Deutsche Telekom profit down 37 pct to $696 mln

Friday's earnings statement showed net profit of euro480 million ($696 million), down from euro767 million a year ago. Revenue was down 7 percent to euro14.597.

The company said its business remained relatively strong in its home country, Germany. But it faced a variety of difficulties elsewhere. Those include an ongoing struggle against bigger competitors in the United States; slow economies in Greece and Romania; a new tax in Hungary, and expensive efforts to attract and keep customers in Netherland and Poland.

The company saw its customer base and revenue slip at T-Mobile USA, which it is in the process of selling to AT&T for $39 billion. A high churn rate among contract customers of 2.4 percent was a weak point, only partly offset by growth in prepaid customers.

As a result, the overall customer base in the U.S. declined by 99,000 during the quarter to 33.6 million.

"Notwithstanding the announced sale of T-Mobile USA, the company will continue to pursue its strategy as an aggressive competitor on the market until the transaction has been closed," the company said in a statement.

The sale to AT&T would reduce the number of U.S. mobile phone companies with national coverage from four to three, and must pass scrutiny from anti-trust regulators. The Justice Department and the Federal Communications Commission could take a year or longer to review the proposed transaction.

Deutsche Telekom earnings were also reduced because the company also no longer includes earnings from T-Mobile UK, now part of a joint venture with France Telecom's Orange.

The company's performance of 9 euro cents per share fell short of analyst estimates of 15 euro cents. The shares were down 1 percent at 11.05 in morning trading in Germany.

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