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Business

Deutsche Telekom profit hit by Brexit vote

German telecommunications giant Deutsche Telekom has reported a huge fall in net profit in 2016, as its stake in Britain's BT lost value in the wake of the country's decision to leave the European Union

Net profit for 2016 was down 18 percent to 2.67 billion euros ($2.8 billion), the German telecommunications firm announced on Thursday, hit by a writedown in the value of BT.

Deutsche Telekom's 12-percent stake in the British telecoms company declined by 2.2 billion euros in value "mainly as a result of a fall in BT's share price and in the pound sterling following the Brexit referendum," the German group said.

Britain's June vote to leave the European Union took the global markets by surprise, sparking lingering uncertainty and unease over London's future relationship with Brussels.

Deutsche Telekom stressed that the dip in profit would not affect its payout of shareholder dividends - scheduled to increase by five euro cents to 0.60 euros per share.

Apart from the BT loss, Deutsche Telekom looks healthy, with underlying profit having outpaced the group's own forecasts, adding almost 8.0 percent and reaching 21.4 billion euros. Revenues grew 5.6 percent in 2016 to more than 73 billion euros

The company's American unit T-Mobile USA performed especially strongly, adding 8.2 million customers last year in the highly-competitive and saturated US mobile phone market.

T-Mobile USA's revenues grew 16 percent to $37.3 billion, while profits doubled to $1.5 billion. By contrast, Deutsche Telekom's revenues in Germany and the rest of Europe fell as its fixed-line phone business continued to decline.

Nevertheless, the company said it would aim to increase revenues in 2017 with the goal of achieving an operating profit of around 22.2 billion euros, up four percent on the 2016 figure.

uhe/kd (dpa, Reuters, AFP)