Feeds

Deutsche Telekom profits plunge 58%

Local loop unbundling hits where it hurts

Bridging the IT gap between rising business demands and ageing tools

Europe's biggest telecommunications firm, Deutsche Telekom, lost over half a million customers during the first quarter of 2007 as fixed-line subscribers fled to cheaper rivals.

The Bonn-based company, which is the continent's largest telco in terms of sales, said on Thursday that first quarter profit declined by a staggering 58 per cent from €1.09bn for the first quarter of 2006 to €459m or €0.11 per diluted share for the same three-month period in 2007. It was the fourth consecutive quarter of declining profit.

Much of the dip in profits was attributed to the firm's failure to keep hold of many of its customers following local loop unbundling (LLU). Overall, the company lost 588,000 fixed-line subscribers during the first quarter.

In 2006, the troubled telco, which is facing industrial action over its plan to shift 50,000 jobs to its newly created T-Service customer service division, lost two million fixed-line customers.

Despite the fall in profit, sales rose 4.1 per cent to €15.5bn in the first quarter, compared with €14.84bn in the year-ago quarter due to increased revenue for its mobile unit, T-Mobile. Overall, Deutsche Telekom's mobile division contributed €8.4bn in revenue, up 10.9 per cent on the same quarter a year ago.

In addition, the firm gained 572,000 broadband customers in Germany during its first quarter.

While the telco's latest figures don't read well, Deutsche's chief executive Rene Obermann was putting a brave face on it.

"The group's financial figures are pointing in the right direction for us to achieve our targets for the year, but we are fully aware that here in Germany we are exposed to considerable competitive pressure. For this reason, it is crucial that the new 'focus, fix and grow' strategy continues to be put into action," said Obermann.

More worrying for the firm right now is the threat of industrial action. Trade union Verdi is vehemently opposed to Deutsche's plan to outsource jobs and the results of a strike ballot are expected to be announced late on Thursday.

Looking forward, the firm estimates moderate growth in net revenue, pre-tax profit of around €19bn and free cash flow of €6bn for the financial year, which is unchanged from fiscal 2006.

Copyright © 2007, ENN

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.