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Deutsche Telekom Estimates Sluggish Core Revenue Growth in 2020

Deutsche Telekom estimates that growth in its core earnings would slow to 3% this year after a sturdy fourth quarter because it appears finally to complete a merger that would create the third-largest U.S. wireless service.Deutsche Telekom Estimates Sluggish Core Revenue Growth in 2020

Europe’s largest cell operator stated it anticipated adjusted earnings before interest, taxation, depreciation, and amortization after leases to achieve 25.5 billion euros ($27.5 billion) this year.

That was below agreement estimates by analysts and marks a halving from the growth rate last year when Deutsche Telekom’s U.S., European and German businesses all did well.

The $26 billion contract for U.S. unit T-Mobile to take over Sprint, launched two years ago in April, last week cleared its last major legal impediment when a New York judge threw out a case introduced by over a dozen U.S. states.

With Sprint struggling through the protracted period throughout which the agreement was pending, T-Mobile chief executive John Legere has indicated that he would seek to renegotiate a few of its terms to replicate the changing market dynamics.

Uncertainty over the agreement has weighed on the group balance sheet, as have the substantial costs of developing next-generation 5G networks, forcing Deutsche Telekom in November to say it would cut its 2019 dividend.

Deutsche Telekom decreased its net debt by 2.8 billion euros in Q4 to 76 billion euros, bringing its leverage ratio down to 2.65 times modified EBITDA, inside management’s comfort zone.

Fourth-quarter revenues soared by 5.4% to 21.361 billion euros, ahead of analyst estimations, while modified EBITDA AL was up 8.2% to 6.030.

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