German telecoms giant Deutsche Telekom said Thursday that profits fell by two thirds in 2011 as losses stemming from the Greek crisis led to a huge net loss in the fourth quarter.
Deutsche Telekom said in a statement that it booked bottom-line net profit of 557 million euros ($739 million) in 2011, a drop of 67.1 percent from a year earlier.
"This was due to a number of special factors in the fourth quarter, including writedowns in the United States and writedowns on goodwill and property, plant and equipment in southeastern Europe and Greece in particular," the group explained.
Deutsche Telekom holds a 40-percent stake in Greece's main operator OTE, currently in difficulty.
"That in total led to net loss in the three months to December of 1.34 billion euros," the statement said.
At an underlying level, operating profit fell by 4.0 percent to 18.685 billion euros in the whole of 2011, while revenues fell by 6.0 percent to 58.653 billion euros.
"In 2011, the company operated in a challenging environment in every respect, a situation that is not going to change this year," said chief executive Rene Obermann.
The numbers were worse than expected and Deutsche Telekom shares were among the biggest losers on the Frankfurt stock exchange, shedding 2.75 percent to 8.72 euros.
Deutsche Telekom said that a cash payment of 2.3 billion euros from US giant AT&T owing to the collapse of takeover talks regarding the T-Mobile USA was not sufficient to offset the huge writedowns.
Deutsche Telekom had agreed to sell the unit to AT&T but the US group threw in the towel on the $39-billion deal in December after running into stiff opposition from US regulators.
The collapse of the deal marked a significant setback for Deutsche Telekom which wanted to wind up its move into the US market, launched in 2000 with the 40-billion-euro purchase of VoiceStream.
Deutsche Telekom now plans to invest heavily in next-generation LTE mobile networks and relaunch the T-Mobile brand, but that should hit earnings this year with 2012 operating profit expected to decline by 3.7 percent to around 18.0 billion euros.
Chief executive Obermann told a news conference that the group was "still on the lookout for partnerships" in the US.
But any tie-up would not entail the sale of T-Mobile USA, he said.
In its home market of Germany, Deutsche Telekom saw revenues drop by 4.4 percent last year.
The group said it would pay shareholders an unchanged divided of 0.70 euros per share for 2011.
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