Deutsche Telekom maintains guidance for 2020 on upbeat Q1 earnings report

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 14, 2020
  • Deutsche Telekom records £810.65 million in net profit and £17.65 billion in revenue in Q1.
  • The German company confirms its guidance for 2020 expecting limited COVID-19 impact.
  • The telecommunications company maintains its dividend at 53 pence per share.

Deutsche Telekom (ETR: DTE) released its quarterly financial results on Thursday that posted upbeat revenue and profit for the first quarter. The company attributed its success to growth in both of its primary markets, Germany and the United States.

The German company reported its net profit in Q1 at £810.65 million that came in stronger than £796.50 million in the same quarter last year. In terms of adjusted earnings before interest, taxes, depreciation, and amortization after leases (EBITDAAL), it printed £5.79 billion in the first quarter versus the year-ago figure of £5.26 billion.

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At £12.14 per share, Deutsche Telekom is currently around 6% down year to date in the stock market after recovering from £9.58 per share in March. Its performance in 2019 wasn’t encouraging either with an annual loss of roughly 3%.

Deutsche Telekom is currently valued at £57.54 billion and has a price to earnings ratio of 16.83.

Deutsche Telekom expects a limited impact of COVID-19 on revenue

At £17.65 billion, Deutsche Telekom’s revenue also topped £17.25 billion that it recorded in the comparable quarter of last year.

In its announcement on Thursday, the telecommunications company also expressed confidence that the ongoing Coronavirus pandemic will affect its revenue limitedly and reassured its financial guidance for 2020. Deutsche Telekom is now estimating its adjusted EBITDAAL at around £22.57 billion this year. It also expects its revenue to surge in 2020.

COVID-19 has so far infected more than 174,000 people in Germany and caused 7,800 deaths. According to CEO Tim Hoettges of Deutsche Telekom, the company is “an anchor of stability in a global crisis.”

Deutsche Telekom maintains 53 pence a share of dividend

In the annual shareholders meeting scheduled for June 19th, CEO Timotheus Höttges commented, the company will propose 53 pence per share of dividend. As per the CEO, Deutsche Telekom’s earnings are strong enough to cover the payout. The meeting is expected to be held online this year.

The German telecommunications company released its quarterly earnings report about a month after its U.S subsidiary, T-Mobile, got the green light from the U.S regulators to complete its merger agreement with Sprint Corp.

Deutsche Telekom’s current guidance, however, doesn’t account for the merger. The company said that it will update its outlook to include Sprint in its second-quarter performance report. In terms of free cash flow, Deutsche saw a 17% decline but maintained its forecast of hitting £7.08 billion in 2020.

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