Telefónica Deutschland reports strong customer growth in Q3

Thorsten Dirks, Telefónica Deutschland CEO
Thorsten Dirks, CEO of Telefónica Deutschland

Telefónica Deutschland said it achieved its biggest growth in postpaid mobile customer numbers since completing a merger with E-Plus two years ago, adding 426,000 new subscribers in the third quarter of 2016.

The operator noted that it has increased its customer base by 1.9 million users to 44.1 million over the past two years, and claimed this was result of the O2 Germany/E-Plus network integration and LTE expansion as well as a strong focus on mobile data services.

Jefferies International analysts agreed that the German operator achieved “solid results” for mobile service revenue and core earnings, and is on track to reach its guidance for the full year -- “a welcome development following a somewhat uninspiring first half,” the analysts added,

Jefferies also noted that the decline in underlying mobile service revenue (excluding regulatory effects) slowed to 0.9 per cent year-on-year in the third quarter from 1.5 per cent in the second quarter of 2016. The analysts described this development as “a rather welcome effect, keeping in mind that revenues are under pressure from the 'technical' impact of a stark mix shift from retail to wholesale as the merger remedy [MVNO contract with Drillisch] unfolds.”

Telefónica Deutschland said mobile services revenue, including regulatory effects such as the decrease in roaming rates, fell by 1.8 per cent year-on-year to €1.4 billion ($1.5 billion) in the third quarter of 2016. In the first nine months as a whole, mobile services revenue was down 1.6 per cent at €4.09 billion.

Operating income before depreciation and amortisation (OIBDA) grew by 3 per cent in the third quarter to €467 million. In the first nine months, the core earnings figure increased by 3.3 per cent to €1.33 billion.

The total loss in the third quarter amounted to €105 million, which was an improvement on the €124 million loss posted in the same period a year ago. The loss for the first three quarters of the year was reduced from €347 million in 2015 to €22 million in the 2016 period.

Thorsten Dirks, CEO of Telefónica Deutschland, said that the operator is now in a good position as it continues to realise the benefits of the merger with E-Plus.

“We are meeting our integration targets. Telefónica Deutschland’s digital transformation will continue to gain momentum in 2017,” Dirks added.