The debt-laden German telecoms group Deutsche Telekom outdid France Telecom yesterday by reporting an even larger loss than its French peer – the biggest loss in German corporate history.
The German firm, straining under a €61bn (£42bn) debt pile, revealed a net loss of €24.6bn for 2002 after accounting for a string of writedowns totalling €21.4bn.
"We are well aware of the scale of this figure. The result reflects the grave situation that the company found itself in last year and is still facing today," the chairman Kai-Uwe Ricke said, adding: "We know what has to be done. And we will succeed."
The loss was, however, even greater than the one reported by France Telecom last week. The French telecoms group, weighed down by €68bn of debt, unveiled a €20.7bn loss after an equally onerous array of writedowns.
Among Deutsche Telekom's writedowns was a €9.3bn goodwill charge as well as an €11.6bn charge to cover telecoms licences in the US and the UK. Mr Ricke dubbed 2002 as "the toughest year so far" for Deutsche Telekom.
Nevertheless, City analysts described the group's figures as broadly in line with expectations and took heart at the company's debt position, which fell to €61.1bn at the end of the year from €64.3bn at the end of the third quarter.
The company's chief financial officer, Dr Karl-Gerhard Eick, said the strides the company had taken to cut debt so far should give investors confidence that Deutsche Telekom could cut debt to €49.5bn to €52.3bn by the end of the year. And Mr Ricke stressed that the company did not need to raise money to cut debt. "We do not require any capital increase in order to reduce debt," he insisted.
There was some disappointment, however, with the performance of the company's mobile phone division – T-Mobile – which turned out an underlying, or Ebitda, profit of €5bn for the year.
"The quarterly progression [in mobile] that we were anticipating has not materialised," analysts at Schroder Salomon Smith Barney said, noting that the UK and Germany had been weaker than expected.
T-Mobile, which was known as One2One in the UK, is at the centre of a huge row over the ownership of Virgin Mobile – a joint venture in the UK with Virgin. Sir Richard Branson's company has started legal proceedings against T-Mobile for "material breaches" of their agreement that are "incapable of remedy". If successful, Virgin could end up buying up T-Mobile's 50 per cent stake of Virgin Mobile.
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