In an interview published in the Financial Times, chief executive Kai-Uwe Ricke said he was encouraged by the operator’s performance so far this year. He confirmed that DT’s mobile arm (T-Mobile), had bounced back from weak December average revenue per user (ARPU), and was optimistic about posting at least 16.7bn euros ($17.8bn) to 17.7bn euros ($18.9bn) in earnings before interest, taxes, depreciation and amortization this year, despite worries over the Iraqi war. It would have to rain stones for us not to achieve this, Ricke told the newspaper.

Ricke also confirmed that he could not rule out an outright sale of DT’s US mobile business, T-Mobile USA – formerly VoiceStream, which was acquired at the height of the telecoms boom for $34bn. Yet this presents something of a double-edged sword for Ricke, as T-Mobile USA is one DT’s key growth drivers. Mobile penetration rates in the US are still below that of Europe, and there is scope for further growth.

T-Mobile USA remains the smallest of six mobile operators in the United States, and analysts are worried it could become marginalized if it is left out of any consolidation round in the US market. The other option for Ricke is to spin it out as a standalone entity, like BT did with mm02 (formerly BT Cellnet).

During 2003 however, Ricke’s main priority is to reduce its 61.1n euros ($67.4bn) of debt, to a more manageable 50bn euros ($53.5bn) by the end of the year. Ricke has already ruled out launching a massive rights issue to reduce its debt burden, and instead has so far achieved 4.4bn euros ($4.7bn) worth of disposals.

There are also concerns over DT’s fixed-line business (T-Com). The worry is that while T-Com generates 90% of DT’s free cash flow, it has barely grown in the last two years and faces intense competition. Additionally, it is losing market share to mobile operators, including its own T-Mobile. The launch of 3G services could exacerbate this problem. In a few months time, it will also face new rules that will make switching to alternative fixed-line carriers a lot easier.

Source: Computerwire