Analysts happy with Deutsche Tel despite falling income

Analysts believe Deutsche Telekom remains in good shape despite a €800 million leap in net loss during 4Q11.
 
The German incumbent recorded a loss of €1.3 billion during the quarter compared to a €514 million loss in 4Q10, as revenue fell 3.7% year-on-year. However, analysts at RBC Capital Markets note the telco’s adjusted EBITDA grew 1.3% to €4.6 billion, which is inline with consensus forecasts, and states the operator’s credit profile is still in good shape.
 
Despite the finance firm’s confidence, Deutsche Tel’s full year figures barely make for easier reading. The telco generated a profit of €557 million, which is down 67.1% on its 2010 income. Revenue dipped 6% to €58.6 billion in what the company acknowledges was a tough year for all telcos.
 
Chairman René Obermann predicts no let up in 2012, but states the firm’s capacity “for innovation, cost discipline and readiness for change are vital assets.”
 
The firm plans to launch LTE at its T-Mobile USA business in 2013, which may be too late to stem a flow of subscribers to rivals offering Apple’s iPhone 4S. Nevertheless, RBC notes the division’s performance in 2011 was a mixed bag, and states Deutsche Tel must “invest heavily in the business to get it back on track.”
 
RBC also notes the operator’s 2012 EBITDA guidance of €18 billion is on-par with consensus forecasts of €18.3 billion.

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