Deutsche Telekom stabilizes its business in Germany and grows in mobile communications

During the third quarter of 2007, Deutsche Telekom stabilized its business in Germany and recorded further growth internationally, primarily with its mobile communications activities. While the Group’s total revenue in the first three quarters rose by 2.8 percent year-on-year to EUR 46.7 billion, its international revenue improved by 14.4 percent. At EUR 23.7 billion, Deutsche Telekom’s international revenue consequently accounts for roughly half (50.7 percent) of its total revenue. The cost savings imposed to help achieve the strategic goal of improving competitiveness in Germany started to take effect in the third quarter, with the Group as a whole recording adjusted EBITDA of EUR 14.7 billion in the first three quarters of the financial year and posting a slight year-on-year improvement in the third quarter at EUR 5.1 billion.

Broadband/Fixed Network

In the Broadband/Fixed Network business area, there are signs that the ‘focus, fix and grow’ strategy is taking effect in Germany: in spite of the fierce competition and the considerable pressure it is under due to the regulatory framework, this business area succeeded in becoming more competitive. Although adjusted EBITDA in the Broadband/Fixed Network strategic business area was down 14.9 percent year-on-year in the first three quarters, adjusted EBITDA in Germany in the third quarter remained stable at around EUR 1.7 billion compared with the first and second quarters of 2007.

New customer growth with regard to broadband lines and complete packages continued to develop positively in Germany. At just under 48 percent, the percentage of new customers who had opted for broadband lines exceeded the projected target of 40 to 45 percent for the full year 2007. The number of broadband customers thus rose by 480,000 in the third quarter. As a result, 8.5 million customers in Germany now have a broadband line from T-Home. On the basis of resale offers, 3.5 million DSL lines are now technically operated by T-Home although marketed by competitors. As such, the number of DSL lines in Germany increased by around 28 percent year-on-year to more than 12 million. By the reporting date, approximately 9 million customers had also opted for one of the complete packages – an increase of around 1.5 million customers compared with the first six months of the year. Entertain – T-Home’s TV entertainment product – proved its suitability for the mass market with its relaunch at IFA and had been ordered by some 50,000 customers by the end of the third quarter.

The less positive revenue development is mainly attributable to the decline in call revenues and the loss of lines in Germany. 497,000 lines were lost in the third quarter; less than in the first two quarters, when 588,000 and 516,000 respectively were lost to competitors or substituted by mobile communications. Total revenue fell by 7.0 percent in the first three quarters of 2007 to EUR 17.1 billion. Outside Germany, the Broadband/Fixed Network business area nevertheless increased its revenue by 2.8 percent to EUR 2.1 billion compared with the first nine months of 2006.