Deutsche Telekom AG (DTEGY) posted solid domestic earnings growth Thursday but a writedown of its stake in Britain's BT Group plc (BT) offset improvements in its U.S. T-Mobile unit and pushed Europe's biggest telco into a fourth quarter loss.
Deutsche Telekom said it would book an €2.2 billion ($2.3 billion) writedown on its 12% stake in BT, owing to the impact of Britain's vote to leave the European Union last June and ostensibly BT's hit from an accounting scandal in Italy earlier this year. The charge put Deutsche Telekom into a loss of €2.12 billion for the final three months of the year, the company said, even as quarterly adjusted core profits rose 2% to €5.26 billion.
DT shares fell 1.17% in Frankfurt to change hands at €16.22 and trimming the three month gain to around 10%, just ahead of the 8.9% advance for the Stoxx 600 Europe Telecommunications Index.
"We have sustained the dynamic growth of recent years and have once again grown profitably. Our forecast through 2018 is set," said chairman Tim Hottges. "Here is a brief reminder: We plan to increase revenue by an average of one to two percent per year in the years 2014 through 2018. Adjusted EBITDA is to grow by an average of two to four percent per year in this period, and free cash flow by around ten percent on average."
Earlier this year, BT said that its third quarter earnings plunged nearly 60% after taking a total £268 million charge linked to an accounting scandal at its Italian business. BT earnings for the three months ending in December, its fiscal third quarter, fell 59% to 3.8 pence per share. On and adjusted basis, that figure comes in 24% lower at 6.6 pence per share.