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T-Online loses $116M
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January 24, 2001: 8:54 a.m. ET
German ISP blames flat-rate Internet connection fees; revenue soars 86%
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LONDON (CNNfn) - T-Online, Europe's largest Internet service provider, said Wednesday it lost 125 million euros ($116.5 million) last year even as sales soared.
The German company, majority-owned by Deutsche Telekom, blamed the loss on costs of introducing its new flat-rate Internet connection fees, which helped boost revenue by 86 percent last year.
Losses at its European subsidiaries also contributed to the red ink.
"On the revenue side, we are pleasantly surprised. Issues continue to be the losses that come primarily from the flat rate, unlimited Internet access and the consolidation of their international assets," Michael Steib, analyst at Morgan Stanley Dean Witter, told CNNfn.com. He had been expecting a loss of £128 million.
 T-Online's full year EBITDA loss was slightly less than analysts had expected and compared with a 17.6 million profit in 1999. EBITDA, or earnings before interest, tax, depreciation and amortization, is a measure of a company's underlying profitability, excluding one-time gains or losses.
Revenue in 2000 rose to  797.2 million, with 655.9 coming from access charges.
Newly acquired subsidiaries contributed 55.2 million to total revenue. T-Online bought Spanish Internet service provider Ya.com for $490 million in September and added a stake in French ISP Club Internet earlier last year before the German firm floated in April. It also has holdings in several other European online companies.
The figures released are preliminary and final results will be reported March 29.
The company also reported a one-time gain of 39.2 million from the flotation of its Internet-broker comdirect bank.
T-Online advertising revenue came in at 110 million, above Morgan Stanley's Steib's estimate of 86 million. The bulk of the advertising increase came in the fourth quarter.
"We don't know how much of that came from Deutsche Telekom; historically that had been around 50 percent," he said.
T-Online didn't break down its fourth-quarter results.
T-Online (ATOI) shares were up 5.3 percent at 16.32 in early afternoon trade on Frankfurt's Neuer Markt. Deutsche Telekom (FDTE) slipped 0.5 percent to 36.83.
Analysts say the flat rate service could continue to hurt T-Online's bottom line, with the combination of fixed income and floating costs that hinge on subscriber usage.
Steib forecast 45 percent revenue growth to 1.1 billion in 2001.
Deutsche said Tuesday that subscribers at T-Online jumped to 7.9 million by the end of 2000 from 4.7 million at the end of 1999.
Since last summer, T-Online has seen its share price tumble and lost scores of top management, including former chief executive Wolfgang Keuntje.
-- from staff and wire reports 
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