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* Q2 core profit 4.43 bln euros vs 4.35 bln expected
* Still sees stable 2014 core profit of about 17.6 bln euros
* No comment on sale process of T-Mobile US
* Deutsche Telekom shares indicated to open up 0.3 pct (Recasts, adds shares, detail, background)
By Harro Ten Wolde
FRANKFURT, Aug 7 (Reuters) - Deutsche Telekom reported a bigger than expected quarterly core profit onThursday after a rise in earnings in the United States offsetheavy investments in its German networks.
Second-quarter earnings before interest, tax, depreciationand amortisation (EBITDA), excluding special items, rose to 4.43billion euros ($5.9 billion), above the average forecast of 4.35billion euros in a Reuters poll.
Last week, T-Mobile US reported its first netprofit in a year, raised its forecasts for subscriber growth andreported the most post-paid phone subscriber additions in theindustry.
Deutsche Telekom now faces a tough decision on whether tostay in the United States after its preferred strategy ofselling T-Mobile US to its bigger rival Sprint crashedinto a regulatory wall.
The German operator has been looking for a way to exit theUnited States for more than three years because it seesT-Mobile's fourth-place position behind Verizon, AT&T, andSoftbank's Sprint as limiting long-term profitability.
Sprint's decision to pull the plug on deal talks on Tuesdaycame shortly after French mobile operator Iliad made anoffer for the business, sparking hopes for a potential biddingwar.
The chairman of the second-largest U.S. satellite operatorDish Network Corp said on Wednesday it now made senseto consider bidding for T-Mobile US, with Sprint out of thepicture.
The German telecoms operator did not make any comments aboutthe process in its earnings statement. A spokesman declined tocomment on the matter and referred to a conference call withDeutsche Telekom's management due at 0800 GMT.
REAPING REWARDS
The global telecoms industry is in the midst of a wave ofdealmaking, as companies look to take advantage of low interestrates to build economies of scale. In Europe, mobile operatorshave seen revenues shrink in recent years because of regulatorychanges such as roaming fees and tough price competition.
In its home base Germany, Deutsche Telekom is up against No.2 carrier Vodafone, which has bought Kabel Deutschlandto boost its broadband offering. Third and fourth-placed mobilegroups Telefonica Deutschland and KPN's E-Pluslast month received EU approval to merge.
Deutsche Telekom shares were indicated to open 0.3 percenthigher, in line with the German blue chip index.
"Our strategy so far has been to make bold and prudentinvestments, focus first on lifting customer numbers, and thenon upping revenues and results. And we are now starting to reapthe rewards," said Chief Executive Tim Hoettges in a statementon Thursday.
The company said it still expected 2014 EBITDA, excludingspecial items, to remain stable at around 17.6 billion euros in2014 and that free cash flow would drop to around 4.2 billioneuros on additional investments.($1 = 0.7470 euro) (Editing by Maria Sheahan and David Clarke)
