Deutsche Telekom Makes €1.3B Loss in Q4

BONN, Germany -- Deutsche Telekom met its financial targets for the 2011 financial year despite a difficult business environment for the telecommunications industry as a whole. Adjusted EBITDA was EUR 18.7 billion, with a EUR 0.2 billion negative impact owing to changes in exchange rates. Adjusted for this exchange rate effect included in the forecast, the Group's adjusted EBITDA was EUR 18.9 billion, while Deutsche Telekom's guidance for the year was around EUR 19.1 billion. Exchange rate fluctuations had a EUR 0.1 billion negative impact on free cash flow. The reported figure of EUR 6.4 billion hence corresponds to the forecast figure of EUR 6.5 billion. The Supervisory Board and the Board of Management will propose to the shareholders' meeting on May 24 a stable dividend of 70 cents per share, corresponding to a payout rate of 47 percent of free cash flow.

"In 2011, the Company operated in a challenging environment in every respect, a situation that is not going to change this year," commented René Obermann, Chairman of the Board of Management of Deutsche Telekom. "Our capacity for innovation, cost discipline, and readiness for change are vital assets as we prepare to master these challenges in 2012, too."

Continued intense competition in many markets, a difficult economic environment in several countries, and burdensome regulatory decisions had an ongoing negative influence on the business of telecommunications companies and, therefore, also on Deutsche Telekom's business. Net revenue in 2011 hence declined 6.0 percent to EUR 58.7 billion. Adjusted for the deconsolidation of the UK subsidiary T-Mobile UK in the prior year, the decline was 4.9 percent. Excluding T-Mobile UK and adjusted for exchange rate effects and the impact of regulatory decisions, net revenue decreased by 2.5 percent.

Deutsche Telekom's adjusted net profit for 2011 reached EUR 2.9 billion, 15.2 percent less than in the prior year. Unadjusted net profit for the full financial year decreased by around two thirds year-on-year to EUR 0.6 billion. This was due to a number of different special factors in the fourth quarter that in total led to an unadjusted net loss in the three months of approximately EUR 1.3 billion. Goodwill impairment in the United States and impairments on goodwill and property, plant, and equipment in Southeastern Europe, notably Greece, of approximately EUR 3.3 billion in the context of scheduled impairment tests in the fourth quarter had a negative impact on unadjusted net profit. The positive impact of the compensation received from AT&T, comprising a cash payment of around EUR 2.3 billion and the right to the transfer of spectrum licenses at a fair value of approximately EUR 0.9 billion minus the applicable tax effects, following the termination of the agreement to sell T-Mobile USA, was hence more than offset.

The Group's cash capex amounted to EUR 8.4 billion, 14.7 percent less than in the prior year. Investments in the Germany segment (excluding the acquisition of the LTE licenses in 2010) increased further by approximately EUR 0.2 billion to more than EUR 3.6 billion, while the level of debt decreased significantly.

At December 31, 2011, net debt stood at EUR 40.1 billion, a year-on-year decrease of 5.1 percent.

Deutsche Telekom AG (NYSE: DT)