Domestic strength helps Deutsche Telekom to beat forecasts

* German adjusted EBITDA up 4 pct

* T-Mobile US reported strong figures this month

* Shares (Berlin: DI6.BE - news) seen up 1.3 pct, outperforming DAX (Adds detail on Germany, shares, analyst, outlook, rivals)

By Georgina Prodhan

BERLIN, Feb 25 (Reuters) - Deutsche Telekom (LSE: 0MPH.L - news) reported better than expected fourth-quarter results in its domestic market, helped by expansion of its super-fast broadband network, boosting take-up of bundled fixed line, mobile and Internet TV packages.

Though Germans spend relatively little on mobile usage -- about half as much as customers in the United States -- prices are supported by a strong economy and consolidation of the market to three operators from four in 2014.

The company's core profit in Germany rose by 4 percent and mobile service revenue was broadly stable, with a small increase in customer numbers against a slight decline across the broader German mobile market, Deutsche Telekom said on Thursday.

Together with strong figures already reported this month by its large U.S (Other OTC: UBGXF - news) . business T-Mobile US, Deutsche beat expectations with a 16 percent increase in fourth-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).

Its shares were indicated to open with a 1.3 percent gain, according to brokerage Lang & Schwarz, outperforming Germany's DAX index.

"Deutsche Telekom was extremely successful on both sides of the Atlantic. We are continuing on our path to becoming the leading European telecommunications provider with further strong investments this year," Chief Executive Timotheus Hoettges said.

The German group, which also has operations in several central and eastern European countries and in Britain, said cash capital expenditure would rise by about 4 percent this year as it continues to expand and upgrade its networks.

U.S. AUCTION

That figure excludes spending on an auction for new mobile capacity in the United States, expected to cost abound $10 billion. It (Other OTC: ITGL - news) is also expanding its broadband network in rural Germany under a government plan to increase Internet access.

Sales are expected to rise this year, the company said, with a strong rise in the United States outweighing declines in Germany and the rest of Europe.

Adjusted EBITDA is expected to increase by about 2 percent, entirely driven by the United States, where a new offer for customers to lease rather than buy handsets will flatter profits before depreciation.

"The outlook is slightly below consensus but may include some cushion due to conservatism," said DZ Bank analyst Karsten Oblinger, who rates Deutsche Telekom a "buy".

Deutsche Telekom this month announced price increases to its mobile packages from April in exchange for more generous data allowances, free EU roaming and access to wi-fi hotspots.

Telefonica Deutschland , which has more mobile customers than Deutsche Telekom but lower service revenues, said on Thursday that it expects modest growth in operating profit this year as costs relating to its integration of E-Plus continue to weigh.

Britain's Vodafone, which owns Germany's third mobile operator, cited Germany as a highlight as it reported a sixth consecutive quarter of underlying revenue growth this month. ($1 = 0.9065 euros) (Editing by Victoria Bryan and David Goodman)