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Deutsche Telekom lifts profit view, aims for T-Mobile majority soon
Global Banking & Finance Review®
Company
By Supantha Mukherjee
STOCKHOLM (Reuters) -Deutsche Telekom on Thursday raised its annual earnings forecast for the second time after beating quarterly estimates, and said it could achieve its goal of a majority stake in U.S. unit T-Mobile much sooner than 2024.
The company has said it wants to own a majority of T-Mobile, which led much of the group’s subscriber growth in the second quarter, over the medium term.
Deutsche Telekom now expects to post adjusted earnings before interest, tax, depreciation and amortisation after leases (EBITDA AL) of around 37 billion euros ($38 billion) in 2022, up from previous guidance of more than 36.6 billion euros.
Chief Executive Timotheus Hoettgas said buying the majority stake in T-Mobile U.S. was the group’s most important strategic project at present.
Deutsche Telekom, which has been trying to cut a debt pile of almost 136 billion euros, last month agreed to sell 51% of its towers business to free up funds to invest in infrastructure and its U.S. business.
The group bought more shares earlier this year in T-Mobile from Japanese conglomerate SoftBank for $2.4 billion, raising its stake in the U.S. company to 48.4%.
Hoettgas said that stake should top 50% in the medium term, and the group could achieve it much sooner than 2024.
T-Mobile, which accounts for three-fifths of group revenue, has been gaining subscribers following its merger with Sprint and as it rolls out its 5G service.
In the latest quarter, T-Mobile added 1.7 million customers who pay their bills monthly, increasing its customer base to 110 million.
Deutsche Telekom reported 54.6 million mobile customers in Germany and 46.5 million in the rest of Europe.
Adjusted EBITDA AL rose to 9.9 billion euros, beating analysts’ consensus forecast of 9.84 billion.
Second-quarter revenue rose 5.9% to 28.2 billion euros, in line with estimates.
($1 = 0.9720 euros)
(Reporting by Supantha Mukherjee in Stockholm and Nadine Schimroszik in Berlin; Editing by Sherry Jacob-Phillips and Mark Potter)
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to evaluate a company's operating performance by focusing on earnings generated from core business operations.
A majority stake refers to owning more than 50% of a company's shares, giving the stakeholder significant control over company decisions and operations.
Subscriber growth refers to the increase in the number of customers or users of a service, often measured over a specific period, indicating the company's market expansion.
A debt pile refers to the total amount of debt that a company has accumulated. It can include loans, bonds, and other financial obligations that need to be repaid.
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