Shares in Europe's largest telecoms group by sales tumbled more than 3 percent as Wednesday's forecast overshadowed solid third-quarter results that again showed a thriving mobile unit offsetting a fixed-line business battered by competition.
To help stimulate revenue growth to 5 percent per year, Deutsche Telekom said earnings before interest, tax, depreciation and amortisation (EBITDA) would dip to between 20.2 billion and 20.7 billion euros in 2006 before recovering to between 21.7 billion and 22.2 billion euros in 2007.
The company's shares slid 3.1 percent to 14.56 euros by 1325 GMT as some analysts said the guidance was more conservative than their targets. Concerns grew that the planned earnings recovery in two years might not materialise.
"The results were very good but the issue is really the guidance," said SG telecoms analyst Scott McKenzie. "There's also a lack of detail about US investment plans."
Chief Executive Kai Uwe Ricke declined to comment on the likely cost of building a third-generation mobile network in the United States, which analysts estimate could be around $10 billion. "We've given no guidance yet," he said.
Deutsche Telekom met market expectations for quarterly profit and sales growth, topped forecasts with surging new US and German mobile customers and reiterated expectations for 2005 core earnings and sales.
EBITDA adjusted for one-offs should rise to between 20.7 billion and 21 billion euros this year and sales should increase to 59.5 to 60 billion.
In the third quarter, EBITDA rose 3.7 percent to 5.487 billion euros on sales of 15.043 billion euros, in line with average forecasts.
Net profit of 2.415 billion euros topped forecasts, largely due to one-off gains and tax effects, while debt fell by 3.7 billion euros to 40.8 billion.
Deutsche Telekom, which has been struggling to build momentum at its UK mobile business, also said it would keep looking for acquisition opportunities after it walked away from a potential $31-billion-plus bid war against Spain's Telefonica for British-based mobile group O2 Plc.
"We are well aware of the European challenge facing us - and not only since the Telefonica deal. That is why we will continue to look closely at all opportunities arising in the European markets where we are present," Ricke told a news conference.
Ricke said the company would continue to aim for a return on capital employed of at least 8 percent on any investment - a target that prompted him to rule out any O2 counter-bid.
Analysts have said Deutsche Telekom now faces three choices in the UK - to invest, buy something else or sell out.
CEO Ricke said only that of the 1.2 billion euros in extra investment planned for 2006, 0.7 billion was earmarked for its mobile phone businesses and 0.4 billion for its fixed-line arm.