T-Online cuts its losses

March 21, 2002 Posted: 12:14 PM EST

DARMSTADT, Germany - German Internet giant T-Online on Thursday said it trimmed its losses in the last quarter of 2001 and expected to break even ahead of schedule by the end of this year.

T-Online, Europe's largest Internet service provider, said strong subscriber growth and cost-cutting measures helped to lower its fourth quarter losses by more than half. As a result, the company said it should begin turning a profit well before its previous 2003 target.

The Darmstadt-based company reported fourth quarter core losses before interest, taxes, depreciation and amortisation (EBITDA) of 31.2 million euros ($27.61 million), compared to a loss of 68 million euros in same period a year earlier.

Fourth quarter sales rose to 331 million euros from 254.5 million a year earlier. T-Online depends on Internet access fees for almost 80 percent of its sales. However, the company said non-access revenue -- from advertising and e-commerce -- also grew in the fourth quarter, to 65 million euros from 40.3 million in the third quarter.

For the full year, the company posted a EBITDA loss of 189 million euros, compared to a loss of 121.6 million euros in 2000. The results were better than T-Online's own forecast -- calling for a loss of 200 million euros last year -- and were in line with most analysts' predictions.

T-Online's subscriber base increased to 10.7 million by the end of 2001, up from 7.9 million customers a year earlier. The company expects to add a further 2 million customers in 2002.

But it is the break-even target on core profits that analysts say is the best yardstick for measuring the performance of ISPs. Europe's other big Internet companies, France's Wanadoo and Italy's Tiscali, have pushed their profit-making targets ahead first half of 2002, as they moved to cut costs.

"That is what's been driving the ISP stocks recently, the path to break-even,'' one London-based Internet analyst told Reuters.

However, analysts believe the company, which is 82-percent owned by Deutsche Telekom, hurt its bottom line with the purchase of Spain's loss-making ya.com and France's Club Internet. In the past year, it also entered into partnership with German tabloid newspaper Bild to provide an online portal for news content.

T-Online shares were up 5.4 percent to .13.54 euros in late afternoon trading on Thursday in Frankfurt.

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