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Drillisch shares slump as earnings guidance, pre-trimmed, 5 G expense slow

FRANKFURT (Reuters) – Shares of the telecommunications company of 1&1 and Drillisch and its parent company, United Internet fell to a six-year lows on Thursday, after they trimmed earnings guidance for the initial 5 g of the network costs, and a higher line to create.

FILE PHOTO: the logo of the upcoming mobile standard 5 G has been shown in Hanover, Germany on March 31, 2019. (REUTERS photo/Fabian Bimmer/File Photo

Drillisch shares have dropped by 12%, whereas in the United the Internet, falling by 9 per cent, while United was announced, a share buyback, to respond to the drastic declines of the last few years in terms of growth in the course of the cost of building a private network.

The CEO, Ralph Dommermuth splurged 1.07 billion euros ($1.2 billion) in the German auction of 5 g of the frequencies in June, which is the self-made millionaire, and take a step closer to his dream of the establishment of the fourth German mobile phone network.

The market leader, the Deutsche Telekom and the rival Vodafone has already announced the roll-out of limited to 5G service in a number of towns in germany, Europe’s largest economy as the backlog of early adopters such as the United States of america, Japan, and south Korea.

Drillisch has allowed the banks to additional credit and minimized the dividend of the fund’s commitments to build a network that can be up to one-half of the German households, as provided by the compliance officer.

In spite of the heavy to spend it to 5G, frequency, Dommermuth said, Drillisch would be only a partial draw on a € 2.8 billion loan facility from the system of a European bank consortium, to the payment of the annual membership fee to the regulator.

“There’s no need for you to understand our financial plan,” Dommermuth, told reporters on a call after the companies reported in the first half of the year. Contract negotiations with vendors, network and infrastructure, the partnership was in progress, he added.

Sales and core earnings on the Drillisch was marginally higher than a year earlier, as it added 380,000 new contracts with customers in the period, bringing the total to 13.9 million euros. This is a missed market expectations, leaving investors with a negative surprise, said analyst of Commerzbank, Heike Pauls.

The pre-paid telecom for a specialist now sees earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 8% this year, compared with an earlier forecast of 10%.

PAYMENT

Drillisch is the result of the subsequent month, have to pay 735 million for the 3.6-Gigahertz (GHz) spectrum to be bought, which is in 2021. An additional charge of 335 million euro for the 2 GHz spectrum, and is due in June 2024. It will be available in 2026.

The case of United Internet, in the first half, the consolidated EBITDA rose by 11.6%, thanks in part to a favorable change in lease accounting rules. On an underlying basis, EBITDA increased by 3.6%. The company has trimmed its EBITDA guidance for the full year by one percentage point to 11%.

United Internet, which Dommermuth holds a 40% stake and which is, in turn, owns 75.1% of Drillisch, also announced a share buyback worth 192 million euros.

Jefferies analyst Ulrich Rathe described the results as “a mess, but the track is where it’s important.” He also added that the buy-back of own shares was represented, “a stark statement of the group for the current share-price breakdown,”.

Shares in Drillisch, there is a decrease of 50% in the past year, the concern is that it will not end up to recover their network investments. United Internet’s share price has fallen by 43% over the same period of time.

Reporting by Douglas Busvine; Editing by Kirsten Donovan and Jane Merriman

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