Deutsche Telekom Stock Down On Weak Q4 Profit; Sees Growth Ahead

Shares of Deutsche Telekom were losing around 6 percent in German trading after the telecom major Thursday reported weak profit in its fourth quarter, despite higher revenues.

Looking ahead, the company expects profitable growth to continue over the next two years. EBIT is expected to increase sharply year-on-year in 2022 and 2023.

Adjusted earnings, meanwhile, will be negatively affected mainly by United States operating segment, due to the gradual exit from the business model of terminal equipment leases in the country and lower revenue in the wholesale business.

As announced at the Capital Markets Day in May 2021, Deutsche Telekom continues to expect at least 1.75 euros for 2024.

Further, the company announced that dividend of 0.64 euros per share will be proposed to the shareholders’ meeting on April 7.

For financial year 2022, the company expects adjusted earnings per share above 1.25 euros, compared to prior year’s 1.22 euros per share. Adjusted EBITDA AL is expected to reach 36.5 billion euros, and adjusted core EBITDA AL to rise by around 5 percent to around 35.5 billion euros.

In fiscal 2021, adjusted EBITDA AL was 37.33 billion euros, while pro forma adjusted EBITDA AL was 36.5 billion euros. Adjusted core EBITDA AL was 34.5 billion euros, and pro forma adjusted core EBITDA AL was 33.7 billion euros.

Further, net revenue is projected to remain stable year-on-year in 2022 and to increase slightly in 2023.

In the next two years, service revenue is projected to slightly increase year-on-year in both 2022 and 2023. In the U. S. operating segment, after an increase in 2022, this metric is expected to increase slightly in 2023.

In the Germany operating segment, revenue is expected to increase slightly in 2022 and to increase in 2023. Service revenue is projected to slightly increase year-on-year in both 2022 and 2023.

Further, for 2024, Tim Höttges, Chairman of the Board of Management, said, “Our outlook for the coming years remains optimistic. As we announced at last year’s Capital Markets Day, we want to increase revenue in the years 2021 through 2024 by 1 to 2 percent on average. Adjusted EBITDA AL is expected to grow on average by 3 to 5 percent a year in the same period, and free cash flow on average by around 10 percent a year to over EUR 18 billion in 2024. Adjusted earnings per share is to increase to more than EUR 1.75, from EUR 1.22 in 2021.”

Through 2024, adjusted core EBITDA AL is expected to increase by 5 percent to 6 percent on average, and service revenue growth of an average of 3 percent to 4 percent.

For the fourth quarter, net profit dropped 71.8 percent to 471 million euros from 1.67 billion euros in the previous year.

Quarterly adjusted net profit was 1.23 billion euros or 0.26 euro per share, compared to 1.64 billion euros or 0.34 euro per share last year.

Adjusted EBITDA AL, a key earnings metric, edged up 0.6 percent from last year to 9.01 billion euros, and adjusted EBITDA AL, excluding US, grew 3.3 percent to 3.52 billion euros.

Net revenue for the fourth quarter grew 4.7 percent to 28.93 billion euros from 27.62 billion euros in the previous year.

In Germany, Deutsche Telekom shares were trading at 15.51 euros, down 5.86 percent.

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