Deutsche Telekom revenue rises 13% on back of T-Mobile US growth

Deutsche Telekom posted a 13 per cent increase in revenue on the back of strong customer growth in the US.

Europe's largest telecoms operator by revenue beat analysts' expectations, with earnings increasing from €4.1bn to €4.6bn, excluding interest, tax, depreciation and amortisation.

Analysts polled by Reuters had forecast pre-tax earnings of €4.4bn. Revenues rose from €14.9bn to €16.8bn. 

The company benefited from the weakness of the euro.

It was also boosted by T-Mobile US, the fourth largest wireless carrier in the country and in which the German company has a majority stake, which gained a net 1.8m customers in the first quarter, taking its total to 56.8m.

Deutsche Telekom has pledged to return more cash to shareholders over the next four years as it expects growth of its US subsidiary to boost profits.

The company's optimism is an indication of growing confidence in a European telecoms sector that has suffered from recession and fierce price competition.

Timotheus Hottges, chief executive, said: "It has been some time since we have seen positive indications for revenue and earnings in our industry. Our clear strategy with strong investment is paying off."

T-Mobile US contributed 41 per cent of the group's net revenue in the last quarter, the single biggest contribution and an increase of 7 percentage points on the prior year. Germany remains the operating segment with the best profit margin.

Deutsche Telekom last year rejected a $15bn takeover offer from Iliad, the French telecoms group, for its US unit. Sprint, the third-biggest US wireless carrier which is owned by SoftBank of Japan, abandoned a takeover last year after failing to win over regulators.

In a note to clients, analysts at Berenberg bank warned that Deutsche Telekom's upbeat outlook depended on US competitors remaining "acquiescent".

"We increasingly find ourselves asking when was the last time two large incumbent mobile operators stood by and allowed a disrupter to take huge amounts of market share without eventually responding," they wrote.

Deutsche Telekom's net profit for the quarter fell by 56.7 per cent year-on-year to €787m. The relative decline was due to the company booking income from the sale of a stake in Scout24, the German classifieds portal, in the first quarter of 2014.

Shares in Deutsche Telekom were down more than 4 per cent to €15.94 this afternoon.

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