Telco giant surprises with £604m gain

EUROPE'S largest phone company, Deutsche Telekom, surprised investors with better-than-expected first-quarter figures, an improved full-year forecast and a sizeable cut in its debts.

The group posted an unexpected net profit of e850m (£604m), compared with losses of e1.8bn in the year-earlier period. Earnings before interest, tax, depreciation and amortisation (ebitda) were about 10% above analysts' expectations, rising 18% year-on-year to e4.5bn excluding one-off profits.

Under new chief executive Kai-Uwe Ricke, appointed last November, the group is cutting 55,000 jobs and he has told investors that he wants to cut net debt to e52bn by the end of this year. During the first quarter it was cut from e61.1bn to e56.3bn, helped by the sale of cable television interests and the strength of the euro.

Ricke also said he was narrowing his target for full-year ebitda from between e16.7bn and e17.7bn to between e17.2bn and e17.7bn. But he did not alter his net debt target.

Revenue from T-Mobile rose by 19% and ebitda by more than 25% to e1.5bn. Deutsche Telekom's total first-quarter revenues rose by 7% to e13.6bn.