Deutsche Telekom's Net Plunges, But Adjusted EPS Beats

| About: Deutsche Telekom (DTEGY)

Deutsche Telekom reported its second-consecutive decline in third-quarter earnings, as net income dropped 87% to €259 million ($376M), compared to analyst expectations of €525M. Its shares are trading to the upside however, because adjusted earnings growth of 6.9% to €1.06B beat analyst estimates of €767M and EBITDA surprisingly increased 0.6% to €5.1B, versus estimates of a 3% decline. Revenues rose 1.4% to €15.7B. Deutsche Telekom's earnings suffered on further losses of fixed-line subscriber accounts in its home market and due to a €660M tax credit valuation charge, as well as €600M in amortization and tax-related costs related to overseas wireless assets. Deutsche Telekom's CFO said the company is forecasting 2008 operating profit will be "stable" compared to 2007 with adjusted EBITDA of approximately €19B expected this year. (Earnings call transcript later today). Spending on building out its T-Mobile U.S. wireless high-speed network and expansion of its German broadband business will impact 2008 earnings. T-Mobile USA added 857,000 customers in Q3, increasing its total customers to 27.7M. Ordinary shares of Deutsche Telekom were last up 1.9% to €14.38 in Frankfurt. Deutsche Telekom's ADRs were unchanged at $20.60 on Wednesday.

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Tagged: , Wireless Communications, Earnings, Germany
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