- Profitability boosted further
- External revenue virtually stable despite fierce competition
It is important to remember that mid-2012 Deutsche Telekom consolidated external business under T-Systems in what is known as the Market Unit and pooled all of the Group's internal IT departments in a separate unit called Telekom IT. The latter aims to save costs for the Group and provides internal IT services by billing only cost, no longer margins. The Market Unit is responsible worldwide for serving Deutsche Telekom's corporate customers and operates in accordance with the principles of revenue and margin growth.
The positive trend for T-Systems in the fourth quarter of 2012 is continuing. In the first quarter of 2013, Deutsche Telekom AG's Systems Solutions segment recorded strong order entry of EUR 2.1 billion, up 33 percent compared with the prior-year period. This was due to agreements with EADS and the Swiss National Railways (SBB) as well as numerous deals for cloud services.
In the area of intelligent networks, T-Systems concluded further strategically important agreements and partnerships. The Deutsche Telekom subsidiary is working with BMW and Sixt to bring hotspots to the car from this summer and, for Daimler, it is developing the communications infrastructure for online services in the car.
External revenues remained almost stable at EUR 1.6 billion in what was a difficult competitive environment characterized by price pressure. By contrast, in the Telekom IT unit, which comprises the Group's internal IT business in Germany, revenue fell as expected, falling to 25 percent below the prior-year level due to seasonal effects. The EBIT margin of the Market Unit, which manages Deutsche Telekom's corporate customers worldwide, increased from minus 0.7 percent in the prior year to 0.4 percent. This is the result of efficiency enhancement measures, as well as of improvements in numerous new agreements from the past year.
Systems Solutions operating segment*:
Comments on the table: As of January 1, 2013, Regional Services and Solutions (RSS) was relocated from the Systems Solutions operating segment to the Germany operating segment with the aim of combining the market approach.
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. They should therefore be considered 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.
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