GERMANY/UNITED KINGDOM: Deutsche Telekom appoints Obermann as new CEO

Deutsche Telekom appointed Rene Obermann, the head of its mobile unit, as chief executive on Monday (November 13, 2006), handing him the tough task of boosting revenues and profits at Europe's top telecoms group. Klaus Zumwinkel, head of Deutsche Telekom's supervisory board, said Obermann had the support of the entire board and had been appointed for a five-year-period, effective from Monday. After years of debt reduction, Zumwinkel said the new chief executive's focus should now be on "raising the share price, the market capitalisation in the long-term." Telekom's shares rose on Monday after news over the weekend that ousted CEO Kai-Uwe Ricke had lost the support of the group's top shareholders -- the German government and private equity group Blackstone -- following a profit and sales warning three months ago. The stock was up 2.8 percent at 1256 GMT, outperforming an 0.7 percent rise in the DJ STOXX telecoms index. Telekom's shares have gained some 20 percent since Ricke was appointed as CEO four years ago, against an almost 50-percent rise in the European telecoms index over the same period. Obermann said he would focus on raising customer service levels, while cuttings costs. "We have to manage this difficult balancing act between savings costs on the one and (creating a) service culture on the other," he told reporters. The government, which wants to sell some of the 32 percent stake it effectively controls in the former state monopoly, has held off a sale due to the depressed share price. But it has been reluctant to support job cuts which could help raise Telekom's share price, and has yet to address the problem of around 40,000 civil servants with lifetime contracts employed by the group. ENDS

ITN Source | November 13, 2006

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