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T-Mobile UK Q3 Financial Results

London, 11th November 2004

Customer base now over 15 million. EBITDA margin at 34.8% 

  • 308,000 net new customers in third quarter
  • Total customers up 23% to 15.2 million year on year
  • Adjusted EBITDA up 42% to £258 million
  • Adjusted EBITDA margin up 10.8 percentage points to 34.8%
  • Non-voice revenues 17% of ARPU
  • T-Mobile extends its industry leads in Wi-Fi
  • UK HotSpots tripled through BT partnership
  • Launch of Office in Your Pocket.TM business services
  • Strong Christmas offer and focus on music phones

London, Thursday 11 August, 2004: As part of Deutsche Telekom’s publication of its financial results for Q3 2004, T-Mobile UK today announced its results, showing a continuing strong growth in customers and profitability. 

Brian McBride, Managing Director of T-Mobile UK, said:

“T-Mobile’s growth momentum in the UK continues. During the quarter we’ve brought over 300,000 net new customers onto our network, bringing our total customer base, including Virgin Mobile, to over 15 million, 23% up on a year ago.  

“We have accompanied this with quarterly EBITDA of £258 million up 42% year on year and an EBITDA margin growth of almost 11 percentage points to 34.8%. 

“The reduction in revenues and ARPU in the quarter reflects the 35% reduction in mobile call termination charges under the new regulatory regime introduced in September. It is notable that, despite this, quarterly revenues were higher than in the second quarter and average ARPU dropped only £2 year on year.  

“We are now clearly seeing the start of a major up-lift in mobile data for business customers.  Our own business connections are up 130% this year to date.  

“T-Mobile is now putting the internet in your pocket, and this will have an increasingly transformational impact on how, when and where business is done.  It’s one reason we place such a focus on Wi-Fi as well as 3G, and this month we have extended our global Wi-Fi leadership, tripling our UK HotSpot network through partnering with BT. We have also launched a complete suite of business services under our Office in Your Pocket.TM banner.  This include Wi-Fi / GSM devices and our Wi-Fi / 3G / 2 ½ G data cards.  They literally enable you to take your office with you wherever you go and, quite apart from their impact on business efficiency, they enable a greater control over work/life balance. 

“Looking ahead, we see a strong mobile Christmas but predominantly not a 3G Christmas.  We will have T-Mobile 3G phones; but Christmas will remain largely [2G and] 2 ½ G and will maintain its traditional pre-pay focus. Our Christmas offer includes half price line rental and free texts.  In addition, we will benefit from our exclusive promotion of the Motorola E398, combining an MP3 player with a camera phone, and ideally suited to the growing interest in downloading, storing and playing music on the move.” 

Financial Results Overview

(unaudited)

 

GBP

 

Euros

 

Q2/04

Q3/04

Q3/03

% y.o.y.

 

Q2/04

Q3/04

Q3/03

% y.o.y

Net revenues (million)

739

744

761

-2.2%

 

1,108

1,106

1,090

1.5%

Adjusted EBITDA (million)

243¹

258

182

41.8%

 

365¹

384

260

47.7%

Adjusted EBITDA margin

32.9%

34.8%

23.9%

10.8%p

 

32.9%

34.8%

23.9%

10.8%p

SAC

91

72

100

-28.0%

 

136

107

143

-25.2%

 - contract

193

144

237

-39.2%

 

289

214

339

-36.9%

 - prepay

26

23

26

-11.5%

 

39

35

37

-5.4%

ARPU

21

20

22

-9.1%

 

31

30

31

-3.2%

 - contract

46

45

45

0.0%

 

69

67

64

4.7%

 - pre-pay

11

11

13

-15.4%

 

17

16

19

-15.8%

Non-Voice % of ARPU

17%

17%

16%

1%p

 

17%

17%

16%

1%p

Capex (million)

60

68

51

33.3%

 

91

100

72

38.9%

 

 

1) Special Factor affecting EBITDA: Subsequent proceeds from sale of Virgin Mobile EUR 75 million/ GBP 50 million.

 

  

Million

Q2/04

Q3/04

Q3/03

% y.o.y

Subscribers¹ (end of period) million

14,899

15,207

12,386

22.8%

 - contract

2,858

2,940

2,523

16.5%

 - pre-pay¹

12,041

12,267

9,863

24.4%

Net adds¹ ‘000

496

308

-113

n.a.

 - contract

114

83

123

-32.5%

 - prepay¹

382

225

-236

n.a.

Average monthly churn

1.9%

2.5%

4.2%

-1.7%p

 

1) Including Virgin Mobile

 T-Mobile UK has had another strong quarter, with 308,000 net customer additions and our total customer base, including Virgin Mobile, up almost 23% since the same period last year and our focus on quality customers reflected in a net 83,000 increase in contract customers.

 Revenues held steady, despite the impact of the new regulatory call termination charge reduction; but quarterly adjusted EBITDA was up 42% to £258 million with an adjusted EBITDA margin up almost 11 percentage points to 34.8%.

 Contract ARPU dropped from £46 to £45 per month since Q2, again reflecting the new termination rate regime, and non voice revenues were 17% of ARPU.

 T-Mobile leads the mobile industry in Wi-Fi, with approximately 10,500 HotSpots across the group, of which 6,600 are wholly owned and 3,900 are derived from roaming agreements such as those with BT in the UK or Deutsche Telekom in Germany. The number of T-Mobile WiFi HotSpot locations across the UK is now tripled to 1,900 with the recent BT Openzone tie-up.

 - ends - 

For more information, please contact: 

Elaine Devereux:                        Tel: + 44 (0) 20 8762 5046
                                                T-Mobile: + 44 (0) 7950 396 249
 
Anthony Carlisle                        Tel:+44 (0) 20 7282 1048
T-Mobile: +44 (0) 7973 611888
 
Laure Lagrange:                         Tel: +44 (0) 20 7282 8001
T-Mobile: +44 (0) 7768 698731

 About T-Mobile International

T-Mobile International is one of the world’s leading companies in mobile communications. As one of Deutsche Telekom`s three strategic divisions, T-Mobile concentrates on the most dynamic markets in Europe and the United States. By Q3 of 2004, almost 109 million people were using the mobile communications services provided by companies in which T-Mobile or Deutsche Telekom have a majority or minority stake. And all that over a common technology platform based on GSM, the world’s most successful digital wireless standard. This also makes T-Mobile the only mobile communications provider with a seamless transatlantic service. 

T-Mobile also is partner of FreeMove, an alliance formed by four of Europe’s leading mobile companies - Orange, Telefónica Móviles, TIM (Telecom Italia Mobile) and T-Mobile – to help their customers communicate as easily while travelling abroad as they do at home. 

For more information about T-Mobile International, please visit www.t-mobile.net

 This press release contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed on them. 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 Form 20-F/A submitted to the U.S. Securities and Exchange Commission on June 27, 2003. 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 does not assume any obligation to update forward-looking statements to take new information or future events into account.  

In addition to the figures shown in accordance with German GAAP, Deutsche Telekom also shows so-called pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and free cash flow. These pro forma financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with German GAAP. For a definition of these pro forma figures, please refer to the explanations under "Reconciliation to pro forma figures" in the Group Report on the third quarter of 2003 and Deutsche Telekom's Investor Relations website at https://www.telekom.de.

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