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Deutsche Telekom second-quarter in line, confirms guidance

Deutsche Telekom second-quarter in line, confirms guidance
FILE PHOTO: A man walks past the logo of Deutsche Telekom AG at the headquarters of German telecommunications giant in Bonn, Germany, February 19, 2019. REUTERS/Wolfgang Rattay -
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FRANKFURT (Reuters) – Deutsche Telekom <DTEGn.DE> on Thursday reported in-line growth in the second quarter and confirmed its guidance for the year as it pushes to complete the $26 billion takeover by U.S. unit T-Mobile <TMUS.O> of competitor Sprint <S.N>.

Europe’s largest telco by revenues said that revenue and earnings before interest, taxation, depreciation and amortization after leases (EBITDA AL) both grew by 7.1%, in line with expectations in a company poll.

Organically, after stripping out the impact of acquisitions and exchange rate effects, revenue grew 2.9% and 3.5% respectively. Deutsche Telekom confirmed its guidance for the year for EBITDA AL of 23.9 billion euros (£22.03 billion).

“We remain reliable,” said CEO Tim Hoettges. “Our business performed well in all areas again in the first half of 2019. That puts us in a position to deliver the results we promised.”

Net profits jumped by 91% as the costs of a legal settlement in the second quarter of last year flattered the year-on-year comparison.

T-Mobile, which has won approval to buy Sprint from the U.S. Department of Justice but still faces a legal challenge from Democrat-led states to the deal, drove growth with a 5.1% gain in dollar terms in the quarter.

Deutsche Telekom’s German home market showed weaker growth but the company highlighted a gain of 2.4% in mobile service revenues and increased data use by users, as it plans a limited rollout of 5G services.

The Bonn-based company reported free cash flow after leases of 1.546 billion euros, below analyst expectations. This figure did not include costs for spectrum, which lifted cash capex by more than a third to 4.2 billion euros.

(Reporting by Douglas Busvine; editing by Tom Sims and Michelle Martin)

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