By Archibald Preuschat
(Adds detail, background.)
DUESSELDORF (MarketWatch) -- Deutsche Telekom AG /zigman2/quotes/213490072/composite DT +5.73% Thursday said it took a EUR1.8 billion write-down on its struggling U.K. operations as it swung to a first-quarter net loss.
It also amended its full-year outlook, which it had already revised down in a surprise profit warning last month, to account for the consolidation of Hellenic Telecommunications Organization SA .
Deutsche Telekom said its net loss in the quarter ended March 31 was EUR1.12 billion compared with a net profit of EUR924 million a year earlier. Deutsche Telekom's bottom line was hurt by the EUR1.8 billion impairment charge on the goodwill of its T-Mobile operations in the U.K.,for which it said it is reviewing all its options. Deutsche Telekom wrote down almost all of the EUR2.1 billion goodwill on its U.K. mobile operations.
Deutsche Telekom April 21 said its 2009 operating profit will fall short of expectations on weak mobile operations in the U.S., the U.K. and Poland, in particular.
The company said Thursday that it expects 2009 earnings before interest, tax, depreciation and amortization, or Ebitda, adjusted for exceptional items to be 2% to 4% below 2008's EUR19.5 billion level, but added that OTE will contribute an additional EUR2 billion to its 2009 adjusted Ebitda. Free cash flow including OTE is set to reach around EUR7 billion, to which OTE is expected to contribute EUR0.6 billion.
The Bonn-based company confirmed that including OTE its first quarter sales were up 6.2% on year to EUR15.9 billion while earnings before interest, taxes, deprecation and amortization, adjusted for special items, rose 2.7% to EUR4.81 billion.
Without OTE, however, adjusted Ebitda was down 5% to EUR4.5 billion on flat sales.
Deutsche Telekom was the first European integrated operator to lower its guidance due to adverse economic conditions, sending it shares lower at the time. France Telecom also late April said Ebitda fell and margins remained under pressure, but reiterated its full-year outlook.
BT Group PLC and Spain's Telefonica SA /zigman2/quotes/200416613/delayed ES:TEF +0.01% report next week.
Despite 6.8% year-on-year growth in its mobile customer base and a 9% increase in revenue, adjusted Ebitda was down 1.9%.
In the U.S., T-Mobile's key growth driver in the past, revenue growth slowed to just 4.1% while adjusted Ebitda was down 4.4% in dollar terms due to slower top-line growth and higher costs for sales, handset subsidies and investment in third generation networks.
T-Mobile's net additions in the first quarter, defined as new customers minus churn, were 68.4% down on year. In Germany, T-Mobile lost 118,000 customers and in the U.K. 111,000 customers in the January to March quarter.
Company Web site: www.telekom.de