BONN (dpa-AFX) - Deutsche Telekom achieved a leap in profits last year despite a decline in revenue. While unfavorable exchange rate effects and the sale of the majority stake in the radio tower business weighed on earnings, the latter in particular was responsible for the huge increase in the bottom line. Group CEO Tim Hottges has set himself ambitious targets for 2024: both operating profit and free cash flow are to increase significantly. Investors were less enthusiastic in early trading: Deutsche Telekom shares slipped by a good two percent at the start.

Nevertheless, UBS analyst Polo Tang believes that telecom shares are still cheap. Expected positive developments such as the doubling of free cash flow by the end of 2024 as a result of the Sprint merger have not yet been priced in.

As the DAX-listed company announced in Bonn on Friday, the Group's net profit for the past year fell by 2.1 percent to just under 112 billion euros. Without exchange rate and consolidation effects, there would have been a moderate increase. With the reported annual revenue, Telekom exceeded the average analyst estimates.

By contrast, the more lucrative revenue from services such as data, from which telecom companies tend to earn more, rose by one percent to almost 93 billion euros for the year as a whole. Organically, the increase was significantly higher.

"Thanks to our growing businesses on both sides of the Atlantic, we are confident that we can go one better in 2024," said CEO Tim Hottges in the press release. Adjusted for special effects, earnings before interest, taxes, depreciation and amortization including leasing costs (EBITDA AL) are expected to increase by six percent year-on-year to around 42.9 billion euros in the current year. This would be a significantly larger increase than in 2023.

In terms of free cash flow AL, the manager is targeting around 18.9 billion euros after 16.1 billion euros last year. Analysts had hoped for a little more on average in terms of both cash inflow and adjusted operating profit for 2023.

In Germany, Deutsche Telekom won 289,000 new contracts under its own brand in the fourth quarter after deducting terminations. In total - i.e. including contracts via contractual partners - there were 360,000 new contracts in Germany. Competitor Telefonica Deutschland recorded around 284,000 net new mobile contracts at the end of the year. Vodafone is further behind - the British telecoms provider added 95,000 new mobile customers in its most important market.

For the year as a whole, Telekom earned around 17.8 billion euros, more than twice as much as in the previous year - the proceeds from the sale of GD Towers were the main driver here. However, analysts had also expected more here. In the final quarter, however, interest-related impairments on the remaining stake in GD Towers resulted in a billion euro loss for Telekom.

As already announced, Telekom intends to pay its shareholders a 10 percent higher dividend of 77 cents per share for the past year. In addition, own shares with a volume of up to two billion euros are to be bought back this year. These share buybacks have already begun, it was reported./ngu/niw/stk