Deutsche Telekom profit beats

FRANKFURT, Nov 10 (Bloomberg): Deutsche Telekom AG, Europe's largest phone company, reported profit that beat analysts' estimates after cost cuts boosted profitability in Germany while the T-Mobile USA wireless business added clients. Third-quarter adjusted earnings before interest, taxes, depreciation and amortization fell 2.3 per cent to 4.91 billion euros ($6.7 billion), the Bonn-based company said in an e-mailed statement today. That compared with the 4.71 billion-euro average estimate of 11 analysts compiled by Bloomberg. Net income climbed 15 per cent to 1.07 billion euros, also topping estimates. The former phone monopoly is banking on increased Web traffic over mobile phones and products such as television packages to make up for falling revenue from traditional landlines. It's also fighting a US government lawsuit against the proposed $39 billion sale of the T-Mobile USA unit to AT&T Inc. That business lost 186,000 contract customers, while on a net basis, it increased clients for the first time in a year. "We have once again demonstrated that we can stand our ground in a difficult environment," Chief Executive Officer Rene Obermann said in the statement. Deutsche Telekom confirmed its full-year forecasts, saying adjusted Ebitda will be about 14.9 billion euros from continuing operations and about $5.5 billion for T-Mobile USA. The company still expects free cash flow to be at least 6.5 billion euros. Third-quarter revenue decreased 6 per cent to 14.7 billion euros, in line with analyst estimates. The German government, which owns about 32 per cent of Deutsche Telekom, said Wednesday it may accelerate a plan to dispose of the shares after agreeing to acquire a stake in European Aeronautic Defence and Space Co. from Daimler AG. Some of Deutsche Telekom's growth areas have been slowing recently. Domestic competition from cable providers such as Kabel Deutschland Holding AG is limiting the operator's expansion in the broadband and TV business. Selling phone connections and other products may become even harder in coming quarters as European Central Bank President Mario Draghi said last week that the euro-zone economy may dip into recession toward the end of the year.