FRANKFURT, May 11 (Reuters) - Mobile phone services boosted
Deutsche Telekom's <DTEGn.DE> results when the telecoms group on
Thursday reported a 2.7 percent rise in first quarter core
earnings, broadly in line with expectations.
Europe's biggest telecoms group by revenue affirmed its
overall outlook for the year, and slightly raised its forecast
for mobile sales to up to 32.3 billion euros ($41.3 billion), or
a little over half of 2006 total sales for the entire group.
The European telecoms sector is under increasing pressure
with fierce price wars and new technology like voice over
Internet calls threatening the traditional business model.
Analysts said growth at Deutsche Telekom's T-Mobile unit was
mainly driven by its U.S. division and that the numbers from
Germany showed that its home market appeared to be saturated.
One analyst also said that developments in Deutsche
Telekom's broadband business, whose main success is in
re-selling Internet access to other service providers, was
"worrying".
"The numbers are okay and there are no negative surprises,
but there are certain problems," said Per-Ola Hellgren, analyst
at Landesbank Rheinland-Pfalz. "This may be a first sign that
things may develop differently than Telekom have expected."
Deutsche Telekom shares were 1.5 percent lower at 13.38
euros at 0709 GMT, the third biggest loser on the German
blue-chip index <.DAX>, which was flat.
HVB cut its rating on the telecoms group to "neutral" from
"outperformer".
EARNINGS IN LINE
Deutsche Telekom's adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA) rose to 5 billion euros
($6.4 billion), which was roughly in line with a forecast of
4.98 billion euros given by analysts polled by Reuters.
Sales in the first three months of the year rose 3.9 percent
to 14.8 billion euros, below an expected 15.02 billion euros.
First-quarter results were boosted by T-Mobile, which saw
adjusted core earnings increase 8.5 percent to 2.280 billion
euros, just below the average of analysts' forecasts of 2.375
billion euros.
T-Mobile won 1.035 million new subscribers in the United
States, 379,000 in Britain and 284,000 in Germany. Overall the
number of mobile customers increased 1.2 percent in the quarter
to 87.7 million.
T-Mobile USA, which has proven the strongest part of
T-Mobile in terms of growth, saw its core earnings rise 52
percent to 917 million, beating the average of analysts'
forecasts of 878 million euros.
Deutsche Telekom said it was confirming its overall outlook
for the group this year. It expects core earnings this year of
up to 20.7 billion euros and sales of up to 62.7 billion euros.
But the group slightly reduced its forecast for broadband
and fixed-line sales.
"They have lowered guidance and it seems we have to wait
longer before things are going to change," Hellgren said.
Hellgren said one quarter's results should not be used to
draw any conclusions, but he added that the lack of progress in
broadband was a concern, because Deutsche Telekom's future
vision is based on Internet business.
To help boost its competitiveness, Deutsche Telekom plans to
invest 10 billion euros in new technology. This includes
starting to build a new super-fast broadband network with speeds
high enough to carry high-definition TV.
Deutsche Telekom is valued at 12.5 times 2007 forecast
earnings, according to Reuters Estimates. This is less than
Dutch rival KPN <KPN.AS> which is valued at a multiple of 14,
but more than Spain's Telefonica <TEF.MC> at around 11.