T-Online’s German business made an ebitda profit, and the whole operation looks set to break even in 2002. However, the company could do with re-evaluating its presence in non-German language markets. Its French and Spanish operations are losing money and market share; it may need to decide between selling them and investing heavily to boost its presence.
Deutsche Telekom’s ISP T-Online has announced a fall in Q4 ebitda losses.
German ISP T-Online has announced a narrowing in ebitda loss for Q4 2001: it fell from E68.1 million in Q4 2000 to E31.2 million – and the domestic unit made a E24.8 million ebitda profit. The Deutsche Telekom subsidiary now expects to reach positive ebitda this year, ahead of its original 2003 planned date.
However, full year 2001 ebitda loss was up on 2000, thanks largely to the consolidation of the loss-making ya.com unit in Spain and Club Internet unit in France. Meanwhile, the overall annual loss was up to E797 million, compared with E390 million in 2000, after T-Online wrote down its stake in eBrokerage Comdirect by E281 million.
T-Online has 10.7 million customers, making it Europe’s largest ISP. But while it has made some attempts at international expansion, it is still heavily dependent on German-speaking markets. Out of its other operations, Ya.com has slipped from being Spain’s second largest ISP to its fourth largest, while Club Internet is only number three in France.
It is also heavily reliant on access charges. Over 80% of Q4 sales came from Internet access, with the rest made up from advertising, eCommerce and premium content. Connectivity charges are falling in the long run, so if T-Online is to keep growing, it must improve its content and commerce revenues.
In the European ISP market, AOL and Tiscali are genuinely international players, with proven expertise at competing in a variety of markets and in a variety of languages. But although T-Online is big and has bigger backing, it is still a domestic operation with a few minor international ventures.
T-Online should hit its 2002 profitability target, based on its German-language operations. The point of the French and Spanish units is less clear. The company should consider either expanding its international operations heavily to become a true pan-European player, or retreating to the Germanic markets where it knows it can make money.