Eurobites: Deutsche Telekom Profits Soar in Q1

News Analysis Paul Rainford, Assistant Editor, Europe 5/4/2016

Also in today's EMEA regional roundup: BICS slump dents Proximus Q1 numbers; MVNOs want action on wholesale roaming; clearer charging for broadband.

Deutsche Telekom AG (NYSE: DT) has a spring in its step at the end of the first quarter, reporting revenues up 4.7% year-on-year to €17.6 billion (US$20.2 billion) and net profits quadrupled to €3.1 billion ($3.5 billion), though the sale of its stake in the EE mobile joint venture in the UK was a significant contributory factor to the healthy numbers. Fiber is taking off for the operator -- it added 660,000 new fiber customers in the period, taking it past the 5 million mark. However, things aren't so rosy on the mobile side, with mobile service revenues declining 1.7% year-on-year and a fall in new contract customer additions.

Table 1: Deutsche Telekom Q1 At a Glance

	Q1 2016 (millions of €)	Q1 2015 (millions of €)	Change (%)	FY 2015 (millions of €)
Revenue	17,630	16,842	4.7	69,228
Proportion generated internationally in %	65.5	63	2.5p	63.8
EBITDA	7,667	4,160	84.3	18,388
Adjusted EBITDA	5,163	4,574	12.9	19,908
Net profit	3,125	787	n.a.	3,254
Adjusted net profit	1,047	1,036	1.1	4,113
Net debt	47,603	46,310	2.8	47,570
Number of employees	223,320	227,184	-1.7	225,243
Source: Deutsche Telekom

Underlying revenues at Belgium's Proximus slipped 3.1% year-on-year in the first quarter, largely as a result of a 10% slump in revenues at BICS , its international wholesale division, though underlying EBITDA increased 2.5% on 2015. The operator has confirmed its full-year guidance, with underlying domestic revenue and Group EBITDA expected to grow slightly.

A coalition of MVNOs has called for more work to be done by the European Commission on wholesale roaming caps, and says that the promised "roam-like-at-home" scenario within the European Union won't be reached by next June unless a reduction in the current level of these caps is put in place. (See Eurobites: Dunroamin' and EU Agrees to Ban Roaming Charges, Enforce Net Neutrality.)

The Advertising Standards Authority, which has the power to veto bad ads in the UK, is to take a harder line on broadband advertising. As from October 2016, broadband providers will have to make the all-in cost of their various packages clear, rather than treating line rental as a separate charge. TalkTalk has become the first provider to commit to the new protocol, admitting in a statement that tricky pricing was a "bad habit we have all been guilty of." Separately, the ASA has also ordered BT Group plc (NYSE: BT; London: BTA) not to run three TV ads again, as it felt that complaints about claims the operator made in the ads about the superior performance of its Infinity broadband service were justified.

— Paul Rainford, Assistant Editor, Europe, Light Reading