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Deutsche Telekom's Q2 net profit jumps 34%

German telecoms giant Deutsche Telekom said on Thursday (Aug 7) that earnings rose sharply in the second quarter, driven by the strong performance of its US subsidiary.

FRANKFURT: German telecoms giant Deutsche Telekom said on Thursday (Aug 7) that earnings rose sharply in the second quarter, driven by the strong performance of its US subsidiary. "It's harvest time for Deutsche Telekom on both sides of the Atlantic," the group said in a statement.

Net profit rose by 34.2 percent to 711 million euros (US$951 million, S$1.19 billion) in the period from April to June. Underlying or operating profit was up 9.5 percent at 4.417 billion euros, while revenues slipped by 0.3 percent to 15.114 billion euros.

"Our strategy so far has been to make bold and prudent investments, focus first on lifting customer numbers, and then on upping revenues and results. And we are now starting to reap the rewards," chief executive Tim Hoettges said.

The US unit, T-Mobile US, "continued its rapid growth of the last few quarters, passing the 50-million customer mark for the first time in mid-2014." In the second quarter alone, 1.47 million new customers were recorded, Telekom said. The US unit "has once again revised its growth expectations upwards for the full year."

Taking the group as a whole, Deutsche Telekom confirmed its full-year earnings target, with underlying profit projected to reach 17.6 billion euros for the whole of 2014.

T-Mobile is being courted by potential takeover partners, notably French group Iliad. But CEO Hoettges told journalists in a telephone conference that Deutsche Telekom had not received "a satisfying offer" for the subsidiary so far. "We've always said that Deutsche Telekom was open to transactions with added value. At the moment, there is no such offer on the table," he said.

The future of T-Mobile US, in which Deutsche Telekom holds a 67-percent stake, has become the subject of feverish takeover speculation recently. US rival Sprint, which is controlled by Japanese giant Softbank, has long been seen as a possible merger partner.

But last week, Iliad made a surprise US$15-billion bid for a controlling stake in T-Mobile, seeking to merge the US operator with the similarly aggressive brand Free, which provides discount Internet and wireless access. The bid has been seen as too low by many observers. "Iliad's bid took us by surprise," said Telekom chief Hoettges, noting that there were "a number of other options" still open. 

Deutsche Telekom was currently "extremely satisfied" with the way T-Mobile US was developing, he continued. "Of the four big wireless suppliers, T-Mobile is the one which has achieved the strongest growth in terms of sales in the second quarter," beating AT&T, Verizon and Sprint, Hoettges said.

On the Frankfurt stock exchange on Thursday, Deutsche Telekom shares were among the top gainers, adding 0.56 percent in a stagnant market.

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