European Communications

Last update04:30:38 PM

Deutsche Telekom dismisses T-Mobile US offer as group profits rise

Deutsche Telekom dismissed Iliad’s bid for its T-Mobile US subsidiary as undervaluing the asset, as it revealed positive Q2 figures.

Chairman Tim Höttges said the French company’s unsolicited €11 billion offer, announced last week, “doesn’t provide value”.

He added: “At the moment we don’t have any [other] offers on the table.”

Sales in the US rose 9.2 percent year-on-year in the second quarter and the subsidiary is now worth almost as much as DT’s core German market.

Revenues in Germany were down 1.8 percent to €5.5 billion just ahead of the US which now brings in €5.3 billion.

T-Mobile US broke through the 50-million customer mark as subscriber numbers rose three percent, or 1.5 million during the quarter.

DT said it had recorded the strongest growth in service revenues of the four major mobile providers in the US.

In Germany, DT talked up “strong demand” for its fibre products as 227,000 new customers signed up during the quarter. It now has 1.5 million fibre subscribers and 2.3 million TV customers.

Group revenues were flat at €15.1 billion. EBITDA rose 9.5 percent to €4.4 billion and net profit increased by over a third to €711 million thanks to the positive effects on earnings from the spectrum swap with Verizon in the US.

In the rest of Europe sales fell 7.9 percent as DT continued to be hit by regulatory effects.

However, DT said its transformation to IP is “progressing apace and right on schedule”.

[Read more: Deutsche Telekom aims for all IP pan-European network]

Sales in DT’s enterprise arm T-Systems were flat at €2.2 billion as it refused less profitable contracts as part of a deliberate strategy to transform its business.

Revenues from cloud-based solutions increased by more than 40 percent in the first half of 2014, however.

Group capex rose 79.5 percent to €3.9 billion

"Our strategy so far has been to make bold and prudent investments, focus first on lifting customer numbers, and then on upping revenues and results. And we are now starting to reap the rewards," said Höttges.

"We are also gaining more customers thanks to our outstanding networks, and this success is being reflected more and more in our financial figures."