UPDATE 2-D.Telekom affirms dividend as cost cuts underpin profit
* Plans to pay minimum 2012 dividend of 0.70 euro/shr
* Q2 adj. EBITDA flat at 4.7 bln euros
* Still sees 2012 adj. EBITDA at around 18 bln euros
* Shares up 0.85 percent in early trade
By Harro Ten Wolde
FRANKFURT, Aug 9 (Reuters) - Deutsche Telekom stuck by plans to pay a dividend of at least 0.70 euros per share for 2012 as cost-cutting in its German and U.S. markets helps it buck a trend among competitors who have been slashing their payouts to shareholders.
The company posted second-quarter operating profit on Thursday that was in line with estimates and kept its outlook for 2012 underlying earnings excluding special items to ease to around 18 billion euros from 18.7 billion last year.
Most European telecom groups saw profits fall in the first half of the year and were forced to cut dividends as a cocktail of tough price competition, regulatory changes, and lower spending by recession-weary consumer hurt revenues.
"We are keeping our word and providing a good deal of reliability to the market with very solid figures," said Chief Executive Rene Obermann.
Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding special items, were flat at 4.7 billion euros ($5.8 billion) in the three months through June, at the high end of a range of forecasts in a Reuters poll.
Deutsche Telekom shares opened up 0.85 percent, ahead of a 0.3 percent rise on the German blue chip index.
"We expect these generally solid results to be taken well against a weak European peer backdrop," said analyst Simon Weeden at Citi Research.
The European telecom index is roughly flat so far this year, largely underperforming most other big sectors like pharma, media, and chemicals.
But Deutsche Telekom's shares have done better than those of peers because of its unchanged dividend policy, while Telefonica and France Telecom shares have fallen because of tough domestic markets.
Deutsche Telekom's shares trade at 15 times 12-month forward earnings, above France Telecom and Telefonica, which trade at multiples of 9 and 8.4 respectively.
The company said revenues and operating profits in Europe suffered from the economic crisis, while its U.S. operation T-Mobile USA improved its operating profit due to cost-cutting.
At the same time it lost 205,000 customers in the United States after adding 187,000 clients in the first quarter.
Deutsche Telekom tried to sell its U.S. business, once a strong growth engine, to AT&T for $39 billion but fierce regulatory opposition scuppered the deal, leaving the German company with a $6 billion breakup package.
Over the next two years, network investments at T-Mobile USA will increase by about $1.4 billion. Over time, T-Mobile USA will spend a total of $4 billion on upgrading its network for high-speed wireless services based on a technology known as Long Term Evolution (LTE).
In Europe smartphones such as Apple's iPhone and Samsung's Galaxy now account for 60 percent of all devices sold, fuelling mobile data revenues, which grew by 21.2 from last year, Deutsche Telekom said.
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