German telecommunications firm Deutsche Telekom AG (DTE.DE, DTEGY.PK) Thursday said it expects to report lower earnings for 2012, after posting a wider loss for the fourth quarter, hurt by writedowns for T-Mobile USA and its Greek business. The company results also reflected continued intense competition in many markets, a difficult economic environment and negative impact of regulatory decisions on planned sale of T-Mobile USA.
René Obermann, chief executive officer said, "In 2011, the Company operated in a challenging environment in every respect, a situation that is not going to change this year. Our capacity for innovation, cost discipline, and readiness for change are vital assets as we prepare to master these challenges in 2012, too."
For the 2012, Deutsche Telekom projects adjusted EBITDA of nearly 18 billion euros and free cash flow of around 6 billion euros, taking into account higher expenses in the US for the move into the LTE era. For the full year 2011, adjusted EBITDA was 18.69 billion euros and free cash flow was 6.4 billion euros, including negative exchange rate effects.
In the fourth quarter, the company's net loss widened to 1.34 billion euros from 514 million euros last year. On an adjusted basis, net loss was 92 million euros, compared to a net profit of 758 million euros in the prior year.
EBITDA, a key earnings measure, increased to 7.27 billion euros from 3.38 billion euros in the preceding year. Adjusted EBITDA was 4.61 billion euros, higher than 4.55 billion euros in the year-ago quarter.
The company noted that the positive impact of the compensation received from AT&T totaling around 2.3 billion euros and the right to the transfer of spectrum licenses at a fair value of nearly 0.9 billion euros following the termination of the agreement to sell T-Mobile USA was hence more than offset.
In December, Deutsche Telekom and AT&T had terminated their agreement on the sale of T-Mobile USA, a subsidiary of Deutsche Telekom. Under the terms of the agreement, Deutsche Telekom received $3 billion in cash from AT&T as well as valuable mobile spectrum.
Deutsche Telekom's net revenues for the quarter decreased 3.7 percent to 14.91 billion euros from 15.48 billion euros in the same quarter last year. Domestic revenues declined 5.2 percent and international revenues were down 2.4 percent from last year.
In Germany operating segment, net revenues dropped 5.5 percent and Europe operating segment saw a total revenue decline of 3.6 percent. The US operating segment reported a revenue decrease of 2.4 percent.
The company also said its board will propose to the shareholders' meeting on May 24, a stable dividend of 70 euro cents per share for the 2011 financial year, corresponding to a payout rate of 47 percent of free cash flow.
T-Mobile USA posted a drop in fourth-quarter earnings to $1.28 billion from last year's $1.34 billion, hurt by costs related to the AT&T transaction. Total revenues for the period declined to $5.18 billion from $5.36 billion, with sharply wider net customer losses of 526 thousand compared to the loss of 23 thousand customers in fourth-quarter 2010.
The company said T-Mobile USA will begin offering services based on new mobile communications standard LTE (Long-Term Evolution) in 2013.
In Frankfurt's Xetra, Deutsche Telekom shares are currently trading at 8.81 euros, down 1.73 percent.
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