Incumbents steer steady earnings course

Western Europe’s big five incumbents generated a marginal increase in overall earnings in 1Q11, on the back of rises at Telefonica, BT and Telecom Italia. 

Combined EBITDA – the most comparative measure of income across the five – amounted to €18.1 billion for the quarter, up less than 2% year-on-year as a near 9% decline in pre-tax earnings at Deutsche Telekom offset gains of a similar level by BT and Telefonica, research by Telecoms shows.
The Spanish incumbent was the last of the Western Europe incumbents to report its 1Q figures, revealing this morning that OIBDA hit €5.5 billion during the period after triple-digit growth in revenues to €15.4 billion.
Chairman César Alierta said trends including 6% growth in overall subscriber numbers and on target earnings “allow us to confirm Telefonica’s full year targets.” The firm focused on providing value rather than volume during the quarter, however it still achieved the greatest success in overseas markets, with sales at its domestic unit down 5.6% to €4.3 billion.
BT yesterday reported EBITDA of £1.4 billion (€1.6 billion) despite a 6% fall in revenue to £5.7 billion during the quarter – the operator’s fiscal 4Q. The firm blamed the decrease on lower mobile termination rates and forex movements, but achieved its full-year target of £20 billion in revenue after growing annual EBITDA 4% to £5.8 billion.
“We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future,” chief Ian Livingstone notes, adding. “We expect to continue to grow our profits and free cash flow whilst investing to return BT to growth. These results show we are making progress, but we are well aware there remains a lot more to do.” 

Telecom Italia was the only other big five telco to grow earnings during the quarter, with EBITDA up 3.6% to €2.9 billion on the back of a 10.3% rise in revenues. Deutsche Telekom saw EBITDA fall 8.4% to €4.2 billion, while France Telecom registered a marginal 1.3% dip to €3.7 billion.