Deutsche Telekom on track for full year

City A.M. Reporter
Deutsche Telekom is on track to meet its 2011 targets, it said, despite a poor performance in the United States, continued economic weakness in southeastern Europe and sluggish growth in Germany.

The group is in the throes of retrenching as a regional European player and awaits regulatory approval for the sale of its ailing US business to AT&T for 39bn euros (£33bn).

Once the sale is concluded - expected in the first quarter of 2012 - Deutsche Telekom's domestic operations in Germany will account for 54 per cent of its business.

It expects to generate 14.9bn euros in core profit this year from its German and European operations and 4.2bn from T-Mobile USA, with free cash flow of at least 6.5bn.

Chief executive Rene Obermann said while second-quarter results were no cause for celebration, he was confident the company would achieve its targets.

But some analyst voiced their doubts.

"After the second-quarter numbers it has become even more clear that Deutsche Telekom will most likely not achieve its EBITDA (earnings before interest, tax, depreciation and amortisation) guidance of 19.1bn euros," DZ Bank analyst Joeri Sels said.

"We believe that Deutsche Telekom will heavily miss the US guidance due to both currency effects and a poor operational performance."