Deutsche Telekom Said Naming Obermann To Be CEO

LONDON (Dow Jones) - Deutsche Telekom on Monday was expected to name Rene Obermann, the head of its mobile division, to become chief executive after Kai-Uwe Ricke resigned over the weekend from the embattled company.

A number of media outlets reported that Obermann, 43, currently head of T-Mobile International, will head Germany's largest telecommunications company.

The German government, which controls about a third of Deutsche Telekom's shares, supported Ricke's removal, according to news reports.

Investors on Monday warmed to the announcement that Ricke was leaving.

Shares of Deutsche Telekom rose 2.2% in early Frankfurt trading.

Ricke had been under increasing pressure since the company cut its 2006 and 2007 earnings and sales outlook in August due to intense competition in Germany.

On Thursday, Deutsche Telekom reported a 20% decline in third-quarter profit as wireless earnings dropped and as fixed-line consumers continued to switch to mobile or Internet-based telephony.

That day Ricke also unveiled plans to reduce costs by 2 billion euros ($2.57 billion) next year and to achieve annual savings of 5 billion euros by 2010. He added that the company will raise 3 billion euros over the next three years from a program of asset sales.

Simon Weeden, an analyst at Goldman Sachs, questioned whether Ricke could have done much more.

"Ricke's departure did not, in our view, originate from any lack of desire for radical surgery on his part, but in the constraints of his political situation," he said in a note to clients.

(END) Dow Jones Newswires "

Posted to the site on 13th November 2006