Page last updated at 12:37 GMT, Thursday, 25 February 2010

Deutsche Telekom and France Telecom see profits fall

An Orange and T-Mobile shop in Liverpool
Deutsche Telekom owns T-Mobile and France Telecom owns Orange

Two of Europe's biggest telecoms firms have seen big drops in annual profit.

Deutsche Telekom reported a net profit of 353m euros ($476m; £311m) for 2009 - a drop of 76% on the previous year.

France Telecom's profit fell 26% to 3bn euros. The group said it was focusing on employment conditions after a series of suicides by workers last year.

Incoming France Telecom chief Stephane Richard said a new scheme this year would put customers and employees "at the heart" of the firm's priorities.

The group's profit was hit by charges related to resolving the suicide crisis.

Overall revenue fell 1.9% to 51bn euros.

Cost discipline

Deutsche Telekom chief executive Rene Obermann said: "After a bumpy start, we rounded 2009 off with good results."

Revenue for the year rose 4.8% to 64.4bn euros.

The firm made a 3m-euro loss in the final quarter of the year, but this was significantly narrower than the 730m euros it lost in the same period a year earlier.

"Cost discipline was key to getting through economically challenging times. However, we did not save at the expense of the future, but continued to invest heavily," Mr Obermann said.

Deutsche Telekom's T-Mobile and France Telecom's Orange have announced plans to merge their UK businesses.

The proposed merger, which would create the UK's largest mobile provider, is being scrutinised by the Office of Fair Trading over fears that it could threaten competition.

Legal action

Separately, Telecom Italia said that authorities in Italy had seized 300m euros in cash and borrowings in lieu of tax credits that were alleged to have been illegally accrued by a subsidiary, Sparkle.

The alleged VAT fraud covers the period between 2005 and 2007.

Telecom Italia said it has been given a 1,600-page court order regarding the legal proceedings against Sparkle.

To have time to review the documents, the Italian telecoms company will now postpone approving its full-year results - scheduled for release on Friday - until its next board meeting on 25 March.

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