Europe: First quarter profits fall at major European telecoms

Deutsche Telekom is paying the price for T-Mobile US’s success. U.S. expenditures were blamed for the decline in Deutsche Telekom’s earnings this quarter. The Bonn, Germany-based carrier posted a 3.9% decline in core profit, falling to $5.62 billion, even as net revenues rose 8%. DT attributed the decline to the heavy investments it has been making in the U.S. market where it competes with AT&T Mobility and Verizon Wireless under the T-Mobile US brand. The carrier is leading the way in subscriber growth, adding about 1.3 million in the first quarter alone.
DT was not the only European carrier to report lower profits this quarter. Over the past week, major European carriers Telecom Italia, Telefónica and Austria Telekom also posted lower profits for the quarter.
Telecom Italia’s earnings before interest, taxes, depreciation and amortization dropped 8.4% to $3.02 billion and sales decreased 12% to $8.09 billion. The Milan, Italy-based carrier faced tough competition on its home turf and its Brazilian operations were impacted by the country’s weak currency. However, Telecom Italia said it expects a gradual earnings recovery over the year.
Falling demand in Spain and currency problems in Latin America hurt Telefónica during the first quarter. The Madrid-based carrier reported a 14% decline in earnings for the first quarter of this year. Sales fell to $16.73 billion.
Telekom Austria, a relatively small player, posted a 5% drop in first-quarter earnings. Like some of its colleagues on the continent, lower sales in its home market were partly to blame. EBITDA dropped to $438.71 million and revenue declined 7%.
Telekom Austria, which is now partly-owned by América Móvil, recently announced plans to create one of the world’s largest fiber networks. Through a partnership between Telekom Austria and América Móvil, the companies aim to create a joint footprint with 200 points-of-presence within 47 countries.
More telecom news from Europe:
Deadline extended for Telefónica’s acquisition of KPN’s German Unit. European Union antitrust regulators have pushed back the decision date on Telefónica ‘s plan to buy KPN’s German unit, E-Plus, for $11.8 billion. The new deadline is June 26.
Orange will complain about Numericable/SFR merger. According to the Financial Times, the leading French telecom plans to complain to regulators about tax and regulatory implications posed by Numericable’s acquisition of SFR, the country’s No. 2 telecom provider.
 
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