Friday November 12th 2021
Dividend raised
Telecom deals better than expected
Business is booming at Telekom. For the third time this year, the Bonn team are raising their expectations. And the group also has good news for shareholders. However, the mountain of debt is growing.
Thanks to good business on both sides of the Atlantic, Deutsche Telekom once again has more confidence in itself. “Our business is going even better than expected,” said company boss Timotheus Höttges about the third forecast increase for 2021. At the same time, a decisive step towards controlling the US subsidiary T-Mobile US through a “very intelligent deal structure” was taken in the third quarter. made with Japanese technology investor Softbank.
Now, after the multi-billion dollar sale of the Netherlands subsidiary, Höttges is taking on the radio tower division in order to set it up independently. However, he does not want to give a schedule. The quarterly report from Europe’s largest telecommunications company was well received on the stock exchange. One trader spoke of strong profitability.
The Bonn-based company is now expecting an adjusted operating result excluding leasing expenses (Ebitda AL) of around 38 billion euros (most recently at least 37.2 billion euros) for 2021. Compared to the previous year, that is three billion euros more on a comparable basis. Deutsche Telekom T-Mobile US, which recently raised its expectations, is following with the forecast increase. The daughter contributes more than half of the parent company’s earnings.
In the third quarter, the adjusted Ebitda AL of the entire group increased slightly to 9.7 billion euros. It went particularly well on the home market of Germany, where the adjusted operating result – also thanks to numerous new customers – climbed by 3.9 percent to 2.5 billion euros. Group sales, adjusted for consolidation and currency effects, rose by 2.1 percent to 26.9 billion euros, but were below analysts’ expectations.
Higher debt – fewer staff
Telekom has been investing heavily in the expensive 5G network structure and the expansion of the fiber optic network for several quarters. Only recently, the Bonn-based company secured a joint venture with the infrastructure investor IFM from Australia in order to be able to lay more connections.
The previous evening, the board had decided to give the shareholders more. The dividend is expected to rise by four cents to 64 cents per share for the current financial year. This benefits the federal government, which remains the largest single shareholder with 30.5 percent. But Softbank also benefits from this. The Japanese have now risen to become the second largest private shareholder with 4.5 percent and have also become a strategic partner. Höttges announced that the first products on which the two companies are cooperating will come onto the market this year.
Deutsche Telekom is counting on time to reduce the huge mountain of debt, which in the third quarter increased again by almost five percent to around 130 billion euros. In the medium term, this will primarily be reduced through the freely available cash flow, said CFO Christian Illek. However, Telekom also looks at the fixed costs. In addition to fewer properties, the number of employees fell within a year by five percent to around 216,000.