Broadband regulation in Europe

There are a couple of items which are related to each other:

• This EU's legal action against Germany (and, by proxy Telekom, the German incumbent. The EU takes exception to a German law exempting Telekom's new fiber investment from sharing rules.
  
• A 43% drop in most recent quarterly earnings.
  
• An article in the German business weekly WirtschaftsWoche from 9 Feb 2007 (in German). This article reports on an internal study by the consultancy Detecon warning that Telekom's business foundations could fall apart. Their solution, reports the article, is to focus on premium quality. But, as Detecon notes that Telekom's competitors can offer nearly equivalent services at similar quality without owning infrastructure
  

Is this a case of a bloated, inefficient monopolist? Is it the case of inefficient regulation? It is hard for me to imagine that these events, in the large, are unrelated.