Deutsche Telekom says Q2 earnings fall on costs

Deutsche Telekom's second-quarter net profit dropped 35% as the strength of the euro, the continued exit of traditional landline consumers and higher debt costs ate into revenues, an Associated Press report said.

However, Europe's biggest telecom maintained its full-year earnings forecast, the report added.

The company said net profit for the April-June period fell to €394 million (US$607 million) from  604 million a year earlier while sales slipped 3% to  €15.1 billion (US$23.3 billion) compared with €15.6 billion a year earlier.

The company's pretax profit in the quarter fell nearly 30% to  €892 million (US$1.4 billion) from  €1.3 billion.

The Associated Press report further quoted CEO Rene Obermann saying that the company was still poised to reach its 2008 financial targets, including a pretax profit of approximately  €19.3 billion (US$30 billion), on par with that of 2007, despite the dip.

'We made good progress during the first half of the year in achieving our strategic objectives, both in operations and with our cost savings,' Obermann said. 'This leads us to assume that we will reach our financial targets in the 2008 financial year.'

The lower net profit was hampered by a continued loss of customers using land lines, something the company has been unable to stem as more and more consumers opt for only cell phones or seeking lower costs by subscribing to Telekom rivals like Vodafone or Arcor who offer bundled packages that mix telephone, internet access and even television.

Deutsche Telekom said its US business is continuing to demonstrate robust development in operations, though the weakness of the dollar is clearly affecting earnings.

 

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