While the majority of the relief and the headlines surrounding Deutsche Telekom’s successful quarter will be about taking the pressure off its mobile arm T-Mobile, last quarter Deutsche Telekom showed extraordinary market strength in its T-Home division, especially with its Entertain IPTV service, and it has repeated that success.
Although last quarter Deutsche didn’t give out exact numbers it said that it increased its installed base by 27%, and given that it had 500,000 customers by January that was a leap of around 135,000 to 635,000
Now it is on 721,000, so perhaps it has grown its customer base by a more modest 86,000 this quarter, but in the current economic climate that’s probably acceptable and keeps Deutsche on track for 1 million Entertain customers by year end, always its target, and when it announced it, one we confess we never thought was possible.
For the company as a whole, after last quarter’s worrying performances and cost drains in the US, UK and Poland, Deutsche’s comments mostly featured the return to decent performance levels at all three. But for the long term viability at home, and its ability to offer Quad play service, the IPTV numbers are important.
Overall Deutsche Telekom increased net revenue by 7.4% to €16.2 billion and net profit grew by 19.4% year-on-year to €0.8 billion.
The packet of measures initiated in April for the US, UK and Poland is beginning to take effect and operating costs fell and margin rose in all three countries compared with the first quarter. ‘We took resolute action at the right time in a difficult environment. The figures for the second quarter make us confident for the full year. Hence, we confirm our forecast for 2009,’ said Chairman of the Board of Management Ren’ Obermann.
A decrease in free cash flow compared with the €3.6 billion generated in the first half of 2008 was due to an increase in capex, something Deutsche Telekom has been resolute in continuing throughout the recession, investing 13% more than in the prior-year period. In the US this meant expanding mobile coverage and in Germany filling blank spots in DSL coverage. In Germany broadband numbers are up to 14.5 million after one of its most productive broadband quarters ever, while pushing up broadband margins and increasing market share to 59%.
Fixed telephony line losses in the German home market were down to 473,000 in the second quarter, 175,000 down from the prior-year quarter and the lowest level since the end of 2005. Deutsche said that around 40% percent of these resulted not from competition, but from a switch of DSL resale customers to a new all-IP platform.
T-Mobile grew to over 150 million mobile customers 8 million up on last year. However revenues for its mobile arm were down in Germany by 2.2% and margin also fell.
Deutsche’s recent investment in the Cosmote companies contributed revenue of €1.2 billion from Greece, Bulgaria, Romania, and Albania, growing faster in mobile customers than anywhere else in the Group.