DT outlines path ahead

2 Mar 2007

Following the release yesterday of weaker than expected financial results – largely down to tough domestic market conditions – Deutsche Telekom CEO Rene Obermann has revealed plans to expand the company’s wireless business internationally in an attempt to boost growth. The expansion will centre primarily on organic growth – the telco hopes for a ‘significant’ subscriber base increase from its European operations in 2007, and an extra five million customers at T-Mobile USA – but may also include carefully selected acquisitions in emerging, high growth markets. The strategy is not dissimilar to that of Vodafone, which recently made a high profile move into the Indian cellular market in order to reduce its exposure to largely saturated European markets.

Obermann also revealed plans that will attempt to directly address declining revenue from the company’s fixed line operations in Germany. DT hopes to build ‘a new media platform’ based on its VDSL network currently being deployed, with 50 cities to be connected by 2008, and ADSL2+ access available in an additional 750 towns and cities. The telco expects to offer television over the internet via the high speed broadband networks.

In a further scheme designed to make the company more profitable, the new CEO – Obermann replaced Kai-Uwe Ricke last November – reiterated that DT hopes to save EUR4.7 billion (USD6.2 billion) in operating expenses by 2010. It is understood that 32,000 employees of the company’s 280,000-strong workforce will be let go.

Finally, Obermann revealed a list of assets placed up for sale. These include DT’s ISPs in France and Spain as well as various real-estate assets. The funds raised from disposals will go towards future acquisitions.