Deutsche Telekom: cost cutting continues

4 Nov 2008

The Financial Times reports that Deutsche Telekom will intensify its cost cutting efforts in a bid to revive its German fixed line business. Rene Obermann, Telekom’s chief executive, told the British broadsheet that the fixed line business faced further restructuring. But he confirmed the company expected to hit its 2008 targets on earnings and cash flow. He also sought to reassure investors there would be no big spending on deals by signalling that Telekom had no plans to make a bid for Sprint Nextel, the struggling US mobile phone operator.

In an interview, Mr Obermann acknowledged the fixed line business looked overstaffed compared with some other European telecoms companies. ‘We will keep striving for competitiveness and for efficiency, and, therefore, we will have some further restructuring ahead of us,” he said. Mr Obermann added that Telekom was looking to secure EUR4.7 billion (USD6.01 billion) of savings – the maximum possible – from its existing cost cutting programme. He pointed to the possibility of further rationalisation, partly through the planned modernisation of Telekom’s fixed line infrastrucure.

Germany, Deutsche Telekom (DT)