Shares in Deutsche Telekom plunged more than 10 per cent this morning after the company slashed its forecasts for this year and next.
Europe's biggest telecoms group by sales chopped €1 billion off its core profit forecast for 2006 and €1.5 billion for 2007, blaming intense price competition in Germany, where it makes more than half its revenues.
Earlier this morning, Deutsche Telekom shares were down 8.1 per cent at €11.06, the heaviest faller on Germany's benchmark DAX index. They earlier touched €10.87, their lowest point since April 2003.
Deutsche Telekom warned last night that this year's profits would be between €19.2 and €19.7 billion, €1 billion less than previously forecast.
The warning came on the back of disappointing results for the second quarter, in which the group's traditional profit driver T-Mobile was unable to compensate for declines at the fixed-line and business customer units, as it has in the past.
Deutsche Telekom also cut its sales outlook by €600 million for 2006, saying it now expected sales of up to €62.1 billion.
Analysts had expected that Deutsche Telekom would cut its forecasts as the telecoms operator, like its European rivals, has been hit harder than expected by a decline in fixed-line telephony and regulatory pressure to cut tariffs.
But they had expected it to come later in the year.