Deutsche Telekom posts mixed results and remains unsure over Trump and Brexit

Billy Bambrough
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Trump could be good news for some mergers and acquisitions in the US
Trump could be good news for some mergers and acquisitions in the US (Source: Getty)

Europe’s largest telcoms group Deutsche Telekom has posted a six per cent uptick in revenues for its third quarter, beating expectations.

Deutsche Telekom – which now controls a 12 per cent stake in BT following the sale of its EE joint venture – saw shares track lower on the results however.

The numbers

Group revenues grew by 5.9 per cent to €18.1bn (£14.5bn), with sales in its home market Germany decreasing slightly to €5.5bn.

The US T-Mobile brought in €8.2bn, a 17.3 per cent year-on-year increase.

The European region on the whole, excluding Germany, increased by 1.2 per cent to €3.2bn.

Revenue was broadly strong than had been anticipated better than the 1.8 per cent drop rival Telefonica Deutschland had reported last month.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 7.2 per cent to €5.54bn, just above a Reuters average estimate poll of €5.49bn.

Free cash flow up 45.6 per cent to €1.9bn, against expectations of €450m.

Why it's interesting

Like every company, investors want to know what effect the shock Donald Trump victory will have on the company.

In an analyst call following the results DT said it was too early to tell how Trump might affect its merger and acquisition deals.

Shares in T-Mobile US – which Deutsche Telekom owns almost 65 per cent – hit a record high yesterday as investors weighed the chances Trump might be more likely to wave through some mergers.

Read more: These are Donald Trump's policies on tax, trade deals, China and M&A

Analysts at Exane BNP said T-Mobile USA could once again be the subject of takeover speculation following the US election result. The Trump victory has raised hopes of a long-awaited deal with US mobile challenger Sprint.

A deal to merger the two was blocked by regulators over two years ago.

"It is just far too early to speculate what the new administration would look like," said chief executive Tim Hoettges on the analyst call.

Meanwhile, Deutsche Telekom still isn't happy about the UK's vote to quit the European Union and couldn't help but make mention of it.

The company isn't too concerned as things stand but is monitoring the situation and wants to see Brexit come off "in an orderly fashion".

In its statement accompanying the results it said:

The uncertainty arising from the aftermath of the UK referendum should only have a marginal impact on economic growth in Europe in 2017 if the exit from the European Union proceeds in an orderly fashion.

The vote of the British people to leave the European Union and the political implementation of this decision, coupled with the danger that other countries may also seek to leave the European Union, could have a negative impact on economic development in Europe in particular, and, consequently, on the global economy.

Read more: Do Donald Trump's policies add up?

What the company said

The message from the company is that it's still on track

it said in a statement:

Still on track for growth. The financial figures for the first nine months of 2016 are still in line with the annual forecast and the medium-term financial outlook.

In short

Deutsche Telekom seems to have had a positive year so far.

A more competitive and demanding market in Europe is being countered with efficiency and productivity measure.

Questions around the future of T-Mobile USA will continue to swirl.

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