Telekom post nine-month loss

October 31, 2001 Posted: 1202 GMT

LONDON (CNN) -- Deutsche Telekom, Europe's biggest phone company, posted a loss for the first nine months because of acquisition and license costs.

Deutsche Telekom, like rivals British Telecom, KPN of the Netherlands and France Telecom, has accumulated debts as they splashed out on high-speed mobile phone licenses and acquisitions.

That crippling debt has already taken its toll with the chief executive of KPN Paul Smits leaving his post last month, British Telecommunications Chairman Iain Vallance losing his job in April and on Wednesday Sir Peter Bonfield, chief executive of BT, became the latest casualty.

So far, Telekom's chief executive Ron Sommer has not fallen despite calls for him to leave after Germany's dominant phone company spent more than $15 billion on mobile phone licences and bought loss-making U.S. wireless operator VoiceStream for $24 billion.

The company now has debts of 65.2 billion ($60 billion), down 5.8 percent on the previous three months.

Telekom said in the nine months to September 30, net profit, excluding acquisition and third-generation mobile phone costs, was 1.6 billion.

But that number was inflated by 1.9 billion in proceeds from the sale of shares in U.S. phone company Sprint and by 500 million from the sale of a cable TV stake. It also omitted 1.8 billion in acquisition costs and 900 million mobile phone license costs.

Adjusted for these items, and a non-scheduled writedown of 400 million on the decreased value of the group's stake in France Telecom, the net result worked out at a loss of 3.1 billion, according to Reuters calculations.

Analysts polled by Reuters gave an average forecast for a net loss before exceptional items of 2.7 billion for the nine months, with the lowest estimate -- from a major investment bank -- at a loss of 3.1 billion.

The chief executive of Deutsche Telekom's cellphone division T-Mobile told Reuters that VoiceStream would generate positive earnings at the EBITDA level (earnings before interest, tax, depreciation and amortisation) next year.

"Next year, the EBITDA at VoiceStream will be clearly positive," said T-Mobile CEO Kai-Uwe Ricke. He added that T-Mobile, which groups all Deutsche Telekom's cellphone interests, was sticking to its goal to double EBITDA in 2001.

Ricke said T-Mobile's nine-month EBITDA, including VoiceStream, doubled to 2.2 billion, with the EBITDA margin rising at all its majority-owned mobile units.

Telekom's (FDTE) stock, which has halved in value since the beginning of the year, fell 3.1 percent to 17.01 in midday Frankfurt trading on Wednesday. The company will publish its detailed accounts on November 28.