Core profit at the firm grew well below expectations during the first three months of the year, and the company plunged into a heavy net loss due to persistent underperformance in its US business.

Putting a brave face on the results, Deutsche Telekom insisted that it was on track for recovery this year.

Deutsche Telekom's shares have performed dismally over the past year, as investors worried over the quality of its management at a time when its market monopoly was being eroded by regulators.

Overspending

The most alarming figure in Deutsche Telekom's results was a 1.8bn-euro (£1.1bn; $1.7bn) net loss, compared with a 358m-euro loss for the same period of 2001.

Behind the loss was a hefty write-down relating to Deutsche Telekom's purchase last year of Voicestream, an expensive and poorly performing US mobile operator.

Voicestream apart, Deutsche Telekom saw modest growth, although crucially this was more sluggish than the firm had indicated in earlier forecasts.

The company's core earnings - before interest, tax, depreciation and amortisation - rose by just 4.4%, to 3.8bn euros.

Some areas of the firm are performing strongly - core earnings at the T-Mobile division doubled during the quarter.

Into the red

Deutsche Telekom, which is two-fifths owned by the German government, lost 3.5bn euros last year, after buying Voicestream and investing heavily in mobile phone and online services.

In 2000, the firm made a profit of 5.9bn euros.

Deutsche has debts of some 67.2bn euros, the heaviest load of any major European carrier, and is seeking to sell off non-core divisions to pay down that debt.

Despite persistent calls for a change of management, chairman Ron Sommer has refused to budge.