Deutsche Telekom exceeds forecasts in 2018

Source: Xinhua| 2019-02-22 20:34:39|Editor: mym
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BERLIN, Feb. 21 (Xinhua) -- Deutsche Telekom recorded a total revenue of 75.7 billion euros (85.8 billion U.S. dollars) in 2018, up 0.9 percent, with operating profits grown by 5.0 percent to 23.3 billion euros (26.30 billion dollars), the German telecommunications company said.

With the adjusted operating profits at 23.8 billion euros (26.97 billion dollars), the results "significantly exceeded" Deutsche Telekom's own forecasts, the Bonn-based German telecom giant said when releasing its annual results.

"2018 was a very good year for us," said Tim Hoettges, chief executive officer (CEO) of Deutsche Telekom, during the press conference on the annual results, adding that Deutsche Telekom generated the best operating profits that the company "had ever recorded".

However, its adjusted net profits decreased by 24.7 percent to 4.5 billion euros (5.10 billion dollars), mainly due to a negative one-time effect of the tax reform in the United States in 2018, according to Deutsche Telekom.

"With a strong presence on both sides of the Atlantic combined with our vast investment capacity, our growth profile is unique in the industry," Hoettges said.

The business of T-Mobile US remained one of Deutsche Telekom's most important segments. In 2018, the total revenues of the Deutsche Telekom subsidiary in the United States advanced 6.8 percent to 43.1 billion U.S. dollars, and adjusted operating profits of T-Mobile US increased by 13.6 percent to 11.9 billion U.S. dollars.

In the German market, Deutsche Telekom recorded a decline in revenues of 1.1 percent to 21.7 billion euros (24.59 billion dollars), while its adjusted operating profits increased by 2.4 percent to 8.6 billion euros (9.74 billion dollars).

According to Deutsche Telekom, switching to the International Financial Accounting Standard (IFRS) had a negative impact on revenue and a positive impact on adjusted operating profits.

Deutsche Telekom is expecting an average annual growth rate at 1 to 2 percent for total revenues and 2 to 4 percent for adjusted operating profits until 2021.

The allocation of frequencies for the new mobile communications standard 5G in Germany, which the federal network agency (Bundesnetzagentur) will conduct in an auction format, is likely cause high one-time cost to Deutsche Telekom in 2019.

Following Telekom's competitors Telefonica and Vodafone which had recently filed a preliminary injunction against the auction procedure by the Bundesnetzagentur, Deutsche Telekom has also submitted an "urgent preliminary injunction against the conditions of the auction of the 5G frequencies," Hoettges announced at the press conference.

The three network operators are afraid that investment costs of the 5G technology will hinder profitability, especially because the German government is planning to oblige network operators to make their network available to competitors if they are the only supplier in certain regions.