Deutsche Telekom’s Q2 profits hit by legal settlement

International revenues represented 67.6% of Deutsche Telekom’s quarterly revenues

German telecom group Deutsche Telekom posted a net profit of 495 million euros ($567 million) in the second quarter of the year, down 43.4% compare to 874 million euros in Q2 2017 due to a one-time expense, the company said in its earnings statement.

This decline was mainly due to the accounting effects of the settlement reached in the Toll Collect arbitration proceedings, which had a negative impact of 600 million euros on net profit. The legal wrangling in that case, revolving around Germany’s truck toll system  — which Deutsche Telekom owns a significant stake in — had dragged on for 14 years, Bloomberg reported.

The group’s overall revenue amounted to 18.3 billion euros in Q2, down 2.8% year-on-year.

Revenues from operations outside Germany totaled 67.6% of the group’s overall revenue in the period.

The company’s EBITDA reached 5.55 billion euros in the period, down 7.2% compared to 5.94 billion in the same quarter the previous year.

“The trends in Germany and the United States are positive. At our European subsidiaries, we are again posting sustained growth,” said Thomas Dannenfeldt, CFO of Deutsche Telekom. The German group operates in the U.S. market through its subsidiary T-Mobile US.

In Germany, Deutsche Telekom has installed 1,000 new mobile sites into operation over the last twelve months in order to close remaining gaps in coverage. The telco said that 74% of households in Germany with a fixed line now have access to fiber-optic-based products (FTTH, VDSL/vectoring), compared with 67% a year ago.

Deutsche Telekom ended June with a total of 43 million mobile subscribers in Germany, climbing 2.4% year-on-year.

In Europe (excluding Germany), Deutsche Telekom had 49.88 million mobile subscribers at end-Q2, up 4.6% year-on-year.

In the U.S. market, T-Mobile US ended the period with 75.6 million subscribers in the mobile segment, up 8.7% year-on-year.

“T-Mobile US maintained its top position in the U.S. mobile communications market, especially as regards key financial indicators like growth in service revenues and net customer additions. Business continued to boom after the announcement in early May of the planned merger with competitor Sprint,” the telco said.

In May, Deutsche Telekom announced the deployment of the first 5G antennas to test the technology in downtown Berlin. The antennas, which are based on 5G New Radio (5G NR), allowed Deutsche Telekom to demonstrate what it claims to be Europe’s first 5G data connection over a live network. The telco said that it is currently in process to deploy a 5G cluster in Berlin.

The first six commercial antennas are now installed in sites in Berlin’s Mitte and Schöneberg districts for test operations. The telco said that an additional 70 cells are to be installed in the coming months, across a total of more than 20 sites.

Claudia Nemat, Deutsche Telekom board member for technology and innovation, previously said that the carrier aims to launch 5G in 2020. During the 2018 Mobile World Congress, Nemat told reporters that Deutsche Telekom was on track to launch 5G commercial trials in Europe during 2018.

Nemat highlighted that Deutsche Telekom is currently upgrading its mobile antennas in Germany and several other markets across its footprint in preparation for the future launch of 5G technology.

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