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Deutsche Telekom reduces 2007 profit forecast


Deutsche Telekom reduces 2007 profit forecast


Deutsche Telekom has issued a profit warning for the second time in six months because of increasing competition in Germany and the weakness of the dollar hitting earnings from its US division.

The announcement underscores the difficulties facing chief executive officer René Obermann, appointed only two months ago. He said the revised forecasts reflect “a thorough and unvarnished analysis” of developments in pricing and demand and that sales growth this year will be “moderate.’‘ .

Last year Deutsche Telekom expects turnover to have been 61.3 billion euros, down 1.2%. Profit at 19.2 billion euros would be down 6% and it lost 2.86 million fixed line customers, the total fell to 33.2 million.

However one analyst said things may not be as bad as the profit warning suggested and that there was perhaps a tactical element to it with Europe’s largest phone company cutting its profit forecast in an attempt to influence upcoming negotiations with trade unions, politicians and the European Union.

Investors reacted by selling and the company’s shares fell sharply. The rest of the telecoms sector was also down.

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