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T-Systems increases revenues and order entry in the first quarter

  • Sales successes through Cloud Services, increasing international business
  • Due to expenditures for new contracts earnings below previous year
  • Progress in future business with intelligent networks

T‑Systems continued its growth course in the first quarter of 2011. Revenue from Systems Solutions increased by 6.1 percent year-on-year to EUR 2.3 billion. This was helped by international revenues, which climbed by 9.4 percent. In the same period, adjusted EBITDA declined by 3.6 percent to EUR 0.2 billion. At the same time, adjusted EBIT amounted to EUR 29 million, EUR 18 million below the prior-year figure; correspondingly, the adjusted EBIT margin decreased year-on-year from 2.2 percent to 1.3 percent. These weaker figures in the first quarter are largely the result of increased expenses relating in part to the major new contracts concluded last year. New business got off to a positive start in 2011. New orders increased by 20.3 percent compared with the first three months of 2010 to EUR 2.6 billion. This development was helped by the comprehensive outsourcing agreement with the UK mobile operator, Everything Everywhere. Once again, T-Systems made gains in the field of cloud computing, securing a deal with Shell to work with Microsoft to build a mega-cloud. This major contract runs for five years and will give Shell employees worldwide the ability to access communication services from the cloud. The future-oriented market for intelligent networks is starting to evolve. In the first quarter of 2011, T‑Systems concluded a new agreement in the energy business area with VOLTARIS on reading, transmitting, and processing energy data. The first signs of progress are also starting to show in the connected car and healthcare fields.

Systems Solutions operating segment*:

Q1 2011 millions of EURQ1 2010 millions of EURChange %FY 2010 millions of EUR
Total revenue 2,2602,1316.19,057
Of which: Computing Services7997506.53,128
Of which: Desktop Services335344(2.6)1,461
Of which: Systems Integration4664269.41,801
Of which: Telecommunications7717453.53,086
Of which: Other a(111)(134)17.2(419)
Net revenue1,6161,5325.56,411
New orders2,5932,15620.39,281
Profit (loss) from operations (EBIT)(11)18n.a.44
Adjusted EBIT2947(38.3)333
EBITDA149168(11.3)667
Adjusted EBITDA189196(3.6)948
Adjusted EBITDA margin8.4%9.2%(0.8)p10.5%
Number of employees (average)48,19147,4461.647,588

Comments on the table: a Non-core activities and consolidation. This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows, and personnel-related measures. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control. Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures, and the impact of other significant strategic, labor or business initiatives, including acquisitions, dispositions, business combinations, and our network upgrade and expansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings and regulatory developments, among other factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets and changes in interest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions. Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect our results at the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, our actual performance may materially differ from the performance expressed or implied by forward-looking statements. We can offer no assurance that our estimates or expectations will be achieved. Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. About Deutsche Telekom Deutsche Telekom is one of the world's leading integrated telecommunications companies with around 129 million mobile customers, approximately 36 million fixed-network lines and more than 16 million broadband lines (as of December 31, 2010). The Group provides products and services for the fixed network, mobile communications, the Internet and IPTV for consumers, and ICT solutions for business customers and corporate customers. Deutsche Telekom is present in over 50 countries and has around 247,000 employees worldwide. The Group generated revenues of EUR 62.4 billion in the 2010 financial year - more than half of it outside Germany (as of December 31, 2010). About T-Systems Drawing on a global infrastructure of data centers and networks, T-Systems operates information and communication technology (ICT) systems for multinational corporations and public sector institutions. T-Systems provides integrated solutions for the networked future of business and society. The company's some 47,600 employees combine industry expertise and ICT innovations to add significant value to customers’ core business all over the world. T-Systems generated revenue of around EUR 9.1 billion in the 2010 financial year.

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