Deutsche Telecom - financial losses

Deutsche Telekom posts 4Q loss

Deutsche Telekom AG said Friday it narrowed its fourth quarter loss and posted a much-improved full-year profit, with U.S. cell phone customer numbers rising sharply even as Germans continued to turn away from traditional land-line connections.

The Bonn-based company said it lost euro730 million ($927 million) in the October-December period, less than the euro750 million net loss in the fourth quarter of 2007.

Overall revenue in the quarter was 2 percent higher, climbing to euro16 billion from euro15.8 billion. However, revenue in its domestic German market fell 5 percent to euro7.3 billion as a long-term customer exodus from land line subscriptions continued.

Over the whole of 2008, the company lost 2.5 million land lines, at the lower end of its guidance.

Full-year net profit soared, to euro1.48 billion from euro571 million in 2007, helped by bigger cash flows and a savings plan that shaved more than euro4 billion off costs. Telekom's revenue for the year was 1.4 percent lower, at euro61.6 billion from euro62.5 billion.

Rene Obermann, the company's chief executive, said earnings from 2008 and previous years were proof that Telekom is in good shape. "Our 2008 financial year is characterized by stable performance and sound financial figures," he said.

In 2009, the company said it hopes to achieve an operating profit of around euro20 billion, the same level achieved for 2008.

The Deutsche Telekom share was the only gainer on Germany's benchmark DAX market in Frankfurt morning trading. The stock was 2 percent higher at euro9.66.

The mobile communications division -- which has become Telekom's mainstay business -- saw revenues in Europe and the U.S. grow 2.4 percent to euro37 billion in 2008, and 7.1 percent in the fourth quarter.

Mobile communications earnings before interest, taxes, depreciation and amortization (EBITDA) for the year grew by 6.2 percent to euro11 billion, and grew by nearly 13 percent in the fourth quarter.

Telekom said it gained more than 950,000 T-Mobile phone contract customers in Germany in 2008, while in the U.S. the number of customers increased by a stunning 4.1 million.

Telekom said 1.1 million of those customers were added through the acquisition of U.S. company SunCom in February 2008. At the end of 2008, the total number of T-Mobile customers in the U.S. was 32.8 million.

Telekom said eastern Europe also remained an important growth driver, with revenues increasing 10 percent to more than euro6 billion and EBITDA growing 14.3 percent for the year.

The company said Polish subsidiary PTC improved its customer base by more than 15 percent to 6.3 million subscribers.

Telekom said mobile business in Britain was negatively affected by fierce competition, with revenue falling 2 percent to 3.2 billion pounds ($4.5 billion) in 2008.

The company's broadband and fixed network revenue declined by 6 percent to euro21 billion in 2008 and by 4 percent in the fourth quarter.

Despite the weaker earnings for the segment, Telekom said it was able to add 352,000 digital subscriber lines in Germany in the fourth quarter alone, making the company market leader. The total number of DSL lines now stands at 10.6 million in Germany.

Additionally, Telekom said that in 2008 half a million customers registered for broadband or fixed-network service, switching from competitors. For the first time, that figure was significantly higher than the number of customers Telekom lost to competitors, the company said.