros. Cash capex before expenses for mobile spectrum is expected to amount to around 12.9 billion euros, up from around 12.7 billion euros. The main factor driving this increase is the accelerated 5G build-out in the United States. 

The guidance for free cash flow remains unchanged at around 6.7 billion euros. All these figures are based on constant exchange rates and exclude changes in the composition of the group. The guidance has been raised on the back of improved results from all operating segments in the first nine months of 2019, as well as the raised average value of T-Mobile U.S.’ guidance.

November 8, 2019

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