Deutsche Telekom experiences €6.9 billion net loss

08 November 2012 | Kavit Majithia


German operator Deutsche Telekom has experienced a €6.9 billion net loss after being hit with an impairment charge following its recent merger with MetroPCS.

The company said, despite the charge, it had stuck to its guidance for 2012.

Q3 revenues dropped slightly to €14.7 billion, but posted solid results in a turbulent economic market. Its guidance for 2012 estimated a drop in underlying earnings to €18 billion, from €18.7 billion last year.

Deutsche Telekom did largely emphasise that its €6.9 billion net loss, down from a profit of €1.1 billion a year prior, was largely due to the charge it suffered from the MetroPCS deal.

“We made a forward-looking decision for our US business in full awareness of the accounting consequences,” said René Obermann, chief executive at Deutsche Telekom. “Anyone seeing only the clear net loss is overlooking the fact that our operating business is completely on track. Unlike many of our competitors, we offer reliability.”

Results of its US business were mixed as the highly competitive landscape in the US begins to take hold, and the company experienced a loss of 492,000 contract customers, largely because it does not offer the new iPhone.

It posted favourable results in its domestic market, with mobile contract net additions of 550,000 in the quarter. Q3 revenue did slip by 1.3% to €5.7 billion, largely due to the effects of a poor market environment.