Higher costs blight T-Systems

T-Systems was a victim of its own success in the first quarter, as earnings were pushed lower on the back of higher operating costs.

Deutsche Telekom’s managed services business recorded an 11.3% fall in EBITDA to €149 million, after reversing a 1Q10 pre-tax profit of €18 million with an €11 million loss in the recent quarter on the back of higher expenses associated with new business.
The firm claims it remains on track despite the earnings squeeze, with revenues up 6.1% year-on-year due to an increase in international sales and strong demand for the firm’s Cloud products. Highlights of the quarter include a new outsourcing contract with Everything Everywhere and a major Cloud deal with Shell and Microsoft. 

Going forward, the firm expects more business to come from intelligent networks, having booked a deal with VOLTARIS covering reading, transmitting and processing of energy data. Markets for connected cars and healthcare also showed the first shoots of progress during the quarter.