Deutsche Telekom swings back to profit in Q1

Deutsche Telekom AG (DT), Europe’s largest telecommunications company, reported Thursday a first-quarter profit after selling assets, reducing spending and paying less tax.

DT reported net income for the first quarter of 2003 of 85 million euros (US$92 million as of March 31, the last day of period being reported), compared to a net loss of 1.8 billion euros in the first quarter of 2002, the company said in a statement.

Revenue in the first quarter rose 6.6 per cent to 13.6 billion euros, while earnings before interest, taxes, depreciation and amortization (EBITDA) rose almost 30 per cent to 4.9 billion euros. Excluding special factors, EBITDA increased 18 per cent to 4.5 billion euros.

The network operator was also able to reduce its huge net debt to 56.3 billion by the end of March, compared to 61.1 billion euros at the end of 2002, according to the statement. The reduction was attributed in part to the sale of the company’s cable TV assets for 1.7 billion euros.

Chief Executive Officer (CEO) Kai-Uwe Ricke, who took over in November, is targeting a net debt of 52 billion euros by the end of the year. To achieve that goal, Ricke is shedding around 55,000 jobs and cutting spending on telecoms equipment and advertising, in addition to selling further assets.

DT’s fixed network unit T-Com, the group’s largest revenue generator, saw first-quarter revenue dip 0.6 per cent to 7.5 billion euros due mainly to the sale of the cable TV networks, the German operator said. Demand for Digital Subscriber Line (DSL) service remained buoyant; the number of DSL customers grew to 3.5 million at the end of the first quarter, compared to 2.3 million at the end of the first quarter 2002.

The T-Systems division, which is responsible for providing managed voice and data services to businesses and operating DT’s global communications network, was able to increase revenue 2.8 per cent to nearly 2.6 billion euros.

Mobile phone subsidiary T-Mobile International AG & Co. KG continued its growth story, reporting an 18.9 per cent rise in first-quarter revenue to 5.3 billion euros, compared to 4.5 billion euros in the same period the year before.

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