Deutsche Telekom raises guidance as U.S. unit outperforms

BERLIN (Reuters) – Deutsche Telekom raised its earnings guidance on Thursday as its reported forecast-beating third-quarter results, lifted by outperformance at its recently-merged U.S. unit T-Mobile .

The transatlantic telecoms group upped guidance for core profit to 35 billion euros ($41.2 billion) this year, saying T-Mobile was ahead of plan on network integration while it added the most German broadband customers since 2017.

“We are raising our guidance thanks to strong business on both sides of the Atlantic,” said CEO Tim Hoettges. “We are able to do this despite feeling the effects of the (coronavirus) pandemic in some areas.”

The Bonn-based group raised its forecast for earnings before interest, taxation, depreciation and amortization after leases (EBITDA AL) for the year by 1 billion euros, while it nudged up its forecast for free cash flow by half a billion to 6 billion.

Third-quarter revenues rose 31.9% to 26.4 billion euros, beating an average forecast in a company poll of 17 analysts of 25.8 billion euros. EBITDA AL gained 49.6% to 9.7 billion euros.

After adjusting for the impact of T-Mobile’s $23 billion takeover of Sprint, which closed on April 1, organic revenue was up 2% and EBITDA AL by 10%.

($1 = 0.8496 euros)

(Reporting by Douglas Busvine; editing by Thomas Seythal)