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* Q3 adj. EBITDA 4.66 bln euros vs Rtrs poll avg 4.58 bln
* German mobile revenues slip despite gain in customers
* Shares fall after deal-fuelled sector rally (Adds analyst comment, shares)
By Harro Ten Wolde
FRANKFURT, Nov 7 (Reuters) - Deutsche Telekom hasposted a drop in wireless revenue despite adding 470,000 newmobile customers in the third quarter, highlighting the impactof a price war in its home market.
Europe's third-largest telecoms operator by revenue isengaged in a fight with Telefonica Deutschland,Vodafone and KPN's E-Plus to attract customersin a country that has been relatively slow to switch tosmartphones from basic mobiles.
This has forced the former monopoly to offer cheaperpackages that have weighed on revenue. In the third quarter,wireless service sales dropped 2.8 percent in Germany, theEuropean Union's largest mobile market with around 114 millionsubscribers.
"The reasons for this were first and foremost the intensecompetition and also the new reductions in 'roaming' chargesimplemented in the summer," said Tim Hoettges, chief financialofficer, referring to European regulations forcing operators tocut fees for travelling clients.
Shares in Deutsche Telekom, which also posted ahigher-than-expected core profit, were down 3.2 percent by 1130GMT, paring recent strong gains as the sector as a whole wasboosted by a flurry of deal-making.
The company's rivals face similar competition issues.
Telefonica Deutschland's wireless revenue fell 5.7 percentin the quarter, while E-Plus, being bought by Telefonica, sawrevenue drop 7 percent. Vodafone, Germany's second-biggestmobile operator, will release results on Nov. 12.
Deutsche Telekom's underlying wireless service revenue,which excludes the latest fee cuts mandated by regulators, weredown 1 percent compared with a 1 percent rise in the secondquarter.
STABLE REVENUE
For the full year, Deutsche Telekom said it expectsunderlying wireless service revenue to be stable, havingpreviously forecast growth.
Simon Weeden, an analyst at Citi Research, said the newforecast implied zero underlying growth in the fourth quarter.
A rally in telecom stocks which carried Deutsche Telekom toa five-year peak of 11.93 euros last month was fuelled in partby hopes of further mergers and acquisitions, such as Vodafone's7.7 billion euros ($10.4 billion) purchase of Germany's biggestcable provider.
Earlier this year the two smaller German mobile operators,E-Plus and Telefonica Deutschland, said they would merge tocreate the country's third-biggest mobile player, with a 30percent market share - close behind Deutsche Telekom andVodafone which each have roughly 35 percent.
The M&A upturn was seen as potentially positive for Telekom,if only because it could emerge as a winner in a consolidatedEuropean market.
Meantime the German group said third-quarter core earningsor EBITDA (earnings before interest, tax, depreciation andamortisation) excluding special items fell 2.6 percent to 4.66billion euros as investments weighed.
The result was above the average forecast of 4.58 billion ina Reuters poll.
The company still expects EBITDA excluding special items tocome in at around 17.5 billion euros in 2013 and free cash flowof around 4.5 billion.
Deutsche Telekom's 74 percent owned T-Mobile US Inc, the No. 4 U.S. mobile provider, on Tuesday reportedmuch higher-than-expected subscriber growth. ($1 = 0.7392 euros) (Editing by Noah Barkin and David Holmes)
