Deutsche Telekom rejigs management

FRANKFURT: Deutsche Telekom is changing its management structure after poor quarterly results revealed that Europe’s biggest telecoms group by sales was no longer growing in its German home market.

Chief executive Kai-Uwe Ricke met Deutsche Telekom’s supervisory board on Friday and Saturday for the first time since the company slashed its earnings and sales forecast for ’06 and ’07 last month.

Since the forecast cuts, German media have been rife with speculation about the future of Ricke whose contract is up for renewal next year, but he said after the meeting that the issue had not been discussed. “It was a very constructive, concentrated discussion on strategy,” Mr Ricke told reporters in a conference call on Saturday.

In the reshuffle of management responsibilities, Mr Ricke will now not only be head of branding for Deutsche Telekom, but also advertising budgets, media planning and media co-ordination, the company said in a statement. Lothar Pauly, the head of business unit T-Systems, will be in charge of networks, IT and purchasing, while the head of Deutsche Telekom’s mobile phone unit T-Mobile, Rene Obermann, will become responsible for points of sale in Germany.

The operational responsibility of Deutsche Telekom’s three business areas world-wide — mobile, fixed-line telephony and broadband Internet, and business — remained unchanged, the company said. “We are emphasising the need to strengthen the co-ordination of our activities in Germany. At the same time we must radically adjust our cost structures to the changing market conditions,” Mr Ricke said in the statement.

Mr Ricke outlined the strategy discussed with the supervisory board, which he said aimed at making Deutsche Telekom Europe’s leading telecom group, not only by sales as today, but also by profits by ’10. Deutsche Telekom will aim for better service and products in Germany while cutting its overall costs. Mr Ricke said that the group would aim to expand its market share in the rest of Europe, emphasising eastern Europe.

Deutsche Telekom also wants to strengthen its position in the US mobile phone market, which Mr Ricke said was four times bigger than the German and was growing by over 6% a year.

T-Systems, the group’s business unit, will focus on a limited number of specific industries such as automotives, the public sector and telecommunications when it comes to its biggest clients, Mr Ricke said.

However, the unit would also seek to expand its market share of small and medium-sized clients in Germany, he said.