Deutsche Telekom profit plunges but it keeps 2011 targets

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German telecommunications operator Deutsche Telekom said Thursday that its second quarter net profit fell by 26.7 percent owing to restructuring costs, but confirmed its full-year targets.

The group's net profit of 348 million euros ($497 million) was far below an average analyst forecast of 563 million euros compiled by Dow Jones Newswires.

Sales were down by 3.3 percent at 10.97 billion euros, a statement said.

"Although these figures are not a cause for celebration, they still give us reason to be confident that we will achieve our targets in a persistently difficult environment," chief executive René Obermann was quoted as saying.

"We are now also seeing light at the end of the tunnel in Southeastern Europe," he added.

Deutsche Telekom, which is burdened in particular by its Greek unit OTE and T-Mobile operations in the United States, confirmed full-year targets including core operating earnings before taxes and special items of 14.9 billion euros.

In the second quarter, adjusted Ebitda lost 2.6 percent to 3.79 billion euros, slightly better than an analyst forecast of 3.73 billion euros

The group also said it expected to have "at least 6.5 billion euros in free cash flow" at the end of the year.

Mobile Internet-based activities were a key source of growth and broadband lines overtook traditional telephone lines for the first time in Germany, the company noted.

But challenges remained in other areas, it said, adding: "This is particularly true in the United States."

T-Mobile lost a net 281,000 US clients, and is in the process of being sold to rival AT&T for some 39 billion dollars, pending regulatory approval.

Deutsche Telekom's European division reported an eight percent loss in operating profit owing to regulatory pressure, stronger competition and poor economic conditions.

The group nonetheless stressed that "some positive trends have emerged in the Greek mobile business."

© 2011 AFP

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