DT 2006 results and future strategy

DT announced 2006 net profit down 43% to €3.1bn on revenues up 3% to €61bn. EBITDA fell 6% to € 19.4bn, in line with DT' s forecasts. Fixed telephony revenues amounted to €21bn, down 5%, while mobile revenues were up 10% to €31bn. T-Mobile USA reported 4Q06 net income at $179m and ARPU at $52. Global results are below street expectations, hit by fierce competition in the wireline segment in Germany, costs related to job cuts and fixed-line customers switching to competitors (over 2m in 2006). 4Q06 net loss amounted to €1.2bn, on sales of €21bn, up 2%. German revenues were down 12%, while international business grew 21% to be over 50% of total revenues.

Following these results, its CEO, has developed a new strategy, focused on the international expansion of its wireless business. Non-core assets will be sold (see Club-Internet and ya.com for sale, or mobile towers in the US and Germany) and proceeds will be used for acquisitions and funding expansion. In parallel, efficiency measures will be implemented to cut costs and save €2bn this year and about €5bn by 2010. In addition, DT will consolidate all its existing retail brands down to just two, T-Home and T-Mobile. High-speed broadband roll-out (FTTx and DSL) and IPTV will remain part of its core strategy.