Deutsche Telekom AG — Earnings Release 1999

Jan 20, 2000

News Details

Ad-hoc | 20 January 2000 07:54

Ad hoc-Service: Deutsche Telekom AG englisch

Ad-hoc announcement sent by DGAP. The sender is solely responsible for the contents of this announcement. —————————————————————————— Ad hoc notification pursuant to paragraph 15 of the Security Trading Act (WpHG) Bonn, January 20, 2000 Deutsche Telekom Group Preliminary key figures for the 1999 financial year (January 1, 1999 to December 31, 1999) – The Board of Management will propose a dividend that remains unchanged at EUR 0.61 (DM 1.20). – Slight increase in revenue in 1999 to EUR 35.3 billion, despite steep tariff cuts, due to the booming growth areas and international acquisitions. – Net income declines due to reduction of profit margins in the fixed- network, amortization of goodwill and startup losses for acquisitions as well as the costs of the capital increase. – With 3.6 million new customers, T-Mobil leads in net growth in 1999. – T-Online doubled its new accounts growth in the fourth quarter to 200,000 per month. Deutsche Telekom AG announces a preliminary indication of the corporate group’s results for the entire 1999 financial year. Deutsche Telekom emphasizes that these results are only initial results on the basis of current information. Deviations may arise between these figures and the audited figures, which are to be published on April 19, 2000. Revenue and net income, January 1 to December 31 Billions of EUR 1999 financial year 1998 financial year Change Revenue 35.3 35.2* 0.3% Consolidated income 1.2 2.2 – 45% * Figure does not include revenues amounting to some EUR 524 million from billing services for competitors that were no longer recorded under revenue in 1999. Deutsche Telekom was able to maintain revenue at a constant level in the 1999 financial year compared to the previous year despite reductions in tariffs resulting in savings of more than EUR 3 billion for Deutsche Telekom’s customers. This was attributable to the continued boom in our growth areas mobile communications, online business, access and system solutions as well as our successful internationalization strategy. 1999 saw the first full consolidation of both the Austrian mobile carrier max.mobil as of January 1 with revenue amounting to approximately EUR 0.8 billion and the British mobile carrier One2One as of October 1 with revenue of approximately EUR 0.5 billion. Even if these acquisitions are not taken into account, the reduction in revenue is considerably less pronounced at approximately 3 % than anticipated at the beginning of the year. As repeatedly mentioned, it was not possible to compensate for the decline in profit margins linked to tariff cuts for telephone network communication. In addition, amortization of goodwill and startup losses incurred for the strategic investments in One2One (pro rata as of October 1) and max.mobil totaled approximately EUR 0.4 billion. Moreover, the costs of the capital increase in June 1999, which amounted to approximately EUR 0.2 billion, also need to be considered when comparing the figures to 1998. Hence, net income was approximately EUR 1 billion below the level of the previous year. As already mentioned in the last quarterly report, no broadband cable network assets were sold in the financial year just ended, and as a result there was no contribution to income. The Board of Management has nevertheless decided to propose paying a dividend that remains unchanged at EUR 0.61 (DM 1.20) per share. Employees and debt Dec. 31, 1999 Dec. 31, 1998 Change Change in % Personnel (excluding Matav / max.mobil/ One2One/others) 172,900 179,200 -6,300 -4 % Personnel (Group) 194,900 195,900 -1,000 -1 % Financial liabilities (excluding Matav/ max.mobil/One2One/ others) in billions of EUR 38.2 39,3 -1.1 -3 % Financial liabilities (Group) 42.4 39.9 2.5 +6 % On December 31,1999, the number of employees in the Deutsche Telekom Group (excluding Matav/max.mobil/One2One/others) had declined by approximately 4%, compared with the figure of the previous year, to approximately 172,900. The number of employees was thus reduced by approximately 6,300 in 1999 avoiding compulsory redundancies. This figure is lower than the figure for 1998, when decisions to leave the company were “accelerated” due to changes in tax policies for redundancy payments as of January 1, 1999. The number of employees declined by approximately 1,800 in the fourth quarter, which is higher than the average of the three previous quarters. Debts (excluding Matav/max.mobil/One2One/others) were approximately EUR 1.1 billion lower than on December 31, 1998. In the Deutsche Telekom Group (including Matav/max.mobil/One2One/others), debt now amounts to EUR 42.4 billion compared to EUR 39.9 billion (including Matav) on December 31, 1998. Liquid assets and marketable securities amounted to EUR 2.9 billion on December 31, 1999. The cash outflow of EUR 11.5 billion compared with September 30, 1999, was essentially attributable to the purchase price payment for One2One. Financial liabilities in the Deutsche Telekom Group increased by approximately EUR 3.9 billion compared with September 30, 1999. This increase was essentially attributable to the first full consolidation of One2One and the financing of the purchase price for the French fixed network operator Siris and the 35% stake in the Croatian Telekom. Customer trends for selected services in millions Dec. 31, Dec. 31, Change Change 1999 1998 in millions in %* Telephone lines 47.8 46.5 1.3 3% (incl. ISDNchannels) of which: total ISDN channels 13.3 10.1 3.2 32 % of which: residential customers 6.0 3.9 2.1 54 % business customers 7.3 6.2 1.1 18 % T-Online accounts 4.2 2.7 1.5 54 % Mobile telephony customers 9.2 5.8 3.4 58 % (T-D1 and T-C-Tel) of which: T-D1 9.1 5.5 3.6 65 % *Percentages on the basis of exact figures in thousands 1999 was a record year for subscriber figures in Deutsche Telekom’s growth areas. With approximately 3.6 million new customers for a total of 9.1 million, T-Mobil leads in net customer growth. In particular, this was attributable to the disproportionately large growth in the number of contract accounts compared to the same figures for competitors. At the end of 1999, Deutsche Telekom Group was serving just under 15 million customers in Europe through its majority-owned subsidiaries T-Mobil in Germany, One2One in the UK and max.mobil in Austria. In addition, there are the approximately five million mobile telephony customers of European joint ventures in Poland, Hungary, the Czech Republic, Russia, Italy and Ukraine. The number of short messages (SMS) for T-D1 alone rose to just under 300 million in December. T-Online was particularly successful in accelerating its rate of growth. While it recorded approximately 100,000 new customers (net) on average in the first nine months of the financial year just ended, this figure doubled to approximately 200,000 a month in the fourth quarter of 1999. The number of new ISDN customers is also steadily growing. There was a 32% increase in 1999, with it even being possible to increase the number of residential customers by 54% over the previous year. Deutsche Telekom thus has an ISDN penetration rate amounting to 28% of all telephone channels, which is without parallel in an international comparison. With the exception of historical information, the matters discussed in this release are forward-looking statements that involve risks identified in filings with the U.S. Securities and Exchange Commission. End of Message