Deutsche Telekom Confirms Guidance as Virus Impact Limited

(Bloomberg) -- Deutsche Telekom AG said the hit to its finances from the pandemic, such as through store closures and reduced roaming revenues, will likely be “limited” as revenues from phone services are rising, enabling it to confirm guidance for 2020.

• The Bonn, Germany-based telecommunications company’s adjusted Ebitda after leases rose 10.2% to 6.5 billion euros ($7 billion) in the first quarter, beating a company-compiled estimate for 6.3 billion euros.
• The company had previously guided for full-year adjusted Ebitda AL of around 25.5 billion euros.

Key Insights

• Adjusted Ebitda AL grew 14.5% at T-Mobile US Inc., the biggest contributor to Deutsche Telekom’s total revenues. The division warned last week that the pandemic prevents it from providing a full-year financial forecast, even as it reported profit that exceeded analyst estimates.
• In Germany adjusted Ebitda AL rose 2.7% as mobile service revenues gained and it added 83,000 new broadband customers, showing the benefit of its fiber-optic network buildout and in its home market to fend off competition; it has also recently inked a sales deal for TV content from Walt Disney Co.
• Revenues rose 2.3% to 19.9 billion euros, a 2.3% gain from a year earlier but just short of consensus estimates for 20.1 billion euros.
• T-Mobile is now integrating its $26.5 billion acquisition of Sprint, completed in April, and will report consolidated figures in the second quarter.

Market Reaction

• Deutsche Telekom shares rose 0.8% in early trading, and are down 6.5% so far this year.

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