RealTime IT News

Portal Revenues Up Sixfold at T-Online, Despite Loss

[London, ENGLAND] German Internet service provider T-Online increased its portal revenues sixfold in 2000, despite making a substantial -- but less than expected -- loss of US $116.5 million.

Like the figures indicated by T-Online's main shareholder Deutsche Telekom on Tuesday, those from the German ISP give new meaning to the term "mixed results."

Group revenue increased by 86.1 percent to EUR 797.2 million (US $750 million) and its subscriber base grew 70 percent to 7.9 million. However, the loss compares badly with the EUR 17.6 million (US $16.5 million) profit achieved in 1999.

The figures given by T-Online International AG are only "initial results" and have yet to be audited. Full audited results will be issued on March 29, 2001.

The most promising aspect of the figures is the greatly increased income from advertising and e-commerce, up six times compared with the previous year. These portal revenues reached EUR 110 million (US $104 million) and showed a 75 percent increase in the fourth quarter over the third quarter.

Overall, the figures appear to be strong, despite the loss -- which T-Online's management believes can be turned around very quickly.

Deutsche Telekom's 81.7 percent equity holding in T-Online has not prevented it from charging a per-minute rate for carrying the ISP's Internet traffic across its network. However, the rules are to change following instructions by the German telecommunications regulator RegTP which will oblige Deutsche Telekom to offer all ISPs a flat-rate service starting February 1.

T-Online was the first ISP to offer end-users a flat-rate service in Germany and to date has attracted over half a million customers for it. Clearly, it cannot continue to charge a flat-rate while paying a per-minute rate to its parent.

Although T-Online was very much the dominant player in the European ISP industry in 2000, the context has changed following Tiscali's January agreement to buy Liberty Surf. According to the German newspaper Boersen-Zeitung on Tuesday, Tiscali has declared its intention to become larger than T-Online during 2001.

Shares rose 6 percent in T-Online after the figures were announced on Wednesday morning.