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BT Reports 28% Increase in Profits While Deutsche Telekom Flounders

12:10 am on November 10, 2006 | Category: Business, Corporate, Internet, Telecom Services, Telephone, Wireless

The United Kingdomâ€™s former telecom monopoly, BT Group, reported an increase in fiscal second-quarter profits this week, thanks in part to its strategy of moving away from the shrinking fixed-line telephone market to focus more attention on broadband internet services.

BTâ€™s profits rose 28% to 475 million pounds (US$904.7 million) in the most recent quarter, in sharp contrast to its German counterpart, Deutsche Telekom, whose profits were off by 20% to 1.95 billion Euros (US$2.49 billion).

Deutsche Telekom, which remains Europeâ€™s largest telephone carrier, has focused almost exclusively on its numerous wireless business. The saturated nature of Europeâ€™s cell phone market, however, is preventing the carrier from achieving its wireless sales targets, while its fixed-line telephone business erodes faster than ever before.

â€œThis isn’t an industry with impressive growth numbers,â€ said Boris Boehm, a fund manager with Hamburg-based, which owns a significant stake in the German telephone giant. â€œDeutsche Telekom’s future is all about whether they can save money and reorganize the fixed-line business.â€

Deutsche Telekom is currently the second worst performing stock in the Bloomberg Europe Telecommunication Services Index, and has declined 4.7% over the course of this year. London-based BT, meanwhile, is the Indexâ€™s sixth best performer, and has surged by almost 30% since the beginning of January.

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