Deutsche Telekom forecasts higher earnings for 2023 after strong quarter

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The German telecoms group Deutsche Telekom said on Thursday that it expects to increase its adjusted earnings and cash flow in 2023, following a solid performance in the fourth quarter of 2023. The company attributed its growth to its U.S. and German businesses, which offset a slight decline in the rest of Europe.

Deutsche Telekom said its adjusted earnings before interest, taxes, depreciation and amortization after leases (EBITDA AL) for the quarter rose by 3.8% in organic terms to 10 billion euros ($10.6 billion). This was slightly above analysts’ expectations of 9.9 billion euros, according to consensus estimates provided by the company. The company’s net profit more than doubled to 1 billion euros.

 

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The company’s revenue for the quarter increased by 1.4% in organic terms to 29.8 billion euros, slightly below analysts’ expectations of 30 billion euros. The company said its service revenue, which reflects its core business, grew by 3.2% in organic terms, driven by its U.S. subsidiary T-Mobile US, which added 1.7 million new customers in the quarter.

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For the full year of 2023, Deutsche Telekom reported a 4% increase in organic revenue to 120.6 billion euros, a 3.8% increase in organic EBITDA AL to 40.8 billion euros, and a 40% increase in free cash flow after leases to 16.1 billion euros. The company said it achieved its financial targets for 2023 and delivered a return on capital employed of 7.5%.

Deutsche Telekom also announced its guidance for 2023, expecting organic EBITDA AL to grow by 4% to reach around 42.4 billion euros, and free cash flow after leases to grow by 10% to over 17.5 billion euros. The company said it would propose a dividend of 0.70 euros per share for 2023, up from 0.60 euros per share for 2022.

Deutsche Telekom’s chief executive officer Tim Höttges said the company’s results showed its strength and resilience in a challenging market environment. He said the company would continue to invest in its networks, products, and services in 2024, and set a target for organic revenue growth of 2% to 3%.

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Source : The Wall Street Journal

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