T-Mobile float delayed

July 31, 2001 Posted: 0654 GMT

LONDON (CNN) -- Deutsche Telekom, Europe's biggest phone company, decided on Tuesday to delay the flotation of its mobile phone unit T-Mobile.

Germany's dominant phone company gave no immediate reason for the decision, but sources told Reuters the company is concerned about the price it will receive because of the current turmoil in the equity markets.

T-Mobile, Europe's second-largest mobile phone operator after Britain's Vodafone, is expected to seek a stock market listing at a later date, the company said.

France Telecom floated its mobile phone unit Orange in weak markets and was forced to cut the offer price by 18 percent at 9.50, valuing the company at 48.5 billion ($45.2 billion). T-Mobile is valued at around 70-80 billion.

Deutsche Telekom has been under pressure to sell assets to reduce its ballooning debt mountain. The German company also said its debt rose 21.1 percent to 68.8 million, as a result of acquiring mobile phone companies VoiceStream and Powertel of the U.S.

The Bonn-based company posted a first-half net loss of 400 million, including the cost of acquisitions and payments for high-speed mobile phone licenses across Europe.

In the second quarter of 2001, Deutsche Telekom generated a "neutral" net income. The company did not provide further details as the figures are preliminary indications of the company's performance and a full update is expected on August 28.

Revenue in the first six months of 2001 rose 17.4 percent to 22.6 billion from 19.2 billion, in the year earlier period. Net income -- excluding acquisition costs, high-speed mobile phone licenses, sale of Sprint FON shares, and VoiceStream – rose 20 percent to 600 million compared to 500 million on the same period a year earlier. 

In the first half 2001, EBITDA (earnings before interest, tax, depreciation and amortization – a measure of a debt-laden company's profitability) at its mobile phone business more than doubled to 1.4 billion from 600 million in the 2000 period.

Ron Sommer, chief executive of Telekom, has shifted the company's focus from gaining new mobile phone customers to improving margins at its cellular unit.

Sommer said earlier this year the  company had sold non-essential assets worth 10 billion last year and "expects to sell between 10-14 billion this year," excluding receipts from the initial public offering of T-Mobile.

Deutsche Telekom (FDTE) shares have plunged from a high of 104 last March to a low of 23.05 in June. The stock closed at 25.75 in late trading in Frankfurt on Monday.

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