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UPDATE 1-Deutsche Telekom raises guidance after collapse of U.S. deal

(Adds more from statement, context)

FRANKFURT, Nov 9 (Reuters) - Deutsche Telekom reported a gain of 3.3 percent in third-quarter core profits and raised its outlook for 2017 as it tries to move on from the collapse of a merger between its T-Mobile US unit and Sprint Corp.

Europe's largest telecom company raised its forecast for 2017 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to 22.4 to 22.5 billion euros ($25.99 -$26.11 billion) from 22.3 billion euros, and confirmed its forecast for free cash flow at 5.5 billion euros.

"Deutsche Telekom continues to post strong growth, which is why we are upgrading our forecast for the second time this year," CEO Tim Hoettges said in a statement. "This was made possible by our booming U.S. business, our strong performance in Germany, and the positive trends in our European subsidiaries."

Hoettges flew 50,000 km in seven days in a bid to save the deal to unite the third- and fourth-largest U.S. market players, only to call it off last weekend because, he later told staff, it would not have added value.

He said that $40 billion in investments in recent years had built the basis for strong future growth at T-Mobile US.

Deutsche Telekom on Thursday reported adjusted EBITDA excluding non-recurring items, of 5.72 billion euros, above a mean forecast of 5.6 billion in a Reuters poll of analysts.

Revenues grew by 0.8 percent to 18.25 billion euros, compared to an expected 18.4 billion.

The costs of scaling up the U.S. business have also weighed on the group balance sheet, with net debt rising 8.6 percent from a year ago to 52.6 billion euros as of Sept. 30.

Free cash flow in the quarter came in at 1.87 billion euros, down 1.6 percent. ($1 = 0.8621 euros) (Reporting by Douglas Busvine; Editing by Maria Sheahan and Victoria Bryan)