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Deutsche Telekom forecasts shrinking fixed-line sales

AFP · 19 Mar 2008, 12:39

Published: 19 Mar 2008 12:39 GMT+01:00

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Core earnings were forecast to fall by five to eight percent, fixed-line operations director Timotheus Höttges added during a conference call with journalists. Sales and earnings should stabilise by 2010, Höttges said, stressing that "the message is: we are slowing the decrease."

Investors failed to get the message, however, and shares in the company plunged 9.67 percent to €10.28 in midday trading, the biggest loser on the Frankfurt stock market, which was down 1.01 percent overall.

Local traders said the announcement was responsible for a quick drop in the telecom company's share price. "This sounds more like a profit warning to me," said a Frankfurt-based trader.

The incumbent German telecoms operator has seen about 4.4 million fixed-line clients pull the plug over the past two years amid growing use of mobile phones and complaints about service.

Deutsche Telekom's German fixed-line operations comprise broadband internet access as well as fixed phone lines. Last year, sales fell by eight percent and earnings before interest, tax and depreciation (EBITDA) dropped by 14 percent on increased competition and lower prices.

Story continues below…

Höttges said Deutsche Telekom sought to cut costs in the segment by €1 billion ($1.56 billion), of which €900 million was to be reinvested in customer acquisition. He added the company was targeting 1.6 million new broadband internet customers this year, to bring its market share to around 45 percent.

Höttges said Deutsche Telekom aimed to attain a market share of 73-75 percent in German land lines by the end of the year.

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