Deutsche Telekom raised its dividend by more than expected after another strong performance at its key mobile unit lifted fourth-quarter earnings and sales.
Europe's biggest telecoms group stuck to its cautious outlook and said it would raise its investment in new technology in 2006 to €10 billion from €7.2 billion last year. This includes starting to build a super-fast broadband network but excludes any spending on new US mobile licences.
The market was reassured by its plans to pay a record dividend after adjusted earnings before interest, tax, depreciation and amortisation rose 10 per cent to €5.2 billion, slightly more than expected, in the quarter.
The telecoms group said it would raise its 2005 dividend to €0.72 from €0.62.
The German operator plans to focus on investments over the next two years to beef up its key mobile units and launch new products as it fights to stem a decline in fixed-line sales.
One key investment this year is likely to be spending on permits to runs 3G mobile services in the United States, which analysts estimate could cost the company up to $10 billion.
Deutsche Telekom stuck to its outlook for this year and next. For 2006, it expects core earnings to be flat at best while sales are forecast to grow 5 per cent.
Deutsche Telekom said the growth in its quarterly earnings had been boosted by its mobile phone business, whose US sales grew almost 36 per cent in the fourth quarter.