Deutsche Telekom AG (DT) Wednesday swung to a first-quarter net profit despite slightly lower sales, as it benefited from easy comparables, though its closely-watched U.S. operations remain weak.

Net profit for the quarter ended March 31 was EUR767 million after a net loss of EUR1.12 billion a year ago, when the company's bottom line was weighed down by a EUR1.8 billion impairment charge on the goodwill of its U.K operations. T-Mobile, its U.K. mobile operation, is now part of Everything Everywhere, a joint venture with France Telecom's (FTE) Orange.

Sales for the period declined 0.6% to EUR15.81 billion.

Closely watched adjusted earnings before interest, tax, depreciation and amortization, or Ebitda, the company's preferred measure of operating performance, still rose 1.6 % to EUR4.89 billion.

Sales and operating profit have been boosted throughout 2009 by the first-time consolidation of Hellenic Telecommunications Organization SA (OTE) from February 2009. In the first quarter, the effect was limited to just one month.

Deutsche Telekom results beat expectations for sales of EUR15.61 billion and met expectations for adjusted Ebitda of EUR4.88 billion, according to a Dow Jones Newswires poll of 10 analysts.

Deutsche Telekom did not revise its 2010 outlook but amended it for the deconsolidation of its U.K. operations. It now expects full year adjusted Ebitda EUR400 million to EUR500 million below the previous guidance of around EUR20 billion and an unchanged free cash flow of around EUR6.2 billion.

Closely-monitored T-Mobile USA remained weak. It lost 77,000 subscribers on a net basis in the January-to-March quarter, level with the subscriber loss in the thrird quarter 2009. Revenue declined by 2.2% in dollar terms to $5.28 billion. In euros, the sales decline was even worse, with a 7.8% slump. Still, the adjusted Eitda margin improved by 0.8 percentage points to 26.4% in the period.

Company website: www.telekom.com

-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18; archibald.preuschat@dowjones.com
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