UPDATE 3-Deutsche Telekom slashes outlook as crisis hits

* Sees core profit down 2-4 percent in 2009

* Had earlier forecast steady adj EBITDA of 19.5 bln eur

* Shares fall more than 10 percent

(Adds details, fresh analyst comment, closing share price)

FRANKFURT, April 21 (Reuters) - The economic crisis finally hit Deutsche Telekom (DTEGn.DE), Europe's biggest telecoms group, as weak conditions and tough competition in major markets forced the company to slash its profit expectations for 2009.

Slumping profit in the United States and Britain as well as the falling Polish zloty and British pound will push down adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) by 2 percent to 4 percent from the 19.5 billion euros ($25.17 billion) in 2008, the company said on Tuesday.

The Bonn-based telecoms group had as late as February predicted profits would remain stable this year, but officials said the worsening environment made that untenable.

"Given the fact that Deutsche Telekom generates half of its total revenues outside the euro zone, negative affects from currency fluctuations might even get worse," said DZ Bank analyst Marcus Pratsch.

"Further risks result from the faster-than-anticipated decline in the U.S. business and from the aggressive competition in the imminent spectrum auctions."

Deutsche Telekom shares (DTEGn.DE) declined as much as 11 percent. They closed down 7.2 percent at 9.01 euros, the leading decliner among firmer German blue chips .GDAXI and European telecom companies.

The DJ Stoxx Telecoms index .SXKP declined 1.8 percent.

Telecommunications, a sector similar to utilities in which demand is usually little influenced from an economic downturn, is showing the first signs of a weakening business situation due to the economic crisis.

Swisscom AG (SCMN.VX) said on Tuesday the crisis will weigh on first-quarter results and niche telecom operator Millicom MICC.O(MICsdb.ST) posted worse-than-expected core earnings in the first quarter.

Deutsche Telekom also competes with British Vodafone (VOD.L), Spain's Telefonica (TEF.MC), France Telecom (FTE.PA) and Telecom Italia (TLIT.MI).

In order to reach free cash flow -- the basis of its dividend -- of 6.4 billion euros in 2009, Telekom is freezing 1 billion euros in capital expenditure, it said.

First-quarter adjusted EBITDA of the German group rose around 3 percent to 4.8 billion euros, it said. It forecast 2009 free cash flow of around 6.4 billion euros versus the 7 billion it had expected in February. (Reporting by Nikola Rotscheroth, Peter Dinkloh, Nicola Leske and Christoph Steitz, writing by Michael Shields and Peter Dinkloh; Editing by Sharon Lindores) ($1=.7748 Euro)