Deutsche Telekom share price falls after Q3 results

By: Siana Mishkova
Siana Mishkova
Siana was one of our leading Journalists in 2013, and has since moved on to become Founder & Editor… read more.
on Nov 7, 2013
Updated: Oct 21, 2019, Thursday, November 7: Shares in Deutsche Telekom (ETR:DTE) fell in early morning trade today after Germany’s biggest telecoms company reported third quarter core earnings and revenues that exceeded market expectations, but its net profit missed forecasts.

Deutsche Telekom reported EBITDA, adjusted for special items, of €4.66 billion, down 2.6 percent year-on-year due to investments in customer growth. However, the earnings were above the average forecast of €4.58 billion in a Reuters’ poll and the consensus estimate of €4.57 in a Bloomberg survey. Moreover, the decline in EBITDA softened from a 5.2 percent fall in the first half of 2013, indicated an improving earnings trend. Net revenue grew by six percent to €15.53 billion, driven by a turnaround in the company’s US business. T-Mobile US, the country’s fourth biggest mobile provider, which is 74 percent owned by Deutsche Telekom, gained more than a million customers net between July and September. Together with MetroPCS Communications, which merged into T-Mobile US six months ago, the influx of new customers resulted in revenue growth of more than 30 percent, measured in euros.

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Deutsche Telekom’s third-quarter net profit stood at €588 million, compared to a net loss of €7.02 billion in the same period last year, but was lower than the mean estimate of €597 million in the Bloomberg poll. Adjusted for special items, the net profit fell by 11.4 percent on the year to €823 million.

**Business in Germany stable**
Deutsche Telekom said it has maintained a stable performance in its home market with revenue in the operating segment edging down by 1.2 percent on the year to €5.7 billion and adjusted EBITDA slipping by 1.1 percent to €2.4 billion. The operator added 470,000 mobile contract customers net between July and September. The European telecoms market has been plagued by falling revenues due to regulatory price cuts and fierce competition. However, telecom stocks have been on the rise for the past three months, underpinned by hopes of further M&A deals. During the third quarter, Telefonica SA (MCE:TEF) and Royal KPN NV agreed to unite their German mobile phone subsidiaries in a deal that will reduce the number of country’s network operators to three. Vodafone Group (LON:VOD), Deutsche Telekom’s major rival in Germany, last month completed its €7.7 billion acquisition of a majority stake in cable operator Kabel Deutschland Holding (FRA:KD8), Germany’s leading cable company.

**European business hit by regulatory issues**
Deutsche Telekom’s revenue in the Europe operating segment fell by six percent on the year to €3.4 billion, driven down by regulatory interventions and by changes in the composition of the group. Adjusted EBITDA dropped by 13.6 percent to €1.2 billion due to higher market investments in the Netherlands and an intensified price war in the Czech Republic and Croatia.

Deutsche Telekom reiterated its full-year outlook for adjusted EBITDA of around €17.5 billion and free cash flow of around €4.5 billion.

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**Shares fall**
The Deutsche Telekom share price fell by as much as 2.2 percent this morning, but regained some ground to trade one percent lower at €11.48 as of 8:34 UTC. The company’s stock has climbed by around 30 percent since the completion of the T-Mobile US transaction in May.
**As of 8.35 UTC buy Deutsche Telekom shares at €11.48.**
**As of 8.35 UTC sell Deutsche Telekom shares at €11.47.**
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