The group's net profit of €348 million ($497 million) was far below an average analyst forecast of €563 million compiled by Dow Jones Newswires. Sales were down by 3.3 percent at €10.97 billion, a statement said.
"Although these figures are not a cause for celebration, they still give us reason to be confident that we will achieve our targets in a persistently difficult environment," chief executive René Obermann was quoted as saying.
"We are now also seeing light at the end of the tunnel in Southeastern Europe," he added.
Deutsche Telekom, which is burdened in particular by its Greek unit OTE and T-Mobile operations in the United States, confirmed full-year targets including core operating earnings before taxes and special items of €14.9 billion.
In the second quarter, adjusted Ebitda lost 2.6 percent to €3.79 billion, slightly better than an analyst forecast of €3.73 billion. The group also said it expected to have "at least €6.5 billion in free cash flow" at the end of the year.
Mobile internet-based activities were a key source of growth and broadband lines overtook traditional telephone lines for the first time in Germany, the company noted.
But challenges remained in other areas, it said, adding: "This is particularly true in the United States."
T-Mobile lost a net 281,000 US clients, and is in the process of being sold to rival AT&T for some $39 billion, pending regulatory approval.
Deutsche Telekom's European division reported an eight percent loss in operating profit owing to regulatory pressure, stronger competition and poor economic conditions.
The group nonetheless stressed that "some positive trends have emerged in
the Greek mobile business."