- New reporting logic: Internal IT in Germany bills merely costs, no longer margins.
- Reduced internal revenues put pressure on overall revenue.
- Adjusted EBIT and adjusted EBIT margin have increased.
In the third quarter of 2012, T-Systems used a new reporting logic for the first time. All internal IT activities in Germany, which had previously been distributed across the Germany, GHS, and T-Systems segments, were pooled within the Systems Solutions operating segment in the Telekom IT unit. As a milestone on the road to an efficient IT function, Telekom IT was launched as a cost center without margin charging as of July 1 of this year. This has a particularly substantial impact on earnings, since earnings attributable to revenues generated within the Group are eliminated. For better comparability, the prior-year figures were adjusted accordingly. External revenues in the Systems Solutions operating segment increased by 0.8 percent in the third quarter to EUR 1.6 billion. Revenue development is negatively impacted by persistently high competitive and price pressure in the industry. As far as internal revenues are concerned, T-Systems aims to scale back Telekom IT revenue for the long term because this type of income translates directly into IT costs for the Deutsche Telekom Group. Seasonal effects in the project business and cost-cutting measures meant that Telekom IT's revenues decreased substantially. Total revenue in the Systems Solutions segment decreased by 10.7 percent in the third quarter to EUR 2.2 billion. The segment's adjusted EBIT margin stood at 1.2 percent in the past quarter, compared with -0.1 percent on a like-for-like basis in the third quarter of 2011. For the first nine months of 2012, this profitability indicator amounted to 0.6 percent, compared with -0.4 percent between January and September 2011. Order entry declined by 5.8 percent compared with the prior-year quarter to EUR 1.6 billion.This reflects the ongoing trend towards smaller, cloud-based deals where the calculation of volumes is based on minimum purchase quantities. Contracts signed with the Catalan government, the chemicals company Clariant, and the oil company BP were some of the largest deals in the third quarter of 2012.
Systems Solutions operating segment*:
Comment on the table: As of July 1, 2012, Deutsche Telekom reorganized the Group's IT infrastructure and pooled the existing units from the Germany operating segment and Group Headquarters & Shared Services into the Systems Solution operating segment as the new Telekom IT unit. The prior-year figures have been adjusted for better comparability.
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