* Q3 adj. EBITDA 4.66 bln euros vs Rtrs poll avg 4.58 bln
* German mobile revenues slip despite gain in customers
* Shares fall after deal-fuelled sector rally
(Adds analyst comment, shares)
By Harro Ten Wolde
FRANKFURT, Nov 7 Deutsche Telekom has
posted a drop in wireless revenue despite adding 470,000 new
mobile customers in the third quarter, highlighting the impact
of a price war in its home market.
Europe's third-largest telecoms operator by revenue is
engaged in a fight with Telefonica Deutschland,
Vodafone and KPN's E-Plus to attract customers
in a country that has been relatively slow to switch to
smartphones from basic mobiles.
This has forced the former monopoly to offer cheaper
packages that have weighed on revenue. In the third quarter,
wireless service sales dropped 2.8 percent in Germany, the
European Union's largest mobile market with around 114 million
"The reasons for this were first and foremost the intense
competition and also the new reductions in 'roaming' charges
implemented in the summer," said Tim Hoettges, chief financial
officer, referring to European regulations forcing operators to
cut fees for travelling clients.
Shares in Deutsche Telekom, which also posted a
higher-than-expected core profit, were down 3.2 percent by 1130
GMT, paring recent strong gains as the sector as a whole was
boosted by a flurry of deal-making.
The company's rivals face similar competition issues.
Telefonica Deutschland's wireless revenue fell 5.7 percent
in the quarter, while E-Plus, being bought by Telefonica, saw
revenue drop 7 percent. Vodafone, Germany's second-biggest
mobile operator, will release results on Nov. 12.
Deutsche Telekom's underlying wireless service revenue,
which excludes the latest fee cuts mandated by regulators, were
down 1 percent compared with a 1 percent rise in the second
For the full year, Deutsche Telekom said it expects
underlying wireless service revenue to be stable, having
previously forecast growth.
Simon Weeden, an analyst at Citi Research, said the new
forecast implied zero underlying growth in the fourth quarter.
A rally in telecom stocks which carried Deutsche Telekom to
a five-year peak of 11.93 euros last month was fuelled in part
by hopes of further mergers and acquisitions, such as Vodafone's
7.7 billion euros ($10.4 billion) purchase of Germany's biggest
Earlier this year the two smaller German mobile operators,
E-Plus and Telefonica Deutschland, said they would merge to
create the country's third-biggest mobile player, with a 30
percent market share - close behind Deutsche Telekom and
Vodafone which each have roughly 35 percent.
The M&A upturn was seen as potentially positive for Telekom,
if only because it could emerge as a winner in a consolidated
Meantime the German group said third-quarter core earnings
or EBITDA (earnings before interest, tax, depreciation and
amortisation) excluding special items fell 2.6 percent to 4.66
billion euros as investments weighed.
The result was above the average forecast of 4.58 billion in
a Reuters poll.
The company still expects EBITDA excluding special items to
come in at around 17.5 billion euros in 2013 and free cash flow
of around 4.5 billion.
Deutsche Telekom's 74 percent owned T-Mobile US Inc
, the No. 4 U.S. mobile provider, on Tuesday reported
much higher-than-expected subscriber growth.
($1 = 0.7392 euros)
(Editing by Noah Barkin and David Holmes)