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T-Online earnings hit by broadband costs in third quarter

Posted by iNext - 2005-11-09

T-Online, Europe's biggest supplier of Internet access, saw earnings fall sharply in the third quarter as a result of the high costs of buying new customers for its high-speed broadband Internet services.

T-Online, a unit of German telecommunications giant Deutsche Telekom, said in a statement on Tuesday that net profit slumped by 73 percent to 23.4 million euros (28 million dollars) in the period from July to September.

Operating profit plummeted by 80 percent to 22.2 million euros, despite a four-percent rise in revenues to 505.8 million euros.

At the same time, selling costs soared by 43 percent to 197.9 million euros and administrative costs jumped by 21 percent to 26.7 million euros in the three-month period.

In the first nine months, net profit tumbled by 43 percent to 146 million euros, operating profit slumped by 52 percent to 149 million euros on a four-percent rise in revenues to 1.537 billion euros.

Selling costs in the period from January to July were up 44 percent at 573.1 million euros and administrative costs were up 12 percent at 78.6 million euros.

"Selling costs increased due to the strategic expenses for customer care and customer acquisition," T-Online explained. "In Germany, this is mainly attributable to the ongoing advertising campaigns for broadband. In the rest of Europe, we continued to incur higher selling expenses as a result of our aggressive market approach."

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