Bonn, Aug 16: Indebted Deutsche Telekom, Europe’s largest telecoms carrier, beat forecasts on Thursday as it unveiled a second-quarter net profit and said it aimed to reinstate dividends in its next financial year. Cost cuts at its cash-generative fixed-line unit, asset sales and a strong showing by its US mobile arm helped propel it to a net profit of a 256 million ($289 million), up from a two-billion-euro loss a year ago. It is the second strong quarter under new Chief Executive Kai-Uwe Ricke, who has slashed costs, jobs and investments after an ambitious expansion spree at the height of the bull market three years ago sent shares crashing and losses surging.

The group, one of Europe’s most indebted companies, cut its debt to a 53 billion — meeting its year-end target six months early. In a mark of confidence, Telekom said it planned to reinstate dividend payments it had suspended in 2002 for next financial year, payable in 2005. “We are delivering the results we promised. We all know that we have no alternative,” Ricke told a news conference, adding: “We... want to pay a dividend because we want to send a positive signal to the shareholders. (But) if you want to know why we won’t pay one this year, remember where we are coming from.”
Ricke, who has been under market pressure to prove a strong first quarter was no flash in the pan, stopped short of raising full-year earnings guidance. But he said he felt comfortable with the upper end of core earnings guidance and pledged to cut debt further. Deutsche Telekom is targeting full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) of a 17.2 billion-17.7 billion and a net profit for the full year. Bureau Report