TELECOM Digest OnLine - Sorted: Deutsche Telekom Loses 2.3 Million Fixed Line Users

Deutsche Telekom Loses 2.3 Million Fixed Line Users

Agence France Presse News Wire (afp@telecom-digest.org)
Sun, 28 Jan 2007 16:57:55 -0600

D-Telekom Loses 2.3 Million Fixed-Line Users and Lowers Outlook
BERLIN (AFP)

Germany's Deutsche Telekom, the biggest telecoms company in Europe,
lowered its 2007 earnings forecast after revealing it lost 2.3 million
fixed-line customers last year.

It said operating profit, as measured by earnings before interest,
tax, depreciation and amortisation (EBITDA), would be 19 billion euros
(24.5 billion dollars) compared with its previous prediction of
between 19.7 billion and 20.2 billion euros.

The group was revising expectations downwards "in accordance with the
extremely tough domestic competitive environment and the recent
development in foreign exchange rates", it said in a statement.

It is the second time in six months that it has been forced to lower
its outlook and reflects a problem faced by many former state
monopolies -- the steady degradation of their traditional base of
fixed-line customers.

Deutsche Telekom has long been losing fixed-line clients to low-cost
competitors, mobile operators and Internet-based systems such as
Skype, but the 2006 figures confirm the trend with 2.3 people million
jumping ship.

The group could count on 41.2 million fixed-line and Internet
customers in late 2005, but just one year later the figure was 38.96
million.

Deutsche Telekom said its fixed-line sector, called T-Com, "will
continue to play an active role in the expected continued tough
pricing competition".

New service and marketing initiatives were being introduced to bolster
the business and pre-tax earnings for the sector will therefore be
slashed by 800 million euros in 2007 compared with previous forecasts.

The traditionally buoyant mobile phone unit, T-Mobile, will suffer
from foreign exchange developments, the company said, prompting it to
cut its pre-tax earnings predictions by 200 million euros.

T-Mobile signed up 8.6 million new customers last year, taking its
total customer numbers in Europe and the United States to 106.4
million.

However the US arm of the business will see its profits hit by the
current strength of the euro.

Revenue was expected to be "moderate" and dividends to shareholders
would be 0.72 euros per share for 2006, the same level as in 2005.

Official figures for 2006 will be published on March 1.

The shift in technological challenges within the sector prompted
Deutsche Telekom to name Rene Obermann, the former head of its mobile
phone division, as chief executive to replace Kai-Uwe Ricke last
November.

But soon after his appointment, Obermann warned he could not "work
miracles" in the face of intense competition.

Copyright 2007, AFP.

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