(Associated Press via NewsEdge) Deutsche Telekom's second-quarter net income fell 14% because of the loss of traditional phone users and the company cut its profit outlook for the rest of this year and 2007. Its shares fell almost 8%.
Europe's biggest telephone company blamed intense competition in the industry for the decline and CEO Kai-Uwe Ricke said the company would cut prices to fend off budget competitors in its home market.
'There is no alternative to a rigorous strategy to defend market share in Germany,' Ricke said. 'The paradise time is over for our competitors.'
The company earned 1.01 billion euros ($1.3 billion) in the April-June period compared with 1.17 billion euros ($1.5 billion) a year ago.
Sales rose 2.6% to 15.1 billion euros ($19.4 billion), compared with 14.7 billion euros ($18.4 billion) a year earlier, helped in part by better international sales, which rose 12.3% to 6.9 billion euros ($8.8 billion).
Domestic sales were down 4.4% to 8.1 billion euros ($10.4 billion) from 8.5 billion euros a year ago. Deutsche Telekom cut its pretax profit outlook to between 19.2 billion euros ($25.3 billion) and 19.7 billion euros ($24.6 billion) for this year.
The company said it would simplify and cut its prices this fall with bundled service offers. Sagging sales in Germany took a bigger chunk out of the bottom line because profit margins were higher there, while stronger overseas business added proportionally less because the margins are lower.
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