Deutsche Telekom Posts $3B Loss
By STEPHEN GRAHAM
Associated Press Writer
German Phone Giant Deutsche Telekom Posts $3 Billion Loss in 2001
BERLIN (AP) -- Deutsche Telekom lost $3 billion last year after buying unprofitable U.S. wireless operator VoiceStream and investing heavily in mobile phone services, Europe's biggest phone company said Tuesday.
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The company reported a loss of 3.5 billion euros in 2001 in contrast to a profit of 5.9 billion euros in 2000 boosted by asset sales.
Last year's loss would have been larger if it hadn't continued the asset selloff, shedding stakes in U.S. operator Sprint Corp. (NYSE:FON - news) and a regional cable television unit.
Telekom completed the 34 billion euro acquisition of VoiceStream last June, crowning an expensive drive to transform the former German state monopoly into a global phone giant. The resulting debt has been worsened by the cost of licenses to provide the latest mobile phone services.
Its push into North America and across Europe helped sales rise 18 percent to 48.3 billion euros ($42 billion) in 2001, Bonn-based Telekom said in its preliminary earnings report.
Excluding interest, taxes, depreciation, amortization and a host of one-time factors, profit climbed 17 percent to 15.1 billion euros ($13.1 billion), boosted by the wireless unit T-Mobile International.
But those gains were outweighed by losses at VoiceStream, rising charges to write off goodwill from its acquisitions and for interest payments on its debt pile. It also wrote down the value of third-generation wireless licenses and its property holdings.
Its net interest payment rose to 4.1 billion euros ($3.6 billion) from 3.1 billion euros.
Analysts had been expecting a smaller loss, and shares in Telekom fell 1.2 percent to 16.83 euros ($14.60) by early afternoon on the Frankfurt exchange. The stock has shed almost half its value since last April.
Telekom's statement provided neither fourth-quarter figures nor an outlook for 2002, but underlined its strategy of expanding in "promising" sectors such as wireless and Internet communications.
Subscribers to its mobile services jumped 27 percent to 48.9 million last year, including a 21 percent increase in Germany, its main market. The company also tripled the number of subscribers in Germany for its DSL high-speed connections to 2.2 million.
Telekom hopes that improving prospects for T-Mobile will persuade investors to snap up shares in the unit in an initial public offering expected later this year.
If the IPO goes forward, the proceeds would help Telekom cut net debt that totaled 62.1 billion euros ($54 billion) at the end of 2001, down from 65.2 billion euros at the end of the third quarter.
However, many analysts are skeptical that the company will meet its goal of reducing debt to 50 billion euros by the end of 2002.
In a setback last month, Germany's antitrust regulator blocked Telekom's plan to sell six regional cable television networks to U.S. cable entrepreneur John Malone's Liberty Media for 5.5 billion euros ($4.8 billion).
Telekom is seeking a new buyer and a British investment group has expressed interest. It also plans to sell real estate to reduce its borrowings.
Telekom's final 2001 earnings are to be published April 23 in the company's annual report.
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