Deutsche Telekom AG issued a profit warning on Sunday for this year, cutting its earnings outlook as it faces fierce competition in Germany and absorbs the impact of a strong euro.
The Bonn-based company said it now expects this year's adjusted earnings before interest, taxes, depreciation and amortization of 19 billion euros (US$24.6 billion), down from a previous forecast of 19.7 billion euros to 20.2 billion euros.
The change resulted from "the extremely tough domestic competitive environment and the recent development in foreign exchange rates," a statement from the company said.
Deutsche Telekom said its T-Com fixed-line business would play an "active role in the expected continued tough pricing competition" this year.
The competition would cause "significantly increased expenditures for service and marketing," it said.
As a result, it said, pretax earnings in the broadband and fixed-line business will be 800 million euros lower than previously estimated.
The company said exchange rate developments have had a negative impact on revenue and earnings for its mobile business.
The impact prompted the company to cut 200 million euros from its pretax earnings outlook.
Deutsche Telekom's mobile business includes T-Mobile USA. The US dollar recently has been under renewed pressure against the euro.
Strong price pressure in the German mobile market and additional marketing expenses resulted in another 200 million euros being cut from the forecast, Deutsche Telekom said.
It added that it expects a "moderate increase" in group revenue this year.
In a preliminary assessment for last year, the company had total revenue of 61.3 billion euros, falling short of its announced target range of 61.5 billion euros to 62.1 billion euros.
However, the telecom said that it expected to meet its earlier pretax profit forecast of between 19.2 billion euros and 19.7 billion euros.
The company's new chief executive, Rene Obermann, took over in November and pledged to win over customers by improving Deutsche Telekom's service while also cutting costs.
Over the course of last year, Deutsche Telekom said it lost more than 2 million fixed-line narrowband customers -- a decline of 5.5 percent -- with total customers declining to less than 39 million.
However, it saw a 37 percent increase in broadband subscriptions, which rose to more than 11.7 million.
The company also saw an 8.8 percent rise in mobile customers, who numbered 106.4 million by the end of last year.
T-Mobile USA saw customer numbers rise by 15.4 percent to 25 million.
In Germany, Telekom's mobile arm posted a 6.4 percent gain to 31.4 million customers.
Deutsche Telekom said it still plans to recommend a dividend for last year that will at least match the previous year's 0.72 euro per share.
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