D.Telekom reassures with solid Q2, keeps outlook

BONN, GERMANY: Deutsche Telekom reiterated its 2009 targets while reporting second-quarter core profit and sales in line with market expectations thanks to growth abroad and continued cost cuts.

"The figures for the second quarter make us confident for the full year," Chief Executive Rene Obermann said in a statement on Thursday. "Hence, we confirm our forecast for 2009," he added.

The German telecoms group slashed its full-year targets in April as weak conditions and tough competition in major markets -- especially Britain and United States -- hit its earnings.

The company now sees 2009 adjusted earnings before interest, tax, depreciation and amortisation  2-4 percent lower than the 19.5 billion euros it made in 2008.

Free cash flow is expected to ease to 16.4 billion euros from 16.6 billion.

The company said it had taken measures to improve its business in the United States, Britain and Poland which were having an effect.

"Operating costs fell and the EBITDA margin rose in all three countries compared to the first quarter," it said.

EBITDA in the second quarter rose 8.4 percent to 5.3 billion euros ($7.63 billion) on a sales increase of 7.4 percent to 16.2 billion euros, driven by the consolidation of its stake in Greek telecoms group OT.

Analysts polled by Reuters had on average seen sales at 16.288 billion euros and EBITDA at 5.084 billion euros.

Deutsche Telekom's stake in OTE, which it acquired last year, contributed 2.4 billion euros to net revenue and 0.9 billion euros to core profit.

International revenue for the quarter rose 18.6 percent to 9.4 billion euros, while domestic revenue dropped 5.1 percent to 6.8 billion euros.

Deutsche Telekom competes with European telecom groups Telefonica, France Telecom and Vodafone, all of which confirmed their outlooks in the past two weeks.