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Deutsche Telekom has large Q3 loss due to accounting writedown on T-Mobile USA division


This Feb. 23, 2012 photo shows Deutsche Telekom CEO Rene Obermann in Bonn, Germany. THE CANADIAN PRESS/AP, Frank Augstein

FRANKFURT - An accounting writedown at its T-Mobile USA division sent Germany's Deutsche Telekom AG skidding to a big third-quarter loss of €6.9 billion ($8.8 billion).

Though the €7.4 billion charge wiped out the quarter's net profits, the company stayed with its earnings forecast. CEO Rene Obermann said Thursday the company's day-to-day business remained "completely on track."

Revenues were flat at €14.65 billion. Adjusted operating profit, which excludes the U.S.-related loss, fell 26 per cent to €1.97 billion.

Telekom took the reduction because of the way accounting rules apply to T-Mobile USA's merger with Dallas-based MetroPCS Communications. The deal is aimed at giving T-Mobile the size and wireless capacity to compete with other U.S. carriers. It has struggled as the fourth-largest carrier; Deutsche Telekom tried to sell the unit to No. 2 AT&T last year but the deal was blocked by U.S. antitrust regulators.

"We made a forward-looking decision for our U.S. business in full awareness of the accounting consequences," Obermann said in a statement. "Anyone seeing only the clear net loss is overlooking the fact that our operating business is completely on track."

Deutsche Telekom shares rose 0.4 per cent to €8.52.

T-Mobile USA, based in Bellevue, Washington, saw operating profits fall 14.2 per cent to $1.2 billion excluding one-time charges and financial items such as interest and taxes. The company said the decline was expected because of higher advertising expenses. Revenue fell 5.9 per cent to $4.9 billion.

The U.S. unit gained prepaid customers but lost 492,000 contract customers, a result the company called "unsatisfactory."


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