Deutsche Telekom Lifts FY21 Earnings View As Q2 Profit Surges; Stock Up


Shares of Deutsche Telekom were gaining around 3 percent in German trading after the telecom major reported Thursday significantly higher second-quarter profit, despite weak revenues. The company also raised its fiscal 2021 earnings view.

For the full year 2021, the company now expects adjusted EBITDA after leases of more than 37.2 billion euros. Adjusted EBITDA AL was originally expected to increase to over 37.0 billion euros.

Deutsche Telekom said the outlook revision is largely attributable to stronger-than-expected business performance in the United States operating segment, where it now anticipates adjusted EBITDA AL of around $26.1 billion, up from the most recent guidance of $25.9 billion.

The company continues to expect operations outside of the United States to generate adjusted EBITDA AL of 14.4 billion euros.

Deutsche Telekom also expects the free cash flow AL to come in at over 8.0 billion euros, in line with its most recent raised guidance.

Regarding its medium-term strategy and the financial outlook, the company said its forecast for growth through to 2024 remains at a consistently high level. The company expects revenue to grow annually by 1 to 2 percent and adjusted EBITDA AL by 3 to 5 percent. Free cash flow AL is to reach more than 18 billion euros by 2024.

Further, Deutsche Telekom said its dividend is expected to rise to more than 1.75 euros by 2024 from the 2020 level of 1.20 euros.

The company said it plans to secure the majority stake in T-Mobile US by 2025 and benefit from the return of capital announced by the U.S. subsidiary.

Deutsche Telekom added that it will continue to strategically review its holding in T-Mobile Netherlands and its cell tower portfolio with an eye to leveraging value potential and strategic opportunities.

For the second quarter, net profit surged almost 150 percent to 1.88 billion euros from 754 million euros in the prior year. Earnings per share were 0.40 euro, up from 0.16 euro last year.

Adjusted net profit for the quarter grew to 2.11 billion euros from 1.28 billion euros in the prior year. Adjusted earning per share were 0.45 euros, compared to 0.27 euros last year.

Profit from operations or EBIT climbed 19.5 percent from last year to 3.69 billion euros, and EBITDA grew 4.4 percent to 10.47 billion euros.

EBITDA AL was 8.79 billion euros, up from 2.4 percent a year ago, and adjusted EBITDA AL fell 4.2 percent to 9.42 billion euros. Adjusted EBITDA AL margin declined to 35.4 percent from 36.3 percent a year ago.

Net revenue for the quarter was 26.59 billion euros, down 1.7 percent from 27.04 billion euros in the previous year. Organic revenue growth of 6.8 percent in the second quarter to 26.6 billion euros

Mobile customers grew 4.7 percent to 246.6 million, Fixed-network lines edged up 0.1 percent to 27.4 million, and the growth was 3.4 percent in Broadband customers to 22.1 million.

In Germany, Deutsche Telekom shares were trading at 18.37 euros, up 2.6 percent.

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