German telecoms giant Deutsche Telekom has reported a 10% rise in core earnings in the fourth quarter, driven by sales at its mobile phone division.
Deutsche Telekom's fixed-line business is facing tough competition
Pre-tax profits came in at 5.199bn euros ($6.21bn; £3.54bn), compared with forecasts of about 5.106bn euros.
However, fourth-quarter net profit fell by 43% amid a continued slump its fixed-line business.
Europe's biggest telecoms operator said competition was becoming tougher in the fixed-line and mobile phone markets.
It also fears the threat of competition from calls over the internet.
And at home in Germany, the rapid growth of new mobile operators means prices are being forced lower - a trend which earlier this week helped force Vodafone to knock 40bn euros off the value of its assets.
Deutsche Telekom reiterated its outlook for 2006 and 2007 and expects profits to be flat this year as it focuses on launching new products to offset the decline in fixed-line sales.
However, the firm's overall sales are expected to grow by 5% this year.
"Competition in our markets has become tougher - and I mean tough," said the company's chief executive Kai-Uwe Ricke.
"Nonetheless we managed to hit our targets."