Deutsche Telekom reports net losses due to falling EU demand
The Bonn-based firm’s net profits dropped to $797 million last year, down from $2.1 billion in 2010.
Deutsche Telekom, Europe’s biggest telecommunications firm, reported fourth quarter net losses of $1.7 billion on Thursday, with losses in Europe wiping out gains made in a cash payment for its collapsed T-Mobile USA deal.
The Bonn-based firm’s net profits dropped to $797 million last year, down from $2.1 billion in 2010, the BBC reported. Its shares fell as much as 1.1 percent to €8.87 in Frankfurt morning trading today.
Deutsche Telekom’s bid to sell its US mobile network T-Mobile USA to AT&T for $39 billion last year was blocked by regulators, but a resulting $3 billion payout failed to compensate for a drop in demand in Europe due to the euro zone debt crisis.
The deal’s collapse was a significant setback for the company, which wanted to wind up its push into the US market, launched in 2000 with the $53 billion purchase of VoiceStream, according to the Agence France Presse.
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T-Mobile USA ceded 802,000 contact customers in the three months to the end of December, due to rivals starting to offer Apple’s iPhone 4S, and requires additional investments by Deutsche Telekom over the next two years before the introduction of faster wireless Internet services, according to Bloomberg.
Deutsche Telekom lost 295,000 landline subscribers in Germany in 2011, and is struggling to prop up profit as the firm’s eastern European units in Poland and the Czech Republic lose customers.
The company now aims to invest heavily in next-generation LTE mobile networks and relaunch the T-Mobile brand, though this will probably hurt earnings in 2012, with operating profit this year expected to fall by 3.7 percent around $24 billion.