As mobiles become more popular, fixed-line demand slides

The company is one of Europe's most indebted and is looking for ways to offset its waning fixed-line business.

It is focusing on wireless and internet services and expects to reverse last year's loss and break even this year.

Under its new chief executive, Deutsche Telekom also has sold assets, trimmed investment and fired workers.

Net profit in the third quarter rose to 508m euros ($593.7m; �353.5m) from a record loss of 20.6bn euros a year earlier, Deutsche Telekom said. Sales rose 4.9% to 14.1bn euros.

That makes a third straight quarter of profit, less than a year after the company posted what was then the worst results in European corporate history.

Comeback

During 2002, the company lost 24.6bn euros, mainly caused by the need to correct the value of underperforming investments.

Since then, Deutsche Telekom has been clawing its way back to profitability.

In the third quarter, its T-Mobile wireless business reported a 35% jump in earnings, with profit of 1.75bn euros.

T-Online, Deutsche Telekom's separately traded internet service provide, also posted a profit.

That prompted the company to increase its full-year target for core earnings before deductions for tax, interest and one-off costs to about 18.2bn euros, up from 17.7bn euros.

The following year, 2004, should also see rising profits, the company said.

With costs dropping and cash coming in, the company has been able to slash debt and meet its debt repayment targets ahead of schedule.

Total debt was 49.2bn euros at the end of September, 15.1bn less than at the same time a year earlier.