Deutsche Telekom has raised its 2009 guidance slightly and left the dividend unchanged. While Telefónica reported a 15% fall in profits, this was due to one-off items and currency movements, which disguised good underlying performance.
DT's results were lifted by savings from a reduced employee base, which helped it achieve slightly better than expected 2008 results, reports the Financial Times.
Further, it forecast stable core profit and free cash flow in the current year after 2008 adjusted group profit before interest, tax, depreciation and amortisation (ebitda) edged up 0.7 per cent to €19.5 billion ($24.83 billion). Its previously stated target was €19.3 billion with free cash flow of €6.6 billion.
Free cash flow rose 6.9 per cent to €7 billion, while sales were marginally lower at €61.6bn, the company said in a statement.
The group is to reorganise its core business by combining its mobile and fixed-line business in Germany, as we reported yesterday, and said fourth-quarter rose revenue 2 per cent to €16.1 billion. Its mobile business generated more than half of that revenue.
The FT noted that, according to Thomson Reuters StarMine, DT's stock trades at 11.6 times 12- forward earnings, compared with France Telecom and Telefónica, which trade at 8.5 and 8.1 times respectively.
Telefónica announced its net profit for the year was €7.6 billion, compared with €8.9 billion in 2007, but the results were still ahead of analysts'' expectations, according to the FT.
Telefónica said it had met its earnings targets and forecast cash flow growth this year of between 8% and 11%, and growth of between 1% and 3% in operating income before depreciation and amortisation. The company had already announced a 15% year-on-year increase in the dividend to €1.15 per share.
Even better, fourth quarter net income was up nearly 89% to €2 billion as job cuts in Spain and Brazil led to a 34% reduction in employee costs. The FT points out this was partially offset by a €209 million pre-tax write-down on the value of Telefónica's 10% stake in Telecom Italia.
Revenues for the quarter were 2.6% ahead, at €14.8 billion, as strong growth in the Latin America customer base compensated for depressed conditions in Spain and the UK. Latin America accounted for 38% of revenues, 2% more than the domestic market.
For the full year, revenues were 2.7% higher at €57.9 billion. Telefónica said it added 30 million new clients during 2008, with Latin America driving most of the growth. Broadband connections overall were up 21%, while mobile income was up 16.6% Pay-TV connections grew nearly 30% year-on-year.