Deutsche Telekom raises profit forecast

FRANKFURT • Deutsche Telekom AG forecast higher full-year earnings bolstered by growth in the US, underscoring that the planned US$26.5 billion (RM107.86 billion) deal for its T-Mobile US Inc unit to buy Sprint Corp is vital for the German carrier.

Deutsche Telekom is defending leading positions in Germany and elsewhere in Europe, where growth is harder to come by — especially as rival Vodafone Group plc is bolstering its portfolio with some of Liberty Global plc’s units.

Deutsche Telekom said more customers are selecting two or more of its services in bundles, which increases loyalty as well as phone bills.

“The trends in Germany and the US are positive,” CFO Thomas Dannenfeldt said in a statement. “At our European subsidiaries, we are again posting sustained growth.”

The challenge in Germany, where Deutsche Telekom is building fibre lines, is to win wireless and business clients in the face of competition from the combined challenge from Vodafone and Liberty Global, as well as Telefonica SA and United Internet AG, which is emerging as a fourth large local carrier.

The stock advanced 0.2% to €14.33 (RM67.60) at 9:32am in Frankfurt yesterday, compared to a 0.8% decline in the STOXX Europe 600 Telecommunications index.

While Deutsche Telekom lost mobile contract customers in Germany compared to the previous quarter, reflecting increased competition, it gained broadband and television subscribers. And mobile service revenues — a key factor indicating how profitable its wireless contracts can be — rose 2.9% from a year earlier.

Deutsche Telekom increased its full-year forecast for adjusted earnings before interest, taxes, depreciation and amortisation by €100 million to about €23.4 billion after T-Mobile posted industry-leading subscriber gains in the second quarter and US$176 million in net income, as analysts had predicted a loss. — Bloomberg