Deutsche Telekom posted a sharp drop in profits for the first three months of this year, after losing customers in the United States and struggling with business in some European markets.

Net profit fell 37 percent to 480 million euros ($696 million) from 767 million euros in the same period a year ago. Revenue also dipped 7 percent 14.6 billion euros.

While Deutsche Telekom reported relatively strong business in its home country, the operator faced a variety of challenges in its international markets. Among them: an ongoing struggle against bigger mobile phone operators in the United States; slow economies in Greece and Romania; a new tax in Hungary; and expensive measures to attract new customers and retain existing ones in the Netherlands and Poland.

Plans to sell US business

In the United States, where Deutsche Telekom is in the processing of selling its T-Mobile USA unit, results were affected by a drop in customers. The unit's US customer base declined by 99,000 customers during the quarter to 33.6 million.

The German operator hopes to sell T-Mobile USA to AT&T. However, the sale, which would reduce the number of US mobile phone companies with national coverage from four to three, is pending approval by anti-trust officials. The US Justice Department and the Federal Communications Commission could take a year or longer to review the proposed transaction.

Deutsche Telekom earnings were also reduced because the company no longer includes the earnings from T-Mobile UK, now part of a joint venture with France Telecom's Orange mobile phone unit.

Author: John Blau
Editor: Nathan Witkop