Telefónica Deutschland sees E-Plus merger benefits in Q2 results

Telefónica Deutschland reported what analysts described as a solid set of second-quarter results, reflecting the first benefits of the company's integration with former rival E-Plus.

The company said its core profit--which it calls OIBDA--rose by 13.5 per cent to €453 million ($501 million) in the Q2 period, while sales increased by 1.3 per cent to €1.95 billion.

Analysts from Jefferies International said the second-quarter results are "reasonably sedate at the top-line, with the well-signalled slowing in service revenue growth a reflection of the stated strategy."

However, the analysts noted that "the talking point…is that merger synergies are tracking comfortably ahead of expectations," adding that the earlier delivery of these benefits suggests small upgrades to the company's full-year guidance.

As things stand, Telefónica Deutschland has confirmed both its synergy and financial targets that have previously been announced for 2015, with CEO Thorsten Dirks saying the company is "fully on track" to achieve its ambitions for 2015.

The company is in the process of integrating the O2 and E-Plus networks in Germany and recently introduced national roaming between the two networks. This, combined with the accelerated deployment of LTE, has helped push up mobile data consumption among its customers, Dirks noted.

"In addition, the [German spectrum] auction in June has provided us with a strong spectrum position which will enable us to offer the best network experience to our customers. The rapid integration progress has already positive effects on our profitability," Dirks commented further.

Telefónica Deutschland completed further steps towards the integration of O2 and E-Plus in the second quarter, including the ongoing implementation of a job-cutting programme that will eliminate 1,800 full-time positions by the end of 2018. The company also recently agreed to transfer around 7,700 mobile sites it no longer needs to Deutsche Telekom.

In terms of its retail network, Telefónica Deutschland has started the transfer of the 301 shops acquired by MVNO partner Drillisch. The move affects 102 of its own shops and 199 partner shops, while 300 employees will also move to the new owner.

The E-Plus brand BASE is also set to disappear from the high street: all BASE shops will be converted to O2 shops by the end of the year, although the brand will retain its online presence at least for now.

For more:
- see the results from Telefónica Deutschland

Related articles:
Telefónica Deutschland transfers 7,700 mobile towers to Deutsche Telekom
German spectrum auction raises more than €5B
Germany's Airdata files challenge to Telefónica-E-Plus merger
Telefónica Deutschland CFO: We have changed the market in Germany forever
Telefónica Deutschland makes confident start to 2015

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