Deutsche Telekom

Deutsche Telekom raises 2020 guidance as revenue grows 32%

13 November 2020 | Melanie Mingas

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Deutsche Telekom has posted revenue growth of 31.9% in the third quarter, prompting the telco to raise its guidance for the year.

Deutsche Telekom posted revenues of €26.4 billion, a 31.9% increase, and an adjusted net profit increase of 6.3%, reaching €1.5 billion.

Adjusted EBITDA AL increased 49.6% year-on-year to reach €9.7 billion and Deutsche Telekom now expects to report adjusted EBITDA AL of at least €35 billion with free cash flow AL of at least €6.0 billion. This puts the guidance for adjusted EBITDA AL around €1 billion higher and for free cash flow AL around €0.5 billion higher than it was in August.

Deutsche Telekom said this is not only due to the raising of the guidance for T-Mobile US, but the rest of the group is also expecting higher adjusted EBITDA AL for the full year of around €14 billion euros, despite the negative impact of the coronavirus pandemic.

Previous guidance for the group – discounting US performance – had stood at €13.9 billion. Its dividend of 60 euro cents per share remains unchanged.

“Deutsche Telekom is showing its strengths,” said CEO Tim Höttges.

“We are raising our guidance thanks to strong business on both sides of the Atlantic. And we are able to do this despite feeling the effects of the pandemic in some areas.”

Free cash flow AL declined by 23.9% in the quarter to €1.6 billion, but after nine months is still up on the prior-year level at €5.3 billion. Net profit decreased by 40.3% to €0.8 billion year-on-year in the third quarter, mainly due to an impairment loss recognised in the systems solutions segment as a result of “dampened short and medium-term expectations for the business”.

With 35,000 cell sites as of the end of Q3, the cell tower business recorded growth of 5.3% year on year. While revenue increased by 3.8% compared with the third quarter of 2019 to reach €248 million. Adjusted EBITDA AL was up 5% to €149 million euros. 

 Over the pond

Supporting the outlook, Deutsche Telekom  said the merger of T-Mobile US and Sprint is “ahead of plan”.

Looking at performance, Deutsche Telekom said key financials “increased substantially” on the back of the Sprint takeover. Revenue grew by 74.2% to US$19.4 billion. Adjusted EBITDA AL increased 119.3% to $7.0 billion and adjusted for the Sprint transaction, in organic terms, revenue grew by 4% and adjusted EBITDA AL by 14.6%.

In Q3 T-Mobile US passed the 100-million customer mark after two million net additions between July and September brought the total number of customers 100.4 million.

The company’s statement read: “The integration of Sprint is ahead of plan. Just a few short months after the transaction was closed, 15% of the voice and data traffic of Sprint contract customers is already being processed on the network of the new T Mobile. The company expects to realise synergies of €1.2 billion in the current year, primarily from the integration of networks and sales.