- 4th quarter: International business improved, growing demand for cloud services and systems integration
- 2011: Focus remains on quality and efficiency along with growth
T-Systems saw continued revenue growth and a clear improvement in earnings in the fourth quarter. Total revenue increased by 3.8 percent year-on-year, 9 percent of which was driven by international business. Revenue generated outside the Group climbed by almost 6 percent, primarily due to increased demand for cloud services and growth in the systems integration business. Total revenue increased by 2.9 percent year-on-year to EUR 9.1 billion in 2010. Revenue generated within the Group decreased by 2.5 percent to EUR 2.6 billion. As a service provider for the Deutsche Telekom Group, T‑Systems plays a key role in optimizing IT costs. T-Systems was able to more than offset this decrease with an increase of 5.4 percent in external revenues over the full year. The increase in adjusted EBIT reflects the significant improvement in profitability, almost doubling to EUR 137 million in the fourth quarter. In 2010, EBIT grew by more than 45 percent compared with 2009. This success is once again based on the Save for Service efficiency enhancement program and the optimized use of assets. The adjusted EBIT margin stood at 3.7 percent for the full year. In the fourth quarter, it rose to 5.5 percent. Adjusted EBITDA increased to EUR 948 million in 2010, a margin of 10.5 percent. In the fourth quarter of 2010, the margin rose to 12.1 percent. Systems Solutions operating segment*:
Comments on the table: a Non-core activities and consolidation. This press release contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These also include statements on market potential, statements on finance guidance, as well as on the dividend outlook. They are generally identified by the terms "expect," "anticipate," "believe," "intend," "estimate," "aim for," "goal," "plan," "will," "strive for," "outlook," or similar expressions and often include information that relates to net revenue expectations or targets for adjusted EBITDA, profit or loss, earnings performance, and other indicators, as well as personnel-related measures and workforce adjustments. Forward-looking statements are based on current plans, estimates, and projections. 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, including those described in the sections "Forward-Looking Statements" and "Risk Factors" of the Company's Form 20-F annual report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom's workforce reduction initiative, the restructuring of operating activities in Germany, and the impact of other significant strategic or business initiatives, including acquisitions, dispositions, business combinations, and cost reduction measures. In addition, regulatory decisions, stronger than expected competition, technological change, litigation, and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. Furthermore, changes in the economic and business environments - for example, the current economic slump - in markets where we, our subsidiaries, and affiliates operate, the enduring instability and volatility on the global financial markets, as well as exchange rate and interest rate fluctuations can also adversely affect our business development and the availability of capital at favorable terms. 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 can offer no assurance that its expectations or targets will be met. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance to a GAAP measure because it would require unreasonable effort to do so. As a rule, Deutsche Telekom does not predict the net effect of future special factors due to their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can have a significant effect on Deutsche Telekom's results. In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents non-GAAP financial performance measures, including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBT, adjusted net profit, 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. For further information relevant to the interpretation of these terms, please refer to the chapter "Reconciliation of pro forma figures" posted on Deutsche Telekom's website (www.telekom.com) under the link "Investor Relations."
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. On this basis, Deutsche Telekom's corporate customers arm provides integrated solutions for the networked future of business and society. Some 47,600 employees at T-Systems combine industry expertise with ICT innovations to add significant value to customers' core business all over the world. The corporate customers unit generated revenue of around EUR 9.1 billion in the 2010 financial year.