Deutsche Telekom has cut its 2007 EBITDA forecast by up to 6% from EUR 19.7-20.2bn to EUR 19.0bn, on the back of growing competitive pressure and regulatoruy tightening in its domestic market and slowing growth in its international operations, primarily in the US.
Our view: This is the second profit warning from DT in 5 months, with a combined EBITDA reduction impact of some EUR 3.2bn, and we fully expect DT shares to fall sifnificantly. Although MTEL is set to deliver the highest growth within the CEE3 telecom space (some 3% in 2006 and 2007) we expect the shares to tumble along with its parent's stock today. We would recommend buying into significant weakness.