In 3Q2016, Deutsche Telekom AG (ADR)(OTCMKTS:DTEGY) posted net revenue of EUR 53.6 billion compared to EUR 51.4 billion recorded in the comparable quarter, a year earlier. The operating segment in the U.S. remained its growth driver with revenue surging by 13.5%. By contrast, its other divisions posted decline in revenue.
In Germany, the revenue declined 2.1 percent, and it can be attributed to reduced sales of mobile terminal equipment. The sales in Europe operating segment dropped 2.3%, which was a result of the spin-off of the energy resale operations in Hungary. On a comparable basis, net revenue surged as much as 5%.
The financial performance
Deutsche Telekom reported that adjusted EBITDA surged considerably to EUR 16.2 billion from EUR 1.4 billion. Following the success of T-Mobile US, they recorded a growth in adjusted EBITDA of EUR 1.7 billion in the U.S. operating segment alone. Adjusted EBITDA dropped in particular in their Europe operating segment mainly as a result of regulation and competition. While Group Headquarters and Group Services division had gained from a positive one-time impact in FY2015.
At 30.2%, the firmʼs adjusted EBITDA margin surpassed against the previous year level of 28.7%. The operating divisions with the strongest margins are in Germany with 40.5% and Europe with 33.2%. EBIT surged considerably to EUR 8.2 billion from EUR 5.1 billion.
EBIT profited in 3Q2016 from the robust business performance in the U.S. and from positive special elements, primarily from the sale of their stake in the EE JV closed in January 2016 valued at EUR 2.5 billion and from deal for the spectrum licenses exchange completed in the U.S. in 2016. The latter was valued at EUR 0.5 billion.
Deutsche Telekom reported that depreciation, impairment and amortization losses jumped by EUR 1.3 billion YoY, mainly due to the continued roll-out of 4G/LTE network and the release of the JUMP! On Demand plan in their U.S. operating division in June 2015.