Deutsche Telekom AG — Earnings Release 2004

May 13, 2004

News Details

Ad-hoc | 13 May 2004 06:32

Elaborations on ad-hoc announcement of Deutsche Telekom, part 3 and end

Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Elaborations on ad-hoc announcement of Deutsche Telekom, part 3 and end end of ad-hoc-announcement (c)DGAP 13.05.2004 Issuer’s information/explanatory remarks concerning this ad-hoc-announcement: Elaborations on ad-hoc announcement of Deutsche Telekom, part 3 and end Adjusted results from ordinary business activities, an expression of the development of operationg results, increased from EUR 66 million to EUR 415 million. In addition to the improvement in adjusted EBITDA, lower levels of depreciation and amortization resulting from reduced capital expenditures made a major contribution to the strong increase. Adjusted net income doubled from EUR 113 million in the first quarter of 2003 to EUR 227 million, even though the figure for the first quarter of 2004 includes an accrual for contingent losses of around EUR 148 million for potential negative effects from the Toll Collect project. This accrual is a consequence of the revised project plan implemented by the new management in the first quarter of 2004, which led to a change in the project budget. Including special factors, net income in the first quarter of this year amounted to EUR 169 million, compared with EUR 853 million in the same period last year. This decrease is mainly due to the drop in other operating income and the non-recurrence of a positive tax effect resulting from T-Mobile’s change in legal form from a stock corporation to a partnership in 2003. Free cash flow before dividend payments increased considerably by EUR 0.9 billion year-on-year to EUR 2.9 billion in the first quarter of 2004. This growth is attributable in particular to an improvement of around EUR 1.3 billion in cash generated from operations, the causes of which include refunded income tax of balanced EUR 0.4 billion. Net debt decreased further in the first quarter of this year, after debt reduction targets had already been exceeded at the end of 2003. Net debt amounted to EUR 44.6 billion at the end of March 2004. This represents a decrease of around EUR 2.0 billion since the end of 2003 and a reduction of around EUR 11.7 billion compared with the level at the end of the first quarter of 2003. Deutsche Telekom expects to achieve its target for adjusted Group EBITDA of at least EUR 19.2 billion for the full 2004 financial year. Of this amount, T-Com is expected to account for EUR 10.7 billion, compared with EUR 10.4 in 2003. An increase in adjusted EBITDA from EUR 6.7 billion to EUR 7.8 billion is planned for T-Mobile. T-Systems is scheduled to make an EBITDA contribution of EUR 1.5 billion, compared with EUR 1.4 billion in 2003. T-Online plans a further increase in EBITDA from approximately EUR 0.3 billion to around EUR 0.4 billion. Group Headquarters and Shared Services is expected to generate negative EBITDA of EUR 0.9 billion. The difference of around EUR 0.3 billion between the total of the individual figures and the planned figure for adjusted EBITDA for the Group as a whole is accounted for by the reconciliation. The development of capital expenditures and free cash flow also remains in line with expectations. Around EUR 7 billion has been earmarked for capital expenditures, with the possibility of increasing this figure by up to EUR 1.5 billion if potential investments will increase the value of the Group. Free cash flow is scheduled to total at least EUR 6 billion. Subsequent to this ad hoc notification, Deutsche Telekom will publish a detailed press release which also includes comments on the development within the individual divisions of the Group. The press release is available on the Internet at www.telekom.de. This notification contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed on them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including those described in the sections “Forward-Looking Statements” and “Risk Factors” of the Form 20-F submitted to the U.S. Securities and Exchange Commission. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account. In addition to the figures shown in accordance with German GAAP, Deutsche Telekom also shows so-called pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and free cash flow. These pro forma financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with German GAAP. For a definition of these pro forma figures, please refer to the explanations under “Reconciliation to pro forma figures” on Deutsche Telekom’s Investor Relations website at http://www.deutschetelekom.com ——————————————————————————– WKN: 555750; ISIN: DE0005557508; Index: DAX, EURO STOXX 50 Listed: Amtlicher Markt in Berlin-Bremen, Düsseldorf, Frankfurt (Prime Standard), Hamburg, Hannover, München und Stuttgart; EUREX; London; Amsterdam; NASDAQ Europe; Virtex; New York (ADR); Tokio 130632 Mai 04