Deutsche Telekom Expands Services To Tap New Revenue Streams
18 March 2010 - 12:33AM
Dow Jones News
Deutsche Telekom AG (DT) said Wednesday it wants to offset
declining revenue in existing businesses such as fixed-line by
expanding its data offerings, a move that will allow a return to
organic growth in the mid-term.
Mobile Internet, broadband offers, Web hosting, data solutions
as well as new services like smart grids could generate up to an
additional EUR13 billion in sales by 2015, Chief Executive Officer
Rene Obermann said ahead of the company's investor days Wednesday
and Thursday.
Obermann said that, with the strategy, Deutsche Telekom wants
"to return to the growth path by 2012, not by acquisitions but
through organic growth."
Germany's incumbent telecom provider also said it wants to
increase the profitability of its struggling U.S. operations, once
its growth engine, through an increase in mobile data revenue.
Telekom posted higher sales and operating profit in 2009, but
this was attributable only to the first-time consolidation of
Hellenic Telecommunications Organization SA (OTE).
With stable investment in its German core market totaling EUR10
billion over the next three years, Deutsche Telekom aims to meet
the need for broader and faster data networks. Telekom's capital
expenditure in Germany in 2009 was EUR3.16 billion.
To compete with cable network providers like Kabel Deutschland
AG, which is about to float, Deutsche Telekom wants to connect the
home networks of 10% of German households with fiber networks,
providing higher bandwidth.
It also wants to supersede Sky Deutschland AG (SKYD.XE) as the
leading provider of paid premium TV content. It targets doubling
its current 2.9 million TV customers in Germany and South Eastern
Europe.
Overall sales in its German core market for broadband and
mobile, which declined in recent years through a loss in fixed
lines, should stabilize by 2012, the company said.
In 2008, Telekom said it wants to stabilize its German broadband
and fixed line sales by 2010, but shuffled its company structure in
2009 to combine fixed and mobile operations in the German market,
its biggest market by far.
Obermann also confirmed Telekom's financial targets for
2010.
The Bonn-based company targets free cash flow of EUR6.2 billion
in 2010, which should rise by 2012.
The companyr also wants to improve its return on capital
employed, or ROCE.
In the struggling U.S. market, T-Mobile USA wants to raise its
operating margin based on service revenue to above 35% by 2012 from
31.2% in 2009. Obermann said that T-Mobile USA, which invested $3.5
billion last year in upgrading its networks, could benefit from
higher data revenue in the future.
The European Commission earlier this month cleared the joint
venture between Deutsche Telekom's T-Mobile and France Telecom's
(FTE) Orange in the U.K., creating the biggest mobile network
provider in one of the most competitive markets in Europe. As a
result of the transaction, 2010 earnings before interest, taxes,
depreciation and amortization, or Ebitda, will come in lower after
the deconsolidation of T-Mobile in the U.K. Including T-Mobile UK,
Telekom has forecast an Ebitda of around EUR20 billion.
Company Web site: www.telekom.de
-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218,
archibald.preuschat@dowjones.com
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