Embracing diversity and change can be very difficult for any individual or organization, even over long periods of time. In only the past few years, German telecommunications giant Deutsche Telekom
The company reported its quarterly results last week, highlighting the pain it is feeling in its domestic market as revenue there dropped 5% to $10.6 billion. The company lost 588,000 fixed line subscribers at home as consumers abandoned the service for alternatives such as Internet telephony and wireless. These woes tempered consolidated revenue growth to only 4% and helped contribute to a 58% drop in consolidated net profit of $621.5 million in the quarter.
The domestic German market has been nothing but headaches for Deutsche Telekom lately. Competition and regulatory changes focused on fostering competition and bringing prices down for consumers have eaten away at the company's once protected cash flow in its prized home market. On top of this, the company is struggling in negotiations with a key union that encompasses 20,000 of its workers, who now plan to strike.
Thankfully, the financial shortfall at home was covered by growth in international revenues, mostly from wireless carriers abroad. One of the shiniest pennies in Deutsche Telekom's pocket is its American subsidiary T-Mobile. The fourth largest wireless carrier in the U.S. added just under 1 million new net subscribers in the quarter, bringing its total base to 26 million. While still smaller than Sprint Nextel
With higher growth coming from international operations, roughly half of Deutsche Telekom's revenue now comes from outside Germany. And with the European Union moving to cut wireless roaming rates and German regulators forcing the company to open up its broadband lines to competition, the trend of increasing international revenue should continue.
So while Germany is great for beer, it's not such a receptive country for growing what was once a telecom monopoly. Investors may want to order a pint to help dull the financial sting.
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Fool contributor Dave Mock has been known to enjoy German beers -- and even lick the glass clean from time to time. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool has a disclosure policy.