In the space of a year Deutsche Telekom AG has reversed one of the biggest annual net losses in German corporate history to report a healthy profit. The turnaround was however overshadowed by the news of a hefty charge in the fourth quarter due to a failed road toll project.
For the last quarter of 2003, Deutsche Telekom reported a 364m euro ($444.9m) net loss, compared with a net loss of 77m euros ($94m) in the year-ago quarter. The loss was mostly due to a 442m euro ($540.2m) charge to cover losses at Toll Collect, a road-charging system for trucks developed with DaimlerChrysler (as reported yesterday in Computergram).
The venture has been unable to produce a toll system good enough to meet government specifications. Nonetheless, the government agreed earlier this month to give Toll Collect another chance, and altered the management to give Deutsche Telekom more control.
Sales during the quarter remained stable at 14.55bn euros ($17.78bn). For the year ending December 31, the telecoms giant reported net income of 1.25bn euros ($1.53bn). This is a positive turnaround compared with the net loss of 24.6bn euros ($30.06bn) in 2002 after the carrier followed most of its peers and booked billions in write-downs on assets. Revenue for 2003 grew 4% to 55.838bn euros ($68.28bn), from 53.689bn euros ($65.66bn) in 2002.
The Bonn-based carrier also made impressive inroads to reducing its colossal net debt burden, which at the end of 2002 stood at 61.1bn euros ($74.72bn). This has now been reduced thanks to the sale of non-core assets totaling 6.7bn euros ($8.19bn), as well as continued growth and increasing profitability in key areas of the group. As of the end of 2003, net debt stood at 46.6bn euros ($56.99bn).
T-Mobile, the group’s mobile division, posted a 39.3% rise in EBITDA to 7bn euros ($8.57bn) for the year. Sales rose 15.4% to 22.77bn euros ($27.85bn). The unit added 7.1 million customers during the year, bumping its total number of subscribers just over 61 million.
Most of the growth came in the US, where T-Mobile USA, the former VoiceStream that DT bought at the height of the telecoms bubble, overtook Nextel in terms of customer numbers, becoming the fifth-largest wireless operator in the US.
While T-Mobile continues to remain the group’s main engine of growth, T-Com, the fixed-line business, remains the company’s cash cow. The unit saw EBITDA rise 1.1% to 10.16bn euros ($12.42bn), while sales declined 4.4% to 29.20bn euros ($35.71bn).
The company said it would pay no dividend for 2003, the second consecutive year it has made no payment.
Looking forward to 2004, the carrier is focusing on profitable growth. Selective acquisitions have not been ruled out, provided they increase the value of the group.
This article is based on material originally published by ComputerWire