View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
October 28, 1999

Deutsche Telekom Profits Hit Hard by Price Cuts

By CBR Staff Writer

Price cuts to protect the market share of its fixed line operations have savaged the first nine months figures of Deutsche Telekom AG. Net profits fell 19.3% to 1.25bn euros ($1.32bn), worse than the 17% decline expected by analysts. Revenue in the same period was 3% down at 25.5bn euros ($26.8bn). Deutsche Telekom said that it was not possible to compensate in the short term for the enormous tariff cuts and the resulting decrease in margins. The company said it had made 3bn euros ($3.1bn) worth of price cuts as it fought off competition from companies such as Mannesmann AG and Mobilcom AG.

Deutsche Telekom is prospering in the online and mobile business and, with an average of 300,000 new customers joining its T-D1 mobile phone service a month, it expects easily to top its forecast of 9 million subscribers by the end of the year.

While Telekom has made progress in reducing its fixed line workforce, analysts are concerned that a 175,000-strong payroll is a huge cost to bear when faced with competition from slimmer, nimbler competitors. Telekom’s huge cash pile is soon to be augmented by the sale of its cable interests and its 10% holding in Sprint Corp, currently being devoured by MCI WorldCom.

While Telekom has purchased One 2 One, the smallest UK mobile operator, and made mobile acquisitions in eastern Europe, the company has failed to make the kind of big takeover that will compensate for the inevitable erosion of market share in Germany. With a wave of consolidation underway, it looks as if Telekom will have to move quickly if the likely prizes are not snapped up by faster-moving operators.

Content from our partners
Rethinking cloud: challenging assumptions, learning lessons
DTX Manchester welcomes leading tech talent from across the region and beyond
The hidden complexities of deploying AI in your business

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.