Deutsche Telekom delivered on its financial restructuring promises in 2003, said Kai-Uwe Ricke, the company’s CEO, speaking at Smith Barney Citigroup’s Entertainment, Media and Telecommunications Conference in Phoenix. While reducing debt, DT has once again become a “profitable growth” company. Ricke noted the considerable differences in the wireline environment of the U.S. and Germany, where core wireline revenues are stable, line losses to competitors are moderate, fixed-to-mobile substitution is not noticeable, there is no threat from cable competitors and VoIP is only slowly emerging. Among the major issues facing Deutsche Telekom are personnel cost management challenges. The company’s leadership is proposing to its unions a 10% reduction in working hours and pay per year. Compared to its European peers, Ricke said DT is better positioned for earnings growth because of the market strength of its four divisions: T-Com, T-Systems, T-Mobile and T-Online. Some additional highlights of the presentation:
- Deutsche Telekom ended 2003 with over 4.2 million DSL lines. The company is targetting between 7.5 to 10 million DSL lines by 2007.
- For 2004, DT is expecting adjusted EBITDA of at least EUR 19.2 billion versus expected adjusted EBITDA of EUR 18.2 billion for 2003.
- Expected free cash flow for 2004 is EUR 6 billion
- Capex for 2004 is expected to rise EUR 1.5 billion for profitable growth initiatives over 2003 Capex of EUR 7 billion.
- T-Mobile Hotspots are becoming a “real business.” At the end of 2003, the company had over 4,000 hotspots online at Starbucks, Borders, Kinkos, etc. About two-thirds of the revenues come from subscription services. Look for new partnerships with other carriers.
http://www.telekom.de
