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Q2 financial results

14 08 2003  
  • T-Mobile International records positive results from ordinary business activities for the first six months of 2003
  • Record half-year result: adjusted EBITDA of EUR 3.3 billion, EBITDA margin climbs to 30 percent
  • Strong revenue growth driven by higher subscriber and ARPU figures
  • Obermann: " Our strategy of sustained value growth is a complete success."
  • T-Mobile USA now with more than 10 million contract subscribers and an EBITDA margin of 25 percent in the second quarter
  • T-Mobile Deutschland: in undisputed first place in subscriber growth

T-Mobile International again recorded a strong growth in earnings in the second quarter of 2003. The total number of customers grew by 19 percent year-on-year, with Europe growing 14 percent, and the U.S.A. 43 percent. The group-wide share of contract subscribers is now approximately 
48 percent. Expressed in actual figures, the number of customers at 
T-Mobile International's majority-owned companies rose to 56.5 million, or by 9 million compared with June 30, 2002. T-Mobile further extended its market leadership in Germany, where its subscriber growth rate again outstripped that of all of its competitors in the second quarter.

Year-on-year revenue growth was also highly positive, with group revenue climbing by 19 percent to EUR 10.9 billion. Revenue growth in Europe was 17 percent, with a 23 percent hike recorded in the U.S.A. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for special factors rose by 27 percent year-on-year to 
EUR 3.3 billion, with the corresponding EBITDA margin further improving to 
30 percent. Special factors in the second quarter included the sale of 
15 percent of the shares of Russian mobile communications operator MTS for around EUR 500 million (of which EUR 352 million was recognized as income), plus an EUR 7 million addition to pension accruals (additional minimum liability). The results from ordinary business activities amounted
to a profit of EUR 398 million, compared with a loss of EUR 1.5 billion 
last year.

René Obermann, T-Mobile International's CEO, welcomed the highly encouraging second quarter results in the U.S.A.: " EBITDA growth there was a fantastic 150 percent, or 214 percent even in USD terms. This gives us the financial leeway to attract new customers again in the second half of the year." Management's strategy has paid off on both sides of the Atlantic: " Our absolute priority is and remains sustained value growth. In spite of, or perhaps even because of, the difficult economic environment, we are very pleased indeed with the second quarter results. We are increasing the number of our customers and their average T-Mobile revenue."

Thomas G. Winkler, T-Mobile International's CFO, also emphasized the good results: " Our focus in the first six months was to increase growth and earnings. EUR 1.7 billion revenue growth, a EUR 700 million year-on-year rise in EBITDA, and positive results from ordinary business activities all indicate that T-Mobile is developing well."

T-Mobile USA
T-Mobile USA closed the second quarter with 11.4 million customers, an increase of 606,000. Due to a deliberate reduction in customer acquisition costs in this quarter T-Mobile USA — after two consecutive quarters being number one in terms of customer growth on the U.S. mobile communications market — came in second in the second quarter of 2003. This has significantly boosted earnings. Revenue in the first half of the year rose by 23 percent year-on-year to EUR 3.4 billion, or by as much as 
52 percent expressed in U.S. dollars. T-Mobile USA recorded EBITDA of EUR 766 million in the first half of 2003, and EUR 443 million in the second quarter. The EBITDA margin in the second quarter was approximately 
25 percent. Average monthly revenue per customer (ARPU) rose by about USD 3 quarter-on-quarter to USD 50, while ARPU expressed in Euro remained unchanged on the first quarter at EUR 44. 

T-Mobile Germany
T-Mobile Germany smashed through the 25 million subscriber barrier in the second quarter of 2003. With 9 percent year-on-year growth to 25.3 million customers, the proportion of contract subscribers remained stable at around 47 percent. Six-month revenue rose by approximately EUR 370 million year-on-year to EUR 4.1 billion, and EBITDA grew by EUR 130 million to EUR 1.7 billion. At EUR 24, ARPU remained stable compared with the first six months of 2002. However, second quarter ARPU was down slightly on the second quarter of 2002, falling by 1 Euro to about EUR 24.

T-Mobile UK
Following the resizing of T-Mobile UK's customer base in the first quarter, the number of customers rose again slightly by 287,000 in the second quarter, producing a net increase of 54,000 customers for the first six months as a whole. This company now has a total of 12.5 million customers, a 13 percent increase over the same period last year. The number of subscribers in the UK includes Virgin customers. Contract customers account for around 19 percent of the total. Half-year revenue rose by 13 percent year-on-year to EUR 2.1 billion; the increase expressed in British Pound (GBP) was 25 percent. T-Mobile UK grew EBITDA by 
25 percent in this period to EUR 545 billion, or an impressive 38 percent in GBP terms. ARPU rose by GBP 3, from GBP 17 to GBP 20; expressed in Euro, however, there was only a EUR 1 increase in growth from EUR 28 to EUR 29 due to currency translation adjustments. T-Mobile UK expects, that a further clean up of it's prepaid customer base will take place in the second half of the year 2003.

T-Mobile Austria
T-Mobile Austria gained 6,000 new subscribers in the first half of 2003, increasing the total number of customers to 2.04 million. Year-on-year revenue rose by seven percent to EUR 532 million. EBITDA was stable at approximately EUR 170 million, but ARPU rose from EUR 29 to EUR 31.

T-Mobile Czech Republic
T-Mobile Czech Republic, which was renamed in May, increased 
subscriber numbers to slightly over 3.6 million at June 30. Year-on-year revenue grew by EUR 44 million to EUR 369 million, while EBITDA rose 
by EUR 24 million to produce a 47 percent EBITDA margin in the first half of 2003. ARPU remained stable year-on-year at EUR 15, although it grew by two percent expressed in local currency.

T-Mobile Netherlands
Following the rebranding of T-Mobile Netherlands in the first quarter of 2003, the company achieved an increase of EUR 5 in monthly ARPU in the second quarter. Second quarter ARPU was EUR 39, the highest of all T-Mobile's European companies. T-Mobile Netherlands also recorded a successful turnaround in its EBITDA in the second quarter: following an EBITDA loss of EUR 27 million, second quarter EBITDA was a positive EUR 33 million. The company acquired 254,000 new subscribers in the first six months of 2003.

Key figures of the T-Mobile Group (incl. consolidated subsidiaries) for the 1st half-year of 2003
(Financial figures of T-Mobile including consolidation effect, unaudited)

Key figures of the T-Mobile Group (incl. consolidated subsidiaries) for the 1st half-year of 2003
(Financial figures of T-Mobile including consolidation effect, unaudited)
Customers ('000) H1/03 H1/02 Delta Delta %
T-Mobile International 56,540 47,533 9,007 18.9
T-Mobile Germany 25,258 23,262 1,996 8.6
T-Mobile UK 1) 12,500 11,099 1,401 12.6
T-Mobile Austria 2,042 1,995 47 2.4
T-Mobile Czech Republic 3,607 3,150 457 14.5
T-Mobile Netherlands 1,690 n.a. n.a. n.a.
T-Mobile USA 11,443 8,027 3,416 42.6
Sales (Mio. Euro) H1/03 H1/02 Delta Delta %
T-Mobile International 10,867 9,140 1,727 18.9
T-Mobile Germany 4,089 3,721 368 9.9
T-Mobile UK 2,096 1,849 247 13.4
T-Mobile Austria 532 497 35 7.0
T-Mobile Czech Republic 369 325 44 13.5
T-Mobile Netherlands 401 n.a. n.a. n.a.
T-Mobile USA 3,449 2,796 653 23.4
EBITDA (Mio. Euro)2) H1/03 H1/02 Delta Delta %
T-Mobile International 3,602 2,559 1,043 40.7
T-Mobile Germany 1,688 1,555 133 8.6
T-Mobile UK 545 436 109 25
T-Mobile Austria 169 170 -1 -0.6
T-Mobile Czech Republic 174 151 23 15.2
T-Mobile Netherlands 6 n.a. n.a. n.a.
T-Mobile USA 766 282 484 171.6
ARPU (Euro)3) H1/03 H1/02 Delta Delta %
T-Mobile Germany 24 24 0 0
T-Mobile UK 29 28 1 3.6
T-Mobile Austria 31 29 2 6.9
T-Mobile Czech Republic 15 15 0 0
T-Mobile Netherlands 37 n.a. n.a. n.a.
T-Mobile USA 44 51 -7 -13.7
SACs per gross add (Euro) H1/03 H1/02 Delta Delta %
T-Mobile Germany 101 93 8 8.6
T-Mobile UK 141 146 -5 -3.4
T-Mobile Austria 132 85 47 55.3
T-Mobile Czech Republic 36 30 6 20.0
T-Mobile Netherlands 166 n.a. n.a. n.a.
T-Mobile USA 181 223 -42 -18.8
Blended Churn (in %) H1/03 H1/02 Delta Delta %
T-Mobile Germany 1.4 1.6 -0.2
T-Mobile UK 3.2 2.0 1.2
T-Mobile Austria 1.6 2.7 -1.1
T-Mobile Czech Republic 1.2 0.7 0.5
T-Mobile Netherlands 3.2 n.a. n.a. -
T-Mobile USA 3.0 4.3 -1.3
1) Including Virgin Mobile

2) EBITDA: Results from ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes.3) ARPU contains monthly service fee, as well as voice-, non-voice- and roaming revenues. In contrast to the reporting of some competitors, visitor revenues are not included.

In addition to the results prepared in accordance with German GAAP provided throughout this press release, Deutsche Telekom has presented non-GAAP financial measures, such as EBITDA, EBITDA adjusted, net debt, free cash flow and ARPU. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. To interpret these non-GAAP financial measures, please refer to the " Reconciliation to pro forma figures" . To view these and other reconciliations visit our 'Investor Relations' link under www.telekom.de

This press release contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Deutsche Telekom's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors detailed in Deutsche Telekom's report filed with the Securities and Exchange Commission (the " Commission" ). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release.

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