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Brexit vote hits Deutsche Telekom profits
[FRANKFURT] German telecommunications giant Deutsche Telekom said Thursday net profits fell in 2016, as its stake in Britain's BT lost value in the wake of last year's Brexit vote.
Net profits were down 18 per cent to 2.67 billion euros (S$3.968 billion), the company said. Analysts had been expecting it to post a profit of 4.54 billion euros.
The main factor hitting profits was a 2.2-billion-euro loss from its 12-per cent stake in BT "mainly as a result of declines in the BT share price and in the pound sterling following the Brexit referendum," the German group said.
Britain's June vote to leave the European Union took the global markets completely by surprise, sparking lingering uncertainty and unease over London's future relationship with Brussels.
Deutsche Telekom stressed that the dip in profits would not affect its payout of shareholder dividends, which it plans to increase by 5 euro cents to 0.60 euros per share.
Operating, or underlying profit at the group slightly outpaced the group's own forecasts, adding almost 8 per cent to reach 21.4 billion euros.
Revenues at Telekom grew 5.6 per cent in 2016 to more than 73 billion euros, more than analysts had forecast, as its American unit T-Mobile USA continued to enjoy strong performance.
That division alone added 8.2 million customers last year in the teeth of a highly competitive and saturated US mobile phone market.
T-Mobile USA's revenues grew 16 per cent to US$37.3 billion, while profits doubled to US$1.5 billion.
Across the Atlantic, Telekom's revenues in Germany and the rest of Europe fell as its fixed-line phone business continues to decline.
Looking ahead to 2017, Deutsche Telekom aims to increase revenues to achieve an operating profit of around 22.2 billion euros - 4 per cent higher than 2016's figure.