Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Deutsche Telekom AG - Interim Group report - January 1 to March 31, 2011

41Interim Group management report Total revenue. Total revenue in our Systems Solutions operating segment in the first quarter of the financial year amounted to EUR 2.3 billion, a year-on-year increase of 6.1 percent. This positive development is the result of the numerous contracts T-Systems concluded, e.g., with DekaBank, Deutsche Post DHL and E.ON, this year and in the prior year. The new deals offset the general negative price trend in IT and communications. Revenue generated with Deutsche Telekom’s other operating segments amounted to EUR 0.6 billion in the reporting period, an increase of 7.5 percent. As a service provider for the Group, T-Systems continues to develop Deutsche Telekom’s IT landscape on an ongoing basis. As part of this process, standardized systems contribute significantly to reducing the Group’s IT costs. Net revenue. T-Systems substantially expanded business with customers outside the Deutsche Telekom Group, reflecting the success of T-Systems’ new growth course. The operating segment generated net revenue of EUR 1.6 billion, 5.5 percent more than in the prior-year period. On the one hand, this positive development is attributable to Computing & Desktop Services. Many customers are already opting for so-called cloud services, which is how we already provide approximately 90 percent of SAP services for our customers. This development is complemented by growth of 11.9 percent within Systems Integration, in par- ticular at Application Management & Development. In the intensely contested telecommunications business, the agreement entered into with E.ON provides further positive impetus. EBITDA, adjusted EBITDA. In the reporting period, the Systems Solutions operating segment generated EBITDA of EUR 0.1 billion. The 11.3 percent decline compared with the same period of 2010 is attributable, among other things, to increased start-up ex- penses for new contracts. Savings generated by the comprehensive restructur- ing and efficiency enhancement program Save for Service did not fully offset the rise in costs. Compared with the prior-year period, EBITDA was negatively affected by an increase in special factors, mainly arising from restructuring measures, such as nearshoring and offshoring as well as staff restructuring outside Germany. Adjusted EBITDA therefore declined more slowly, by 3.6 per- cent, to EUR 0.2 billion in the first quarter of 2011. EBIT, adjusted EBIT. Adjusted EBIT is EUR 18 million lower than in the prior-year period. This de- crease is due to, among other factors, higher depreciation and amortization expense resulting from capital expenditure to expand the business in 2010. In addition, the extension of the economic useful lives of some assets, such as high-performance servers, had had a positive impact in the prior-year quarter. There was no equivalent to this effect in the first quarter of 2011, a situation which was only partially compensated for by Save for Service, the comprehen- sive restructuring and efficiency-enhancement program. The adjusted EBIT margin decreased from 2.2 percent in the first quarter of 2010 to 1.3 percent in the reporting period. Cash capex. At EUR 0.1 billion, cash capex in the reporting period was below the prior- year level. Although investments in new contracts and customer relationships continued, above all the build-out of the dynamic computing platform did not match the intensity it had reached in the previous year. The positive impact of efficiency enhancement measures, such as the increasing standardization of the ICT platform, is also contributing to the reduction in capital expenditure. Employees. Average headcount grew by 745 in the first quarter of 2011 to 48,191, a year- on-year increase of 1.6 percent. The average number of employees in Germany increased by 263 or 1.0 percent to 25,341, internationally by 482 or 2.2 percent. This is largely attributable to business developments at Systems Integration and the build-up of nearshore and offshore sites. Measures taken to cut costs partially offset this increase.