T-Mobile Group posts strong growth in revenue in first quarter of 2006
# T-Mobile Germany now has 30 million customers - market leadership defended despite difficult market climate - T-Mobile@home successful: already over 515,000 customers
# T-Mobile UK records highest rate of growth in contract customers in company history
# T-Mobile USA: over a million new customers, plus 50 percent increase in EBITDA
The T-Mobile Group increased its revenue by around 12 percent, or EUR 0.8 billion in the first quarter. With revenue up 29 percent, T-Mobile USA was the main growth driver. T-Mobile International’s earnings before interest, taxes, depreciation and amortization (EBITDA) were also on track, increasing by EUR 0.2 billion to 2.3 billion (increase of 8 percent). The Group’s EBITDA margin was 30.1 percent
The number of customers in the T-Mobile companies rose by 1.1 million from 86.6 million to 87.7 million by the end of the first quarter. A substantial proportion of customer growth was generated by T-Mobile USA with more than one million new customers, T-Mobile UK with 400,000 customers and T-Mobile Germany with around 300,000 new customers.
Details on individual national companies:
T-Mobile Germany continued to hold its own against increasingly tough competition despite the difficult market climate and its customer base exceeded the 30 million mark in the first quarter of 2006 (up 9.7 percent compared to the year-ago period). In addition to 284,000 new customers, this figure also included 440,000 so-called “machine-to-machine” cards, which are used for automatic data communication, for example, between machines and their control unit. The decline in ARPU (average revenue per user) to EUR 20 is mainly due to the consistently fierce price competition in Germany and the cut in termination charges last December. To counteract these market developments, T-Mobile Germany has introduced a number of new products. These have already shown initial success beyond original expectations.
The T-Mobile@home calling plan introduced in January 2006 was particularly popular. By the end of the reporting period, over 515,000 customers had subscribed to the service, which allows customers to make calls from four cents per minute within their defined zone.
Customer acquisition costs decreased by 15 percent from EUR 107 to 91 compared to the previous year.
T-Mobile USA again acquired the most new customers in the past quarter. With 22.7 million customers, the US subsidiary’s customer base was up by one million on the previous quarter. For the first time, EBITDA was higher at T-Mobile USA than T-Mobile Germany (EUR 0.9 billion compared with EUR 0.8 billion). In the previous quarter EBIDTA was still around EUR 600 million.
T-Mobile UK secured 379,000 new customers in the quarter under review. The Flext calling plan introduced at the beginning of March was especially popular, resulting in particular in the high percentage of contract customers in new customer business: 266,000 new customers is a new high in the number of contract customers acquired in one quarter. With the Flext tariff, T-Mobile UK was able to establish 18-month contracts instead of the usual 12-month contracts. The reported decline in customers of 0.8 million is attributable to the change in the recognition of Virgin Mobile customers. Whereas previously all customers who used their cell phone in the past 365 days were included, a stricter regulation - according to which T-Mobile UK has always reported - now also applies for Virgin Mobile customers from the first quarter of 2006: Only those using their phone during the past 180 days are counted as customers. This effect more than compensated for the large increase in customers on the market. The recognition of key accounts, which were previously recorded uniformly as fixed-term contract customers, also changed. From the first quarter of 2006, these customers were broken down according to the nature of their contract into fixed-term contract customers and prepay customers.(1) The entire wholesale customer base was therefore reviewed as at January 1, 2006 and 458,000 customers from the fixed-term contract customer base assigned to the prepay customer base. T-Mobile UK stabilized its ARPU at EUR 26 compared with the previous quarter.
Other T-Mobile countries (Croatia, Netherlands, Austria, Slovak Republic, Czech Republic, Hungary)
Revenue development was particularly positive at the national companies in Croatia, the Czech Republic and the Slovak Republic with a double-digit increase. ARPU-related revenue rose or was maintained in all national companies. New customer growth as much as doubled quarter-on-quarter in some parts of Eastern Europe.
Key figures for the T-Mobile Group (Download PDF): www.t-mobile.net/MEDIA/7502,0.pdf
(1) Prior-year comparatives have also been restated for the sake of clarity.
This release contains or may contain forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They are generally identified by the words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “goal,” “plan,” “will,” “seek,” “outlook” or similar expressions and include generally any information designated as “guidance” or that relates to targets for revenue, adjusted EBITDA or other performance measures. Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including those described in the sections “Forward-Looking Statements” and “Risk Factors” of the company’s Form 20-F report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom’s workforce reduction initiative and the impact of other significant strategic or business initiatives, including acquisitions, dispositions and business combinations. In addition, stronger than expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its estimates or targets will be achieved. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance to a GAAP measure because it would require unreasonable effort to do so. As a general matter, Deutsche Telekom does not predict the net effect of future special factors because of their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can be significant to the company’s results. Among the EBITDA adjustments in 2006 and 2007 will be the costs of the group’s workforce adjustment initiative, which Deutsche Telekom estimates will result in costs and charges of approximately EUR 3.3 billion over the next three years.
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