Deutsche Telekom Swung to Full-Year Loss After Buying VoiceStream
BERLIN -- Deutsche Telekom AG said Tuesday that it posted a net loss last year after buying unprofitable U.S. wireless operator VoiceStream Wireless (VSTR - news) Corp., and investing in third-generation wireless services.
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Germany 's dominant phone company had a net loss of 3.5 billion euros ($3.04 billion) in 2001, its first annual loss since going public nearly six years ago -- compared with a profit of 5.9 billion euros in 2000. Analysts surveyed by Dow Jones had predicted a loss of two billion euros.
The company is burdened by a mountain of debt, a slowdown in growth and uncertainty over its U.S. mobile operation.
The loss would have been greater if Deutsche Telekom (DT) hadn't booked gains on asset sales, including stakes in U.S. operator Sprint Corp. (NYSE: FON - news) (FON, PCS) and a regional cable-television unit. Excluding one-time items, the loss was 4.7 billion euros, in line with analysts' expectations.
Chief Executive Ron Sommer spent 33 billion euros on VoiceStream, which was included in the accounts as of June. Excluding goodwill charges, the inclusion of Bellevue, Wash. -based VoiceStream cost Deutsche Telekom 1.9 billion euros last year.
Europe's largest phone company said sales rose 18% to 48.3 billion euros from 40.9 billion euros.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, climbed 17% to 15.1 billion euros from 12.9 billion euros, boosted by the wireless unit T-Mobile International AG.
T-Mobile's Ebitda more than doubled to 3.1 billion euros from 1.4 billion euros. VoiceStream contributed a loss of 300 million euros in the period.
Bonn-based Deutsche Telekom said net debt totaled 62.1 billion euros at the end of 2001, slightly better than forecasts, and compared with 65.2 billion euros at the end of the third quarter. Many analysts are skeptical that Deutsche Telekom will manage to meet its goal of reducing debt to 50 billion euros by the end of this year.
The reduction of debt during the fourth quarter mainly resulted from tax refunds, proceeds from an asset-backed securities transaction and the sale of real estate.
The total financial expense in 2001 was 5.3 billion euros, compared with 1.2 billion euros in 2000. The figure includes interest payments on Deutsche Telekom's debt pile and a 300 million euro write-down on the company's stake in France Telecom SA (FTE).
Depreciation and amortization totaled 15.2 billion euros last year, after 13 billion euros in 2000.
Deutsche Telekom took charges to write down the value of third-generation wireless licenses, license amortization for VoiceStream, amortization of goodwill on brand names as part of the rebranding of the wireless units in Europe, and to revalue its property portfolio.
Deutsche Telekom and its European peers, including France Telecom SA and Britain's BT Group PLC, are still struggling to overcome the enormous debts that resulted from their investment in third-generation mobile networks. Concern over that debt, coupled with slower growth in the sector, has pressured share prices this year.
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