Telco Earnings Roundup: Portugal Telecom, Deutsche Telekom, Leap

A series of telcos have announced their earnings, although with little focus on the data side of things.
Portugal Telecom (currently the subject of a hostile take-over bid by SonaeCom) said its third-quarter net profit rose 63% with tax restructuring and workforce reduction offsetting ongoing pressure in its main domestic fixed-line and mobile markets. Net profit in the three months ended September was EUR125.4 (US$160.3) million, compared with EUR77.1 (US$98.5) million a year earlier…But third-quarter sales fell 1.3% to EUR1.62 (US$2) billion, while earnings before interest, taxes, depreciation and amortization, or EBITDA, was down 2.1% at EUR595 (US$760) million. Also, PT’s JV in Brazil, Vivo, saw its customer base shrink 0.4% in the quarter to 28.7 million. It’s still the largest in the country…
Deutsche Telekom posted a 7.3 pct drop in adjusted third-quarter EBITDA due to a loss of fixed line customers in Germany, and its mobile businesses weren’t able to compensate for that, although they did quite well. T-Mobile UK said Thursday that revenues for the third quarter rose 9% to GBP792 million and adjusted EBITDA was 89% higher at GBP221 million. Meanwhile, T-Mobile USA on Thursday reported third-quarter net income of $1.79 billion, up from $458 million in the third quarter of 2005 and $233 million in the second quarter of 2006. The International Herald Tribune compared Deutsche Telekom’s focus on mobile with BT’s focus on broadband: “BT’s strategy of focusing on broadband access for retail customers and consulting services for corporate customers, while exiting cellphones, has paid off. But Deutsche Telekom, the biggest phone company in Europe, has put more weight on its wireless unit, at a time when markets are saturated and profit margins are under pressure. Less use of fixed phones hurt both companies.”
–“Leap Wireless International brands attracted 161,000 net new customers during the third quarter, which also saw a 25-percent increase in revenue but a 39-percent drop in profit…Revenue for the third quarter increased 25 percent to $287.5 million from $230.5 million a year ago. Net income was $10 million, or 16 cents per share, as compared to net income of $16.4 million, or 27 cents a share, in the third quarter of 2005. Analysts predicted a per-share loss for the quarter.”

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