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Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2011

27Interim Group management report Development of operations. Q1 2011 millions of € Q2 2011 millions of € Q3 2011 millions of € Q3 2010 millions of € Change % Q1 – Q3 2011 millions of € Q1 – Q3 2010 millions of € Change % FY 2010 millions of € Total revenuea 5,991 5,989 6,004 6,317 (5.0) 17,984 18,703 (3.8) 25,145 Consumers 3,118 3,147 3,159 3,330 (5.1) 9,424 9,826 (4.1) 13,109 Business Customers 1,414 1,390 1,401 1,414 (0.9) 4,205 4,197 0.2 5,661 Wholesale 1,066 1,062 1,048 1,142 (8.2) 3,176 3,387 (6.2) 4,553 Digital Services 177 179 177 202 (12.4) 533 607 (12.2) 866 Value-Added Services 107 101 103 116 (11.2) 311 365 (14.8) 498 Other 109 110 116 113 2.7 335 321 4.4 458 Profit from operations (EBIT) 1,248 850 1,357 1,370 (0.9) 3,455 3,868 (10.7) 4,916 EBIT margin % 20.8 14.2 22.6 21.7 19.2 20.7 19.6 Depreciation, amortization and impairment losses (1,067) (1,101) (1,115) (1,035) (7.7) (3,283) (3,079) (6.6) (4,193) EBITDA 2,315 1,951 2,472 2,405 2.8 6,738 6,947 (3.0) 9,109 Special factors affecting EBITDA (69) (488) (18) (118) 84.7 (575) (313) (83.7) (509) EBITDA (adjusted for special factors) 2,384 2,439 2,490 2,523 (1.3) 7,313 7,260 0.7 9,618 EBITDA margin (adjusted for special factors) % 39.7 40.7 41.5 39.9 40.6 38.8 38.3 Cash capexb (815) (811) (979) (862) (13.6) (2,605) (3,587) 27.4 (4,765) Average number of employees 76,598 76,065 75,994 79,318 (4.2) 76,219 79,925 (4.6) 79,364 a As part of the One Company initiative, we have aligned our business structure even more closely with the needs of customers. From the first quarter of 2011, we have reported revenue for the consolidated customer segments within the Germany operating segment. The prior-year figures have been adjusted for better comparability. b The prior-year figures have been adjusted to reflect the change in the reporting of the acquisition of LTE licenses (spectrum). Total revenue. Total revenue in the first three quarters of 2011 amounted to EUR 18.0 billion. The 3.8-percent decline year-on-year was mainly attributable to the downward trend in voice telephony, both in mobile business (due to the cut in termination rates) and fixed-network business. Adjusted for the price effect of regulatory decisions – mainly the reduction in termination rates from December 2010 and the decrease in interconnection rates in July 2011 – and the discontinuation of trade with mobile prepaid cards of other carriers, which was stopped as part of the measures for value-driven growth, we reduced the year-on-year decline in our revenue to 2.3 percent. Management’s intensified focus on high-value business development in the Germany operating segment resulted in a consis- tent increase of the EBITDA margin despite declining revenue. The decline in revenue was partially offset by growing demand for complete packages with mobile Internet and TV services, and the positive trend in smartphone revenue. Revenue from Consumers was down by 4.1 percent to EUR 9.4 billion. The decline was mainly attributable to continuing losses of fixed-network lines and a price effect from the reduction in mobile termination rates. New, favorable mobile rate plans including minute buckets for calls into third-party networks also contributed to the lower revenue. This revenue decrease was partially offset by 35.7-percent growth in TV revenue and 37.1-percent growth in mobile data revenue compared with the prior-year period. In the Business Customers area, total revenue increased in the first three quarters of 2011 by 0.2 percent to EUR 4.2 billion, despite the reduction in termination rates. Growth in mobile data and broadband revenue slightly more than offset the decline in revenue from voice telephony in the traditional fixed- network business. The 6.2-percent decline in revenue in the Wholesale area to EUR 3.2 billion was largely attributable to regulation-induced price cuts for digital leased lines, unbundled local loop lines and interconnection (as of July 1, 2011) and the reduced usage of interconnection. Volume growth in the sale of unbundled wholesale lines partially offset the revenue decline.