Deutsche Telekom’s non-executive directors are sizing up potential candidates for the top job at Europe’s largest telecoms group before a decision in December whether to renew the contract of the current chief executive beyond 2007.
Kai-Uwe Ricke has come under pressure since issuing a profit warning in August as falling subscriber numbers at the company’s ailing fixed-line division continued and growth of its mobile businesses in the US and Europe slowed.
Mr Ricke won supervisory board backing in late August to tackle these problems. But one non-executive director told the Financial Times that members of the board were still mulling Mr Ricke’s future.
Big German companies typically begin considering executives’ contracts about a year before they are due to expire.
Some Telekom directors are understood to be pushing for a candidate with an international record – with Ben Verwaayen, BT’s chief executive, among those being considered. But the government which controls 31.2 per cent of Telekom directly or via state-owned bank KfW, is said to favour home-grown Telekom talent for political reasons.
The key consideration for the government is to minimise the political fallout from any restructuring of the overmanned fixed-line unit.
Mr Ricke deferred to these concerns last year when he quietly reduced his demand for job cuts at T-Com from 60,000 to 30,000. Talks with unions about this number are proving tough.
“We can’t say, ‘We want to save jobs at [troubled aircraft maker] Airbus or [mobile handset maker] BenQ,’ while drafting in a new Telekom chief executive who will want to cut thousands of jobs,” said a Berlin official.
Berlin could favour an insider such as Karl Gerhard Eick, chief financial officer, or Rene Obermann, T-Mobile head, for this reason: although even they might want the leeway to cut jobs denied Mr Ricke.
Given Berlin’s quandary, some Telekom executives believe that Mr Ricke has a good chance to get his contract extended.