Deutsche Telekom AG (DT) reduced its net loss in the fourth quarter as restructuring measures took hold but posted a full-year record loss.
Europe's largest telecommunications company reported a preliminary fourth-quarter net loss of €100 million (US$105 million as of Dec. 31, 2002, the last day of the period being reported) compared with a loss of €2.5 billion for the same period of 2001, the company said Monday in a statement.
DT will publish the audited annual report in mid-April, said Kai-Uwe Ricke, speaking at a press conference here ahead of the CeBIT trade show, which opens its doors to IT professionals on Wednesday.
Fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITA) rose 15 percent to €4.4 billion from €3.8 billion in the same period last year, the company said. Revenue also increased to €14.5 billion in the latest quarter from €13.3 billion in the year-earlier period.
But full-year net loss in 2002 rose to €24.6 billion from €3.5 billion recorded for 2001, DT said. The full-year net loss, which experts believe to be the largest in German corporate history, was attributed largely to non-scheduled write-downs of €21.4 billion, the company said.
At the end of the fourth quarter, DT's net debt was €61.1 billion, down from €64.3 billion at the end of the third quarter. The debt reduction was attributable in large part to the sale of assets, including various real estate holdings and 120 million shares of T-Online International AG, and improved free cash flow, said DT's Chief Financial Officer (CFO) Karl-Gerhard Eick.
The German operator scaled down investments by around 30 percent to €7.9 billion, according to Eick.
CEO Ricke said he was "encouraged" by the earlier results of the group's debt-reduction initiatives.
Mobile communications continued to be a strong revenue generator. T-Mobile International AG saw revenue increase 35 percent to €19.7 billion. For the full year, the mobile operator's EBITDA rose 61 percent to €5.0 billion.
In Germany, T-Mobile Deutschland GmbH increased its customer base by 1.5 million to 24.6 million in 2002. The number of subscribers served by T-Mobile majority shareholdings increased to 53.9 million from 46.7 million last year. The total number of subscribers served by consolidated companies and minority shareholdings of the Deutsche Telekom group, including mobile communications holdings not held by T-Mobile, increased 22 percent to 81.7 million.
Looking ahead, Ricke said the goals are clear: "debt reduction and yield-oriented growth." For 2003, the group has embarked on a new program, called "6 plus 6," he said. The program targets €6 billion from the sale of non-strategic affiliates and another €6 billion from the free cash flow of the operational business.
DT has been cutting around 10,000 jobs annually for the past couple of years and will continue to reduce its workforce "in this manner in the years to come," Ricke said. The group's fixed-line operations, called T-Com, will be particularly affected, he said.
Asked whether a possible war with Iraq is having any influence on DT's business in the U.S. and elsewhere, Ricke said the group "is feeling no impact."
The group's focus on cutting cost, Ricke said, has no affect on its roll-out of 3G (third-generation) mobile broadband services. "We're on schedule for launching service in Europe," he said.
As for new wireless LAN (WLAN) technology becoming a threat to 3G, Ricke said DT has a foot in both camps. "We don't see WLAN as substitute for 3G but as a service that supplements 3G and that is how we're positioning it."