Deutsche Telekom reported better-than-expected Q3 earnings this morning as the company’s cost-cutting initiatives gathered pace.

The German giant said that it has saved EUR1.5 billion in the first nine months of the year via its 'Save for Service‘ initiative, which has brought its cost base down by EUR 3.9 billion in total since 2010. It is targeting savings of EUR 4.2 billion for 2010 through to 2012.

This meant that, despite earnings and revenue declines, net profit rose 14.6 percent to surpass EUR1 billion, up from EUR933 million a year ago. Net revenue fell 6 percent to EUR14.7 billion, while EBITDA (adjusted for the deconsolidation of T-Mobile UK a year ago) fell 2.3 percent to EUR4.9 billion, though the latter was ahead of the EUR 4.7 billion average estimate of 11 analysts in a Bloomberg poll.

The operator was able to reaffirm its guidance for the full year, despite noting “persistently difficult conditions characterised by a weak economy and the negative effects of decisions by governments and regulatory authorities in several countries.“

"We have once again demonstrated that we can stand our ground in a difficult environment," said CEO Rene Obermann. "We cannot afford to be complacent in our efforts as the challenges will continue to intensify."

Germany remained the operator’s largest market with Q3 revenue of EUR6 billion, down 5 percent year-on-year. It attributed a decline in German mobile revenue to ”weaker handset revenues and the reduction in MTRs,“ which was partially offset by a 26 percent rise in mobile data revenue to EUR410 million.  Smartphones now account for 64 percent of all devices sold in its home market, compared to 53 percent in the prior year. Total mobile customers in the country grew 0.1 percent to 34.9 million. The adjusted EBITDA margin in Germany increased to a record 41.5 percent due to the reduction in operating costs.  

In Europe (excluding Germany), the firm had 59.5 million mobile customers, down 1.5 percent year-on-year, while T-Mobile USA’s customer base was flat at 33.7 million. 

In the Europe segment, revenue declined 6.1 percent to EUR3.9 billion, while US revenue was down 11.1 percent to EUR3.7 billion (though adjusted EBITDA fell only slightly by 0.3 percent to EUR 1 billion).

T-Mobile USA has been reported as a “discontinued operation“ since Q1, under the terms of the unit’s proposed US$39 billion acquisition by AT&T. Obermann said on the earnings call that he was “still very optimistic” that the sale will go ahead in the first half of 2012, despite the deal being opposed by US regulators and potentially delayed.