Deutsche Telekom Q2 EBITDA AL Climbs, Lifts FY20 View; Stock Up

Shares of Deutsche Telekom AG were gaining around 2 percent in the morning trade in Germany as the telecom giant raised fiscal 2020 outlook following the integration of newly acquired Sprint in the United States, along with significant growth in second-quarter EBIT and EBITDA AL, the key earnings metrics. Meanwhile, the second-quarter net profit declined from last year.

For fiscal 2020, adjusted EBITDA AL is now expected to come in at approximately 34 billion euros, higher than previously expected 25.5 billion euros.

Including the business combination of T-Mobile US and Sprint concluded on April 1, the company expects the new, larger United States operating segment to generate adjusted EBITDA AL of around $22 billion in 2020 financial year, compared with the original forecast of $13.0 billion.

The company further said, “Indications suggest that the severe economic downturn seen in the first half of 2020 will be followed by gradual recovery in the second half of the year. However, if measures such as smart distancing do not succeed in keeping the rate of new infections to a minimum …, then a sustained period of weakness is to be expected.”

For the second quarter, net profit declined 20.1 percent to 754 million euros from last year’s 944 million euros. Earnings per share were 0.16 euro, down 20 percent from 0.20 euro a year ago.

Adjusted net profit was 1.28 billion euros, compared to 1.33 billion euros last year. Adjusted earnings per share were 0.27 euro, compared to 0.28 euro a year ago.

Profit from operations or EBIT, however, climbed 31.4 percent from last year to 3.09 billion euros, and EBITDA grew 49.6 percent to 10.03 billion euros.

EBITDA AL climbed 50.1 percent from last year to 8.59 billion euros. Adjusted EBITDA AL went up 56.4 percent to 9.8 billion euros. Adjusted EBITDA AL margin improved to 36.3 percent from 32.0 percent last year.

Net revenue for the quarter grew 37.5 percent to 27.04 billion euros from last year’s 19.66 billion euros a year ago after inclusion of Sprint.

Revenues from Germany edged up 1.1 percent, while United States revenues surged 76 percent with the business combination of T-Mobile US and Sprint. The “all-new,” larger T-Mobile US now has almost 100 million customers.

Meanwhile, revenues in Europe fell 4.5 percent.

In the quarter, Mobile customers climbed 31.1 percent to 235.8 million, while fixed-network lines dropped 2.2 percent to 27.3 million. Broadband customers were 21.3 million, up 2.9 percent.

In Germany, Deutsche Telekom shares were trading at 15.44 euros, up 2.01 percent.

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