More losses at Deutsche Telekom

More trouble for CEO Sommer as company posts sixth loss in a row

BONN, Germany (CNN) -- Debt-laden Deutsche Telekom has posted its sixth quarterly loss as pretax profit at its fixed-line business halved.

The loss widened to 1.8 billion euros in the first three months of this year from 358 million euros a year ago. Pretax profit at its T-Com fixed-line business fell to 694 million euros from 1.32 billion euros, the company said on Wednesday.

While the loss was widely expected, the numbers at the fixed-line business are unlikely to boost the rating of Chief Executive Ron Sommer among investors. Many analysts view that as a cash cow but it has come under pricing pressure from rival operators, like Vodafone's Arcor, and regulators.

"There has been an across-the-board decline in fixed line businesses at Deutsche Telekom and France Telecom with British Telecom the only exception," Mark James, telecom analyst at Nomura told CNN. "This will be taken negatively by the market."

MORE STORIES • T-Mobile IPO 'not crucial to cut debt'  • Telekom sees sales improving  • D. Telekom 'to axe 30,000 jobs'

The company's stock fell 2.7 percent to 12.73 euros in early Frankfurt trading on Wednesday. Deutsche Telekom's stock fell to a record low this month of 12.02 euros from a peak of about 104 dollars two years ago.

That was before Sommer began a multi-billion dollar spending spree to acquire U.S. mobile phone operator VoiceStream and high-speed mobile phone licences across Europe. Deutsche Telekom (FDTE) has debts of about 67 billion euros.

Sommer, like Jean-Marie Messier, the chief executive of the world's second-largest media company Vivendi Universal (PEX), is under pressure to slash debt and return the group to profitability.

CNN NewsPass VIDEO Deutsche Telekom under the microscope. Becky Anderson talks to Mark James, telecoms analyst at Nomura. Play video

But Deutsche Telekom also said earnings before interest, tax, depreciation and amortisation (EBITDA) -- a measure of a company's ability to service its debt -- rose 4.4 percent to 3.8 billion euros in the first quarter, missing the average of analysts' expectations.

Analysts polled by Reuters had forecast Europe's largest telecoms operator by sales to post between 3.7 billion euros and 4.1 billion euros in EBITDA, with an average of 3.9 billion euros.

Sales rose 15 percent to 12.8 billion euros but were lower than expectations the company announced last month.

"We've always said that DT's debt reduction programme would be hard to meet but we believe that they can meet their dividend and interest bill of about 6 billion euros a year out of its current earnings," James said.

"It's going to be tight for DT, there is no room for a slip-up. We see strong growth from the mobile phone business and from VoiceStream."