Strengthens number two position in the Austrian market - agreed purchase price of €1.3 billion.
Deutsche Telekom AG announced today that its subsidiary T-Mobile Austria has entered into an agreement with Western Wireless International Austria Corporation, a subsidiary of Alltel Corporation, Little Rock USA, to acquire full control of the Austrian mobile communications operator tele.ring Telekom Service GmbH, Vienna. The transaction is subject to approval by the Austrian telecommunications regulator as well as the European Commission. The agreed purchase price is €1.3 billion. As part of the transaction, T-Mobile will acquire net operating losses with a net present value of approximately €150 million. T-Mobile estimates the net present value of synergies to be €300 million.
René Obermann, CEO of T-Mobile , welcomed the agreement with Western Wireless: "With 3 million combined customers, the market position of T-Mobile Austria will be significantly enhanced. The customers of tele.ring will maintain their existing tariffs. At the same time, they will benefit from our outstanding network quality. Going forward they will be able to use our attractive mobile services as part of a mobile community with 3 million members, compared to 1 million previously."
tele.ring is the fourth-largest mobile operator in Austria, with approximately 968,000 mobile customers as at 30 June, 2005, corresponding to a share of the Austrian mobile market of around 13 percent. In the second quarter of 2005 alone, tele.ring added 51,000 new subscribers. The company's proportion of contract customers of 77 percent is very high compared to the rest of the Austrian market, and its total customer base generates an average monthly revenue per user (blended ARPU) of €39, higher than the Austrian market average of approximately €35. During the first half of 2005, tele.ring generated revenues of €277 million and EBITDA of approximately €80 million. Total revenues in 2004 amounted to approximately €539 million, with an EBITDA of €122 million (compared to €25 million in 2003).
Through the acquisition of tele.ring, Deutsche Telekom strengthens its position in the competitive Austrian market. Deutsche Telekom has long had a strategic presence in the market with T-Mobile Austria, the second largest mobile operator, ending the first quarter of 2005 with approximately 2.04 million customers. T-Mobile Austria generated revenues of €882 million and EBITDA of €240 million in 2004.
With the acquisition of tele.ring, the number of mobile subscribers of the combined company will increase to more than 3 million. This represents a market share of around 38 percent. In addition to the improved subscriber market position and the substantial increase in revenues, Deutsche Telekom also expects significant EBITDA margin improvements, driven primarily by synergies with a net present value of approximately €300 million.
The acquisition will be financed from Deutsche Telekom's existing financial resources.
Fact sheet for the acquisition of the Austrian mobile operator tele.ring 1. Combination of T-Mobile Austria and tele.ring (pro forma):
Mobile customers: more than 3 million (1) - of which T-Mobile Austria: 2.04 million customers (1) (3)
- of which tele.ring: 968,000 customers (2)
Market share: approximately 38 percent (number 2)
- of which T-Mobile Austria: approximately 25 percent
- of which tele.ring: approximately 13 percent
Proportion contract customers: approximately 58 percent (1) - of which T-Mobile Austria: approximately 48 percent (1)
- of which tele.ring: approximately 77 percent (1)
Revenues: €1,421 million in FY-04 (4)
- of which T-Mobile Austria: €882 million in FY-04
- of which tele.ring: €539 million in FY-04
EBITDA: €362 million in FY-04 (4) - of which T-Mobile Austria: €240 million in FY-04
- of which tele.ring: €122 million in FY-04
(1) As at 31 March, 2005; (2) As at 30 June, 2005; (3) T-Mobile Austria information for H1 will be announced on August 11, 2005; (4) Sum of historic year-end financials
T-Mobile Austria numbers according to IFRS, tele.ring numbers according to Austrian Gaap
2. Reasonable Purchase Price
- €1.3 billion in cash; no debt transferred since tele.ring will be acquired debt-free
- tele.ring's accumulated net operating losses have a value to T-Mobile of approximately €150 million
- The synergies have a value to T-Mobile of approximately €300 million
3. Overview of tele.ring
- Since May 2000, tele.ring operates a GSM/GPRS mobile network in the 1,800 MHz band. The company was sold by Vodafone to the current seller Western Wireless International in 2001
- tele.ring commenced the construction of its UMTS network in 2003, and is working towards meeting the regulatory network population coverage requirements of 50 percent by the end of the current year
- tele.ring operates a 5,300 km fibre optic network. In addition to serving as a backbone for the mobile network, the fibre optic network also provides fixed line services to external customers
4. The Austrian Mobile Market
- 8 million population
- 98 percent market penetration
- 5 mobile operators with own networks: Telekom Austria (#1), T-Mobile (#2), One (#3), tele.ring (#4), 3 Hutchison (#5)
- 4 mobile operators without own networks (MVNOs)
This release contains forward-looking statements and forward-looking pro forma metrics ("expected EBITDA") 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 submitted to the U.S. Securities and Exchange Commission. 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 IFRS, 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 IFS. For a definition of these pro forma figures, please refer to the explanations under "Reconciliation to pro forma figures" on Deutsche Telekom's Investor Relations website at www.deutschetelekom.com.
This release contains financial information that has been prepared in accordance with International Financial Reporting Standards, or "IFRS," and on the basis of the new strategic business areas. The IFRS financial information contained in this report was prepared on the basis of the assumption that, with the exceptions of IAS 39 "Financial Instruments: Recognition and Measurement" and IFRIC 3 "Emission Rights," all existing standards and interpretations that have been issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) will be fully endorsed by the EU. The accounting policy for financial instruments takes into account the proposed EU revisions to IAS 39 and complies with the amended IAS 39. IFRIC 3 is not relevant for Deutsche Telekom. Subject to EU endorsement of outstanding standards and no further changes from the IASB, the information presented here is expected to form the basis for reporting Deutsche Telekom's financial results for 2005, and for subsequent reporting periods. However, Deutsche Telekom cannot assure you that there will not be material changes in IFRS between the date of this Interim Report and the first date on which Deutsche Telekom is required to publish financial statements for 2005, 2004 or 2003 under IFRS.