Sprint Merger Pushes Up DT's Financial Report for 2Q20

In the second quarter of 2020, Deutsche Telekom had €27 billion revenue. It was 37.5 percent higher compared with the same period of 2019, due partly to the inclusion of results from acquired US operator Sprint.

Costs associated with integration in the US business contributed to the reduction of its profit by 20 percent to €754 million. Adjusted EBITDA was up 56.4 percent to €9.8 billion, while free cash flow went up 56.9 percent to €2.4 billion. In its new guidance for 2020, DT expects adjusted EBITDA of around €34 billion and free cash flow of at least €5.5 billion. “The merger in the United States is a historic step for the Group“, said Tim Höttges, CEO of Deutsche Telekom. “Our figures are formidable and our strong business operations in Germany and the rest of Europe also play a part in this.“

On its home market, DT recorded its most successful quarter in broadband business in two years, measured in terms of net customer additions. In mobile business, roaming revenues lost on account of the travel restrictions had an impact. Despite the negative effect of the pandemic on roaming revenues, total revenue in the Germany operating segment increased by 1.1 percent in the second quarter compared with the prior-year period to €5.4 billion. At the same time, adjusted EBITDA grew 3.0 percent to €2.2 billion. Margin thus improved by 0.7 percentage points year-on-year to 40.7 percent.

The merger of T-Mobile and Sprint was concluded on April 1. The integration is well underway, with the Sprint brand having been retired as of August 2. At the end of the second quarter of 2020, the new T-Mobile had 107.7 million customers. As of July 1, T-Mobile sold Sprint’s prepaid business, as required by the U.S. authorities, leaving a customer base of 98.3 million. As such, T-Mobile overtook AT&T in the United States in terms of customer numbers and is the new number two on the U.S. mobile market. The merger brought a clear jump in the financials. T-Mobile generated total revenues of $19.0 billion, up 72.5 percent. Adjusted EBITDA was up 115 percent year-on-year to €6.9 billion.

The stark travel restrictions had a negative impact on mobile service revenues in Europe as a result of much lower roaming revenues. This affected Greece in particular. As a result, total revenue in the segment decreased by 2.0 percent in the second quarter in organic terms to €2.8 billions. Strict cost discipline helped to prevent this trend being reflected in earnings. Adjusted EBITDA increased by 1.1 percent year-on-year in organic terms to €1.0 billion, marking the tenth quarter of growth in succession. The positive trend in customer numbers also continued unabated. In the second quarter, the national companies recorded 174,000 mobile contract net additions. The broadband customer base grew by 69,000 between April and June. In addition, the companies gained 265,000 new users of converged fixed-mobile products, a year-on-year increase of more than 30 percent in the FMC customer base.