Deutsche Telekom's core profit jumps 8%, lifts cash flow target
Writes through with comments from press call
By Marleen Kaesebier and Eva Orsolya Papp
Aug 8 (Reuters) -Deutsche Telekom DTEGn.DE said on Thursday the Euro 2024 soccer championships had brought in new customers for its TV offering, after it reported a nearly 8% jump in second quarter core profit.
Its TV business added 114,000 new contract customers in Germany between April and June, driven by the tournament and a new law that essentially prevents landlords from including TV services in rental contracts, CFO Christian Illek said.
"There are terms of one month and twelve months. We have to look at how many people have only purchased it as part of the European Championships and then cancel it again," CEO Timotheus Höttges added.
Telekom's Magenta TV, which bundles classic TV channels and streaming services, was the only German provider to broadcast all live matches from the Euros.
The law affecting rental agreements officially came into effect on July 1, but had already been affecting TV providers during the transition period prior to that.
Vodafone VOD.L, another major player in Germany, last month flagged a slowdown in German business growth as the regulation led to a loss of cable network contracts.
"We don't want to celebrate big yet," CEO Timotheus Höttges told reporters when asked about the gap between Telekom's gains and Vodafone's losses in the quarter, saying there was little transparency in terms of customer retention.
Customers at the German TV business increased by 2.6% compared to the first quarter.
Europe's biggest telecoms provider by market capitalisation said its adjusted core profit after leases (EBITDA AL) rose 7.8% to 10.8 billion euros ($11.8 billion) in the second quarter, in line with expectations.
The earnings grew 1% in Germany and 8.2% elsewhere in Europe, boosted by lower energy costs. However, Telekom expects that boost to diminish in the second half of the year.
Quarterly revenue grew 4.3% to 28.4 billion and free cash flow after leases soared 48.5% to 5.2 billion euros, both ahead of expectations.
Telekom raised its annual forecast for FCF after leases to around 19 billion euros from around 18.9 billion previously, following a similar move by U.S. subsidiary T-Mobile US TMUS.O last month.
Telekom's shares rose more than 2% and were trading at their highest levels since 2001.
($1 = 0.9146 euros)
Reporting by Marleen Kaesebier and Eva Orsolya Papp in Gdansk; editing by Ludwig Burger and Milla Nissi
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