Deutsche Telekom Rejigs Executives, Unveils 3-Year Plan"
LONDON -(Dow Jones)- Deutsche Telekom, Saturday unveiled a reshufle of its management structure that will give Chief Executive Kai-Uwe Ricke overall responsibility for marketing and outlined a three-year plan to boost revenues and market share and reinvent the former German monopoly provider as a more aggressive, service-oriented company.
Under the plan, which was announced after a board meeting Saturday, Ricke will take control of company-wide advertising budgets, media planning and media coordination.
The company plans to boost sales by EUR1 billion in three years through the introduction of new products, increase its market share in Europe, expand its mobile business in the U.S. and become Europe's largest telecommunications company by earnings.
"With our new strategic alignment we are emphasizing the need to strengthen the coordination of our activities in Germany. At the same time we must radically adjust our cost structures to the changing market conditions. This will happen whilst keeping the worldwide responsibilities of T-Mobile, T-Com and T-Systems intact," Ricke said.
The reorganization, which takes place with immediate effect, will give T-Systems CEO Lothar Pauly control of areas Networks, IT and Purchasing operations worldwide, while T-Mobile CEO Rene Obermann will be responsible for sales in Germany.
The reshuffle is the latest move by the company, in which the German government still holds 32.5%, to combat an increasingly tough business and regulatory environment. Like all former monopoly telecoms providers in Europe, Deutsche Telekom is facing declining revenues from its fixed line operations and intense price competition and slowing growth in the mobile phone sector. The company's key engines of growth include its mobile businesses in the USA and the UK.
On a conference with reporters following the strategy announcement, Ricke said that under the new plan he wants to develop the U.S. retail T-Mobile USA business to become the largest division within Deutsche Telekom.
Deutsche Telekom is currently bidding for additional mobile spectrum in an auction in the U.S. As of Aug. 25, it was the top bidder.
Ricke also said he wants to import the U.S. service model to Germany to ensure faster and more customer-oriented services.
Ricke said Telekom will advertise and market its triple play products of telephony, Internet and TV services more aggressively. But the CEO stressed that Telekom doesn't aim to grab market share simply through price cutting but will focus instead on providing the best packages.
In the market for corporate service, Deutsche Telekom aims to become one of the top three players in Europe, Ricke said.
In recent weeks, Ricke has come under fire from shareholders following a surprise profit warning in August, when the company lowered its forecast for full-year earnings before interest, tax, depreciation and amortization - or EBITDA - by EUR1 billion, to give a forecast range of between EUR19.2 billion and EUR19.7 billion.
According to press reports, some shareholders are calling for Ricke's head. His contract is due to expire at the end of 2007. But Ricke dismissed reports of shareholder criticism and said personality issues had not been a feature of discussion during the board meeting, which took place on Friday and Saturday.
Company Web site: http://www.deutschetelekom.com
-By Stefan Mechnig and Michael Matern, Dow Jones Newswires, 0049 - (0) 69- 29715 - 100, michael.matern@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 2nd September 2006