Deutsche Telekom Launches German Discount Brand

BERLIN -(Dow Jones)- Deutsche Telekom, Tuesday launched its Congstar brand under which it will offer wireless telephone and high-speed Internet services at discount rates in Germany, in an attempt to claw back market share it has lost in recent years to more nimble rivals.

The low-cost strategy mirrors that of rivals such as wireless operator E-Plus and Internet service provider United Internet, which have gained traction in Germany due to the success of discount brands such as Simyo and Base and 1&1 Internet AG.

"With Congstar...Deutsche Telekom is taking up the fight against the providers in the discount segment of the telecommunications market," said Deutsche Telekom Chief Executive Rene Obermann in a statement.

At 1156 GMT, Deutsche Telekom shares were down EUR0.15 or 1.1% at EUR13.42, on a 0.8% drop in the benchmark DAX index.

Congstar's offering includes a high-speed Internet connection at around EUR15 a month, excluding the costs of a phone line. In addition, customers have the option to add different packages for fixed-line and wireless telephony at between EUR5 and EUR20 a month each.

For making unlimited calls on fixed-line and all wireless networks in Germany, Congstar offers a EUR85 a month flat rate, undercutting the competition; E-Plus, for example, offers a similar service under its Base brand for EUR90 a month.

The initiatives are part of Obermann's efforts to turnaround the company's German business, which has suffered from declining sales as customers have been ditching their fixed-line connections at Deutsche Telekom in favor of low-cost rivals.

Deutsche Telekom, Germany's former fixed-line monopoly, is the country's leading wireless operator and high-speed Internet provider. Its T-Mobile wireless unit shares the top position with Vodafone Group's D2. E-Plus, a unit of KPN of the Netherlands, and Telefonica's O2 are the number three and four in the market.

Tuesday's launch marks Deutsche Telekom's second endeavor in the low-cost wireless telephone market this year, having already launched its "Max Young" brand, targeting consumers between the ages of 18 and 25 in spring.

Max Young offered unlimited calls to other T-Mobile customers and to the German fixed-line network of Deutsche Telekom for a flat rate of EUR25 a month.

-By Joon Knapen, Dow Jones Newswires; +49-30-28884121; joon.knapen@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 17th July 2007