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Deutsche Telekom 1Q Net Loss Euro1.1 Billion

The Associated Press

FRANKFURT (AP) — Germany's Deutsche Telekom AG reported Thursday a large first quarter net loss which the company blamed on a "strong economic slowdown" and more intense competition, especially in the U.K.

The Bonn-based company said it lost euro1.1 billion ($1.46 billion) in the January-March period compared with a net profit of euro924 million in the first quarter of 2008.

Revenues were 6.2 percent higher at euro16 billion compared with euro15 billion in the first quarter of 2008.

"The figures we are presenting today show a mixed picture: Despite the difficult environment in some markets, we are in a relatively stable position," Rene Obermann, the company's chief executive said in the company's report.

Deutsche Telekom did not offer a detailed outlook for the current quarter or the full year in Thursday's report.

In late April however, the company said it expects pretax earnings to be between 2 percent and 4 percent lower for the year compared to 2008, when earnings before interest, taxes, depreciation and amortization amounted to euro18 billion.

Telekom said total revenue for its mobile communications division increased 9 percent to euro9.2 billion from euro8.4 billion in the first quarter of 2008. The division however recorded an operating loss of euro635 million compared with a profit of euro1.3 billion in the first quarter of 2008.

"The impact of the marked downturn in the economic environment was felt as much in the United States as in the United Kingdom and Poland, where negative exchange rate effects further intensified the declining trend in revenue and earnings," Telekom said.

The company said the number of mobile customers in the U.S. and Europe outside of Germany increased 20 percent to more than 148 million, with T-Mobile USA reporting a 20 percent increase in revenues to euro4.1 billion. Business in Germany remained largely stable on year-ago levels.

The broadband and fixed network division saw revenues increase 3.6 percent to euro5.9 billion and operating profit increase 32 percent to euro1.2 billion.

Due to the acquisition of Greek telekom company OTE, the volume of international business for the division nearly doubled. At the end of the first quarter, international Telekom subsidiaries served around 3.2 million digital subscriber line customers, half of which were from OTE customers in Greece and Romania.

The systems solutions division, which sets up phone and computer networks for businesses and organizations, said revenues declined 4.3 percent from a year earlier, to euro2.1 billion. Operating profit fell more substantially, to just euro11 million from euro483 million in the first quarter of 2008.

Telekom said the division's international sales increased by more than 6 percent while revenues in Germany fell by more than 8 percent.

Systems orders during the first quarter fell nearly 15 percent, largely because of a big order in the first quarter of 2008. However, Telekom said it had won some major contracts this year from the likes of German industrial gas company Linde AG and from the Rewe grocery store chain. Other major contracts came from the German states of North Rhine-Westphalia and Baden-Wuerttemberg.

Shares of Telekom closed slightly lower Wednesday at euro8.30.

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On the Net:

http://www.deutschetelekom.com