Deutsche Telekom shares slump after group warns of profit decline

Feb 23, 2012, 13:15 GMT

Bonn, Germany - Shares in Deutsche Telekom dropped sharply Thursday after Europe's biggest telecoms group warned about a further decline in profit this year amid intense competition in its US and European markets.

The Bonn-based company said earnings before interest, taxes, depreciation, amortization and one-off items (adjusted EBITDA) will drop 3.7 per cent to about 18 billion euros (23.85 billion dollars) this year.

'In 2011, the company operated in a challenging environment in every respect, a situation that is not going to change this year,' said chief executive Rene Obermann in releasing the results.

Telekom said operating profit for the full year slipped to 18.69 billion euros, from 19.47 billion euros in 2010.

By late morning trading, the group's shares were down 2.9 per cent at 8.71 euros. Telekom proposed holding its dividend for 2011 at 0.70 cents a share.

Net loss in the fourth quarter of last year ballooned to 1.34 billion euros from a loss of 514 million euros a year earlier. Quarterly revenue declined by 3.7 per cent.

This also followed write downs of more than 3 billion euros for its US and European operations, including its business in debt-hit Greece.

The write downs cancelled out a one-off payment of 2.3 billion euros from AT&T as compensation for Telekom's failed bid to sell its American mobile offshoot, T-Mobile USA, to the giant US telecoms group.

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