DT 1Q07 results

DT earned €459m in the quarter, down 58%, on revenues of €15.5bn, up 4%. The results are mixed; sales are slightly ahead of forecast in spite of strong demand in mobile, while profit is far less than the €773m expected. But DT is just one more in a growing group of European operators that have seen 1Q07 earnings and margins cut. The culprit is of course the domestic fixed line business that lost another half a million (588k) customers in the quarter. The results, however, were helped by rising demand in mobile and broadband internet access in Germany. T-Mobile has added 980k new users in the US, 251k in Germany and 100k in the UK to bring the total to 109.2m worldwide, of which 83.2m in Europe and 26m in NA. DT added 572k new broadband customer in Germany to a total of 7.6m. The easy solution was to cut costs and lay-off people at T-Service, a new unit with 50k workers. A solution rejected by the unions and leading to a monster strike of 20k people.

The management, however, remains moderately optimistic. Sales are expected to rise slightly, and pretax profit to remain flat at the 2006 level of €19bn.