Deutsche Telekom's profits nosedive, down 37% in Q1

Poor performance in Greece, Romania and the US caused Deutsche Telekom to report first quarter net profits of €480 million, down 37 per cent compared with the same period last year.

Nevertheless, the company attempted to reassure jittery stock markets by confirming it is still on track to generate EBITDA of more than €19 billion in 2011.

Deutsche Telekom CEO Rene Obermann said in a statement that the company remains resolute despite the disappointing results. "We have done our homework correctly. The course has been set for the Group's realignment, and we intend to pursue this course systematically. The figures for the first quarter show, however, that there are further challenges ahead."

While the company was impacted by troubles outside its home market, overall damage was limited by cost cutting within its German fixed-line operations and over-performance from mobile data revenues. The company admitted that Germany now contributes more than half of the company's revenue and about two-thirds of earnings. It also confirmed plans to invest €10 billion to improve its network and infrastructure in Germany through 2012.

Of note, the company said marketing campaigns geared toward retaining and attracting high-value contract customers in Poland and the Netherlands had been successful, but expensive and damaging to its first quarter EBITDA. It also revealed that smartphones accounted for more than 40 per cent of all handsets sold across Europe, twice the amount of 12 months ago.

France Telecom and KPN reported similar lacklustre results.

For more:
- see this Financial Times article
- see this Bloomberg article
- see this Reuters article
- see this Cellular News article

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