Deutsche Telekom says Q3 net income up 7 pct to euro959 million ($1.4 billion)

Deutsche Telekom Q3 net income up 7 pct

BERLIN — Deutsche Telekom AG reported third-quarter net income rose 7 percent as it remained focused on controlling costs and developing key markets in the U.S., Britain and Poland.

Telekom, based in Bonn, on Thursday reported net income of €959 million ($1.4 billion) in the July-September period compared with €895 million a year earlier. This quarter’s figure includes results for Greece’s Hellenic Telecommunications Organization SA.

Revenue rose 5 percent to nearly €16.3 billion in the quarter compared with nearly €15.5 billion.

“We have continued the positive trend of the second quarter and have picked up the pace,” Chief Executive Rene Obermann said. “We responded quickly and took effective steps in those markets we were concentrating on in the first quarter — the United Kingdom, the United States, and Poland.”

Investors agreed, pushing Deutsche Telekom shares nearly 2.2 percent higher to €9.48 in Frankfurt morning trading.

Telekom said its business in Britain, T-Mobile UK, had stabilized and, in September, it began talks with France Telecom about setting up a joint venture between it and Orange. In the U.S., where T-Mobile USA operates, the sale of handsets on 3G networks and Internet access by subscribers both rose.

Telekom’s Polish subsidiary, PTC, also turned the corner, taking on more subscribers and bringing in more revenue.

The company’s efforts to cut costs — dubbed the Save for Service program — also bore fruit, increasing profitability across all of its segments in the third quarter. Since it was implemented in 2005, it has generated savings of some €5.4 billion.

Over the January-September period, however, Telekom’s net income slid 84 percent to €356 million compared with €2.2 billion a year earlier. Revenue, though, was up 6 percent to €48.4 billion compared with €45.5 billion in the first nine months of 2008.

Despite the gains outside of Germany, Telekom’s home market remained vexing, with revenue dipping in the third quarter as it lost more landline subscribers.

Revenue was down 2 percent to €6.5 billion and pretax earnings were down 3 percent to €2.5 billion.

But its mobile business offset the decline, as more and more Germans flocked to T-Mobile shops to acquire the latest Apple iPhone, the 3GS, lifting the total number of contract customers to 17.1 million in the quarter. That resulted in a 1 percent increase in revenue to €2.1 billion from $2 billion a year earlier.

Telekom said that the rate of subscribers to its DSL Internet service was lower, too, given that “many of the contracts for complete packages expired after two years in July and August.” The number of new subscribers fell 18 percent in the third quarter.

In th U.S., T-Mobile USA continued expanding its 3G network, expanding its coverage there by 50 percent during the third quarter and adding more phones for consumers. By the end of the year, it hopes to have 24 models available that can take advantage of the fast speeds 3G networks offer.

Still, revenue fell by 3 percent in the quarter to €3.8 billion, proof that competition with rivals like AT&T and Verizon is fierce. Measured in U.S. dollars, the decrease was 2 percent to $5.4 billion. It also lost 77,000 customers from July through September, but moved to extend its reach by opening more T-Mobile shops and offering phones and contracts for sale through the retailer RadioShack.

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