Ad hoc notification of Deutsche Telekom AG
- Net revenue increased by 5.4 percent year-on-year to EUR 41.3 billion at September 30, 2003.
- Net income up by EUR 26.1 billion to EUR 1.6 billion - adjusted for special factors, EUR 0.7 billion.
- Group EBITDA increased by 25.6 percent to EUR 14.3 billion.
- Adjusted EBITDA improved by 15.3 percent to EUR 13.8 billion.
- 6+6 program successfully completed ahead of schedule: Net debt reduced by EUR 15.1 billion year-on-year to EUR 49.2 billion at September 30, 2003.
- Free cash flow before dividend payment considerably increased to EUR 7.4 billion in the first nine months.
Overview of selected key figures (first nine months of 2003)
Third Quarter 2003
Selected key figures for the divisions
Group Headquarters &Shared Services
Deutsche Telekom increased its revenue in the first nine months of 2003 by 5.4 percent year-on-year to EUR 41.3 billion. Net income improved by EUR 26.1 billion to EUR 1.6 billion. This increase is mainly attributable to the positive development in results from ordinary business activities and the non-recurrence of the negative special factors implemented as a result of the strategic review last year, and improved Group EBITDA. Excluding special factors, the Group recorded net income of EUR 0.7 billion year-on-year with a net loss of EUR 4.2 billion. The double-digit improvement in Group EBITDA recorded earlier this year continued almost to the same extent in the third quarter of 2003, which led to an increase of EUR 2.9 billion in EBITDA for the first nine months to EUR 14.3 billion. Net debt decreased by a total of EUR 15.1 billion since the end of the third quarter of 2002 to EUR 49.2 billion at September 30, 2003. A reduction of almost EUR 12 billion has been achieved since the end of 2002. Deutsche Telekom's debt reduction target for the full 2003 financial year has thus been achieved ahead of schedule. The 6+6 program has therefore been completed. Free cash flow before dividend payments amounted to EUR 7.4 billion in the first nine months of 2003, approximately EUR 2.7 billion higher than in the same period last year. This increase of approximately 60 percent is mainly attributable to the increase in cash generated from operations and the reduction of approximately EUR 1.8 billion in investments in property, plant and equipment and intangible assets. With free cash flow before dividend payments totaling EUR 7.6 billion since September 30, 2002, the target set in November of last year (EUR 5.5 billion - EUR 6.0 billion) has been exceeded by far.
Deutsche Telekom now aims to generate adjusted EBITDA of approximately EUR 18.2 billion in 2003, as opposed to the previous guidance of EUR 16.7 to 17.7 billion. Adjusted EBITDA in the 2002 financial year amounted to EUR 16.3 billion. Total investments for the full 2003 year will not exceed EUR 7 billion. Deutsche Telekom expects to generate adjusted EBITDA of at least EUR 19.2 billion in the 2004 financial year. The 2004 guidance for the free cash flow is EUR 6 billion at least. Furthermore, Deutsche Telekom intends to increase its investments by approximately EUR 1.5 billion over the 2003 level.
Of the divisions, T-Com was once again the largest revenue driver and contributor to results in the Group in the third quarter. Nevertheless, the development of T-Com's revenue was influenced by regulatory, competitive and general economic factors and - adjusted to exclude the
revenue contribution of the cable companies in prior-year figures - was 1.8 percent lower than in the same period last year. Cumulative adjusted EBITDA increased by around 1 percent year-on-year to approximately EUR 7.7 billion as a result of cost savings and efficiency improvements.
Revenue in the mobile communications division increased by approximately 18 percent to almost EUR 16.8 billion in the first three quarters of 2003, compared with EUR 14.2 billion in the same period last year. This development reflects the positive effect of the continued growth in the number of customers and improvements in average revenue per user in several foreign companies, as well as the first-time consolidation of T-Mobile Netherlands since the fourth quarter of 2002.
Excluding T-Mobile Netherlands, total revenue increased year-on-year by more than 13 percent in the first three quarters of 2003. With a jump of 35.4 percent year-on-year to EUR 1.748 billion, T-Mobile had another record quarter with its adjusted EBITDA. T-Mobile Deutschland remained the main contributor to EBITDA with a year-on-year increase of 11.5 percent to EUR 953 million in the third quarter of 2003. Adjusted EBITDA increased from EUR 3.85 billion to approximately EUR 5 billion year-on-year in the first nine months.
Despite the difficult market environment, T-Systems succeeded in increasing its total revenue by around 1 percent year-on-year to more than EUR 7.7 billion in the first nine months of 2003. The sustained increase of 22 percent in adjusted EBITDA to approximately EUR 1 billion was a result mainly of the continued improvement in cost structures.
In the third quarter, the T-Online division again reported clear growth in total revenue. Revenues in the first nine months increased by more than 20 percent year-on-year to over EUR 1.3 billion. EBITDA (in accordance with German GAAP) increased year-on-year by 140 percent in the third quarter of 2003 to approximately EUR 84 million. EBITDA in the first nine months increased to EUR 260 million compared with EUR 50 million in the same period last year.
In the first nine months of 2003, Group Headquarters & Shared Services generated total revenue of EUR 3.2 billion, representing a slight increase of 1.5 percent year-on-year, primarily as a result of organizational changes in previous periods. Compared with the same period last year, EBITDA in the first nine months of 2003 was boosted in particular by special factors, such as income from the sale of shareholdings, transfer payments to Vivento, and the non-recurrence of the book losses on the sale of France Telecom shares.
This press release contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed on them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control, including those described in the sections "Forward-Looking Statements" and "Risk Factors" of the Form 20-F/A submitted to the U.S. Securities and Exchange Commission on June 27, 2003. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom's actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account.
In addition to the figures shown in accordance with German GAAP, Deutsche Telekom also shows so-called pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and free cash flow. These pro forma financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with German GAAP. For a definition of these pro forma figures, please refer to the explanations under "Reconciliation to pro forma figures" in the Group Report on the third quarter of 2003 and Deutsche Telekom's Investor Relations website at http://www.telekom.de.