Deutsche Telekom cuts dividend despite higher profits

Tim Hoettges, CEO of Deutsche Telekom AG walks on stage for the company's AGM in Bonn, Germany, in this file photo. —Reuters

BONN, Germany — German communications giant Deutsche Telekom reported a jump in quarterly profits on Thursday but cut its dividend for 2019, partly blaming "unexpectedly high" costs in the roll-out of Germany's 5G network.

The Bonn-based network operator said net profit from July to September jumped 23 percent to 1.37 billion euros ($1.5 billion) compared with a year earlier.

Quarterly revenues were up 4.8 percent, allowing the group to breach to 20-billion-euro mark "for the first time in the company's history".

"Earnings increased in all areas of the group in the first nine months of this year — with some of that growth in the double digits," CEO Tim Hoettges said in a statement.

Nevertheless, the group announced it would lower its dividend payouts this year to 0.60 euros per share, down from 0.70 euros last year.

The decision came as a result of "unexpectedly high costs for the mobile spectrum auction in Germany", said the company, which is investing billions in super-fast 5G mobile networks.

It also cited "greater clarity" over upcoming US spectrum auctions and less uncertainty over the planned mega-merger of its US offshoot T-Mobile with rival Sprint as reasons for the dividend cut.

The US telecoms regulator this week approved the tie-up between the country's third and fourth largest carriers, but the deal could still stumble over an anti-trust challenge brought by more than a dozen US states.

T-Mobile once again drove growth at Deutsche Telekom in the third quarter, gaining 1.7 million new customers to top 84 million and generating revenues of $11.1 billion.

Looking ahead, the group raised its 2019 outlook saying it now expected underlying, or operating profits adjusted for special items, of 24.1 billion euros — up from 23.9 billion previously.

The company's share price dipped 2.7 percent to 15.25 euros by 1100 GMT, making it the worst performer in Frankfurt's DAX index that was up 0.8 percent. — AFP