Ad-hoc | 28 January 2007 13:46
Deutsche Telekom AG / Profit Warning
Ad hoc announcement according to § 15 WpHG transmitted by DGAP - a company
of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Bonn, January 28, 2007
Deutsche Telekom has adjusted guidance for 2007 in accordance with
tough competitive environment - additional expenditures for market
approach planned
Foreign exchange rate impacts negatively on earnings expectation
Adjusted EBITDA and group free cash flow for 2006 within expectations
Board of Management continues to plan to recommend to the Supervisory
Board a dividend of at least 72 Eurocents per share for 2006
Deutsche Telekom has adjusted its expectation for group revenue and
adjusted EBITDA for 2007 in accordance with the extremely tough domestic
competitive environment and the recent development in foreign exchange
rates. In terms of adjusted EBITDA the expectation is now 19.0 billion
Euros, compared to the previous expectation of 19.7 to 20.2 billion
Euros. In terms of group revenue, a moderate increase is expected for
2007. Free cash flow is expected to be at the same level as reached
in 2006.
Deutsche Telekom sees itself confirmed by the operational development in
the fourth quarter in terms of the alignment of the German business. The
market position, achieved by the new tariffs, will be strengthened and
expanded beyond 2007 by additional measures in service and marketing.
For 2006, based on a preliminary assessment, the Board of Management
expects to meet the expectations for group adjusted EBITDA and free
cash flow. In terms of adjusted EBITDA, an expectation of 19.2 to
19.7 billion Euros has been communicated. With at least 5.5 billion
Euros free cash flow (prior to spectrum capex in the U.S.) is expected
to exceed the guidance of 5 billion Euros. Group revenue of 61.3 billion
according to preliminary results is slightly below the low end of the
guidance of 61.5 to 62.1 billion Euros. On the basis of this assessment
the Board of Management continues to plan to recommend to the Supervisory
Board the payment of a dividend of at least the prior year’s level of
72 Eurocents per share.
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Information and Explaination of the Issuer to this News:
With regard to the domestic business in 2007 Deutsche Telekom assumes a
significantly changed assessment of the market in terms of competitive and
pricing development in the fixed network business in particular in the
strategic business area Broadband/Fixed Network. In 2007 T-Com will
continue to play an active role in the expected continued tough pricing
competition, as already shown with the 3x3 tariffs introduced in
September 2006. In addition T-Com’s position in terms of new customer
acquisition and customer loyalty will be strengthened with significantly
increased expenditures for service and marketing.
As a result of these effects and measures Deutsche Telekom anticipates
that the adjusted EBITDA of the strategic business area Broadband/Fixed
Network will be reduced by 0.8 billion Euros in 2007, compared to the
previous internal planning.
In the mobile business the recent development of foreign exchange rates
has a negative impact on revenue and EBITDA. The newly assumed exchange
rates will have a negative impact of 0.2 billion Euros on the adjusted
EBITDA of the strategic business area mobile in 2007.
In addition, it is expected for T-Mobile Germany that the decrease in
prices, which was minus 11% in 2006 according to the Federal Statistics
Office, will continue. As a result of this price pressure as well as
additional expenditures to strengthen the market position the EBITDA
contribution of the strategic business area mobile will be lowered by
approximately 0.2 billion Euros, compared to the previous internal
planning.
This announcement contains forward-looking statements that reflect the
current views of Deutsche Telekom management with respect to future
events. They are generally identified by the words 'expect,'
'anticipate,' 'believe,' 'intend,' 'estimate,' 'aim,' 'goal,' 'plan,'
'will,' 'seek,' 'outlook' or similar expressions and include generally
any information that relates to expectations or targets for revenue,
adjusted EBITDA or other performance measures. Forward-looking
statements are based on current plans, estimates and projections. You
should consider them with caution. Such statements are subject to risks
and uncertainties, most of which are difficult to predict and are
generally beyond Deutsche Telekom’s control, including those described
in the sections 'Forward-Looking Statements' and 'Risk Factors' of the
company’s Form 20-F report filed with the U.S. Securities and Exchange
Commission.
Among the relevant factors are the progress of Deutsche Telekom’s work-
force reduction initiative and the impact of other significant strategic
or business initiatives, including acquisitions, dispositions, business
combinations, and cost saving initiatives. In addition, regulatory
rulings, stronger than expected competition, technological change,
litigation and supervisory developments, among other factors, may
have a material adverse effect on costs and revenue development. If
these or other risks and uncertainties materialize, or if the assump-
tions underlying any of these statements prove incorrect, Deutsche
Telekom's actual results may be materially different from those ex-
pressed or implied by such statements. Deutsche Telekom can offer no
assurance that its expectations or targets will be achieved. Deutsche
Telekom does not assume any obligation to update forward-looking state-
ments to take new information or future events into account or other-
wise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance
to a GAAP measure because it would require unreasonable effort to do so.
As a general matter, Deutsche Telekom does not predict the net effect
of future special factors because of their uncertainty. Special factors
and interest, taxes, depreciation and amortization (including impairment
losses) can be significant to the company’s results. Among the adjustments
to be made in determining adjusted EBITDA in 2006 and 2007 will be the
costs of the Group’s workforce adjustment initiative, which Deutsche
Telekom estimates will result in costs and charges totaling
approximately EUR 3.3 billion.
In addition to figures prepared in accordance with IFRS, Deutsche
Telekom presents non-GAAP financial performance measures, e.g., EBITDA,
EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT,
adjusted net profit, free cash flow, gross debt and net debt. These
non-GAAP measures should be considered in addition to, but not as a
substitute for, the information prepared in accordance with IFRS.
Non-GAAP financial performance measures are not subject to IFRS or
any other generally accepted accounting principles. Other companies
may define these terms in different ways. For further information
relevant to the interpretation of these terms, please refer to the
'Reconciliation of pro forma figures', which is
also posted on Deutsche Telekom’s Investor Relations website at
[www.deutschetelekom.com.]
DGAP 28.01.2007
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Language: English
Issuer: Deutsche Telekom AG
Friedrich Ebert Allee 140
53113 Bonn Deutschland
Phone: +49 (0)228 181-88880
Fax: +49 (0)228 181-88899
E-mail: investor.relations@telekom.de
WWW: www.telekom.de
ISIN: DE0005557508
WKN: 555750
Indices: DAX, EURO STOXX 50
Listed: Amtlicher Markt in Berlin-Bremen, Frankfurt (Prime Standard),
Hannover, Düsseldorf, Stuttgart, München, Hamburg;
Terminbörse EUREX; Foreign Exchange(s) Amsterdam, London,
Nasdaq EUROPE, NYSE, Tokyo
End of News DGAP News-Service
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