DT expects Euro5.5bn loss in 2002; to cut 22,000 jobs
28 May 2002 -- After a Q1/2002 net loss of Euro1.8bn, and expecting a loss of Euro5.5bn in 2002, Deutsche Telekom plans voluntary redundancies of 22,000 staff by 2004.
28 May 2002 -- Deutsche Telekom AG (DT), Europe's largest telecoms company, on 22 May reported a Q1/2002 net loss of Euro1.8bn (almost five times that of a year ago). This includes a Euro1bn charge for the amortisation of newly consolidated companies, mainly US mobile-phone operators VoiceStream Wireless and PowerTel.
Revenue was Euro12.8bn (up 15% on a year ago), including Euro4.3bn outside Germany (up 86%, from 21% of total revenues to 33%) partly due to Euro1.4bn from VoiceStream and PowerTel.
T-Com, DT's fixed-line unit which focuses on national markets, contributed 49% of revenues but pre-tax income fell to Euro694m (from Euro1.3bn a year ago). Internet-provider business T-Online narrowed its pre-tax loss to Euro3m (from Euro27m).
On 23 May rating agency Moody' cut DT's credit standing from stable to negative, pushing its shares and bonds to all-time lows. This prompted DT's Euro5bn bond sale - to secure the company's financing until end-2003 - to be postponed and the third revision of its pricing in as many days.
On May 25 chief financial officer Karl-Gerhard Eick said that DT should see its biggest ever loss of Euro5.5bn in 2002. DT already has debts of Euro67bn. Eick also expects losses in 2003 and 2004.
At the annual shareholders meeting on 28 May chief executive Ron Sommer said that DT plans to save more than Euro10bn, through voluntary redundancies of 22,000 staff by 2004 (8% of its 256,000 workforce) and by using its market power to get better deals from suppliers. Together with the sale of non-core assets like cable TV, it aims to cut debt to Euro50bn by end-2003.
Regarding restructuring, the national carrier services business is being transferred from T-Systems to T-Com and the international carrier services business from T-Com to T-Systems. Eastern European subsidiaries MATAV, Slovenske Telekomunikacie and Hrvatske telekomunikacije have been transferred to T-Com. T-Systems is being positioned as a network-centric IT/telecoms provider.