Deutsche Tel CEO: To Launch Combined Fixed/Mobile Phone

FRANKFURT -(Dow Jones)- Deutsche Telekom AG (DT) is planning to launch a new product that combines mobile and fixed-line communications into one phone, Chief Executive Kai-Uwe Ricke told a media conference call Thursday.

He said, though, that the more details about the "dual phone" will be revealed in about three weeks on the technology conference IFA.

Earlier Thursday, the German telecommunications incumbent reported a 63% jump in second-quarter net profit to EUR943 million, buoyed primarily by growth at its U.S. and German wireless units.

Ricke said that Deutsche Telekom's planned reintegration of its Internet unit T-Online is "a core element" of the company's future strategy.

Some T-Online shareholders have challenged the merger agreement, under which Deutsche Telekom is buying out T-Online minorities for EUR3 billion, in court. These complaints are without merit, according to Deutsche Telekom.

"In the next few days, T-Online will apply to court for judicial release so that the merger can become legally binding as soon as possible," Ricke said.

Ricke also said that Deutsche Telekom's wireless unit T-Mobile has exceeded the savings target of EUR500 million in the first half year, under its so-called "Save for Growth" program.

T-Mobile announced a January a string of measures to cut costs at its European operation, including more than 2,000 planned job cuts, that would save the company EUR1 billion by the end of 2006.

Germany's largest telecommunications operator set up a personnel services agency Vivento at the end of 2002 to retrain staff for jobs within and outside the Bonn-based company in a bid to shrink its domestic workforce and save costs.

Ricke said that 3,700 have left the Vivento program in the first half of 2005, leaving a head-count of 16,500 in Vivento at the end of June. Of these, "only approximately 2,800 employees ... had not been placed in a job" in June, Ricke added.

Commenting on the acquisition of Austria's fourth-largest mobile network operator Tele.ring, announced Wednesday, Ricke said that Deutsche Telekom estimate of EUR300 million in net synergies "are based on conservative calculations for the next five years."

He added that Deutsche Telekom is "not actively seeking new acquisitions, but we will continue to evaluate any opportunities which arise within our existing footprint." He said that any purchases need to meet Deutsche Telekom's return on investment criteria and need to be earnings enhancing.

Ricke declined to comment on recently emerged speculation that Deutsche Telekom is interested to acquire U.K.-based mobile network operator O2 PLC (OOM.LN).

He acknowledged, though, that the U.K. market seems to be "overcrowded" with five network operators, but noted that "that doesn't mean that we will be a consolidator."

Concerning the future of Deutsche Telekom's U.S. mobile network unit T-Mobile USA, Ricke said that he "keeps all options open."

In recent months, speculation emerged that Deutsche Telekom is considering to sell the unit, which has been its longtime growth engine.

Ricke said Deutsche Telekom will decide at year-end how it will act in the auction for the third-generation network spectrum in the U.S.. Among the options are whether to bid for the spectrum alone, or seek partners for joined bids.

Deutsche Telekom Chief Financial Officer Karl-Gerhard Eick said that the recent debt-rating upgrade by Moody's to A3 will lower annual interest payments by around EUR50 million.

Company Web site: http://www.deutschetelekom.com

-By Joon Knapen, Dow Jones Newswires; +49-69-29725509; joon.knapen@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 11th August 2005