DT chief says not to expect ‘miracles’

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Deutsche Telekom’s new chief executive, René Obermann, on Wednesday warned investors not to expect any “miracles” and pledged to stick to the tough restructuring his predecessor outlined only days before being sacked.

Moves to stop customers deserting DT’s fixed-line unit had to respect the fact that Europe’s largest phone operator was “a complex company” that could not change “from one day to the next”, he said at a press briefing.

His comments appeared aimed at DT’s largest shareholders, the German government and private equity group Blackstone, which ousted Kai-Uwe Ricke as chief executive last month for what they deemed insufficient action.

Without naming his predecessor, Mr Obermann said new marketing packages introduced in September were “starting to take effect” and stressed “the image of our customers deserting us in throngs is inaccurate”.

Mr Obermann pledged to stick to plans to cut costs by €5bn ($6.7bn) by 2010 and outsource 45,000 staff to lower-paying subsidiaries, outlined by Mr Ricke just before his departure.

At a press conference on November 9, Mr Ricke had reported 1.5m customer defections from fixed-line unit T-Com since the start of the year but also pointed to a jump in subscribers after a change in tariffs in October.

Presenting a new – if incomplete – management board, Mr Obermann said this team and a group of external advisers would discuss further strategic goals in the coming months. He said he planned to announce details in spring.

The new T-Com head, Timotheus Höttges, would also take charge of DT’s German internet and mobile businesses, Mr Obermann said, signalling he was keen to end divisional thinking and centralise decision-making.

The new T-Com boss won his spurs at mobile unit T-Mobile with a cost-reduction programme. Mr Obermann said Mr Höttges would now play a central role in raising productivity at T-Com while protecting customer service.

But Mr Obermann has yet to find a personnel chief to help negotiate with the Verdi services union about resulting wage cuts. He said union favourite Regine Büttner had withdrawn and refused to speculate on who might follow.

People close to DT said the post could remain vacant for half a year – chief financial officer Karl-Gerhard Eick has taken the post on an interim basis – and that it was probable Verdi would have a second try at nominating a candidate. These people said the issue could raise questions over Klaus Zumwinkel’s stewardship of the supervisory board. The non-executive chairman supported Ms Buttner but was opposed by other shareholder representatives.

FT Deutschland, the Financial Times’s sister paper, has reported that Blackstone is watching Mr Zumwinkel’s every step. “Having the candidate you support for a board seat turned down does not look good,” said one person close to DT.

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