- Non-captive business has grown - above all internationally
- Investments in quality lower margin
- Customer satisfaction reaches all-time high
T-Systems' business saw moderate growth in 2011. Total revenue increased slightly by 2.1 percent year-on-year to EUR 9.2 billion, with disproportionately high growth in external revenue ( 2.4 percent ) and in international revenue ( 4.2 percent ). At EUR 8.8 billion, order entry was down 4.9 percent year-on-year. This decline was partly due to T-Systems' decision in 2011 to prioritize quality assurance in existing contracts over acquiring new business. It also reflects an industry-wide trend away from big deals toward more cloud-based contracts. Cloud-based contracts are billed based on use and only stipulate a minimum purchase quantity; the actual order volume per corporate customer is usually significantly greater. The cost involved in quality assurance had an impact on earnings figures in 2011. Adjusted EBITDA declined 8.0 percent to EUR 0.9 billion . The adjusted EBIT margin for the full year was 2.7 percent , one percentage point under the 2010 figure. The adjusted EBIT margin recovered considerably in the fourth quarter compared with the prior quarter to 5.0 percent . This is attributable to high revenue in the fourth quarter due to seasonal effects with a high system utilization and virtually unchanged costs. In addition, the quality assurance measures have taken effect, leading to a historic high in terms of customer satisfaction. Systems Solutions operating segment*:
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.