Nov. 14, 2006

Deutsche Telekom’s CEO will be replaced with the head of the company’s wireless division, on the heels of a quarter in which the company’s net income dropped 20 percent year over year.

Deutsche Telekom said yesterday that Kai Uwe-Ricke, who led the company since 2002, will be succeeded by René Obermann, effective today.

“René Obermann is a strong entrepreneurial leader with over 20 years experience in an industry that is characterized by fast technological changes and constant new challenges in the market,” said Klaus Zumwinkel, chairman of the Deutsche Telekom supervisory board.

“His career has a strong international influence, particularly through the successful internationalization of T-Mobile.”

Ovum research director Dan Bieler said in a research note that Ricke lost his position because of three main issues: Deutsche Telekom has lost ground in both fixed and mobile markets in its home country of Germany.

He “caused irritation amongst staff and the unions” over his program to reduce the DT workforce.

As a result, the company’s share price remains below the issue price of its initial public offering, with “divisional infighting” further undermining the company’s course.

Bieler added that the new CEO of Deutsche Telekom “will have little more room for maneuver than Ricke.

Given the new product portfolio and changes to the delivery and sales channels, the focus must now be on a mammoth task: the migration toward a next-generation network environment.

This will require the complete overhaul of business processes away from the traditional focus on fixed and mobile phones towards a focus on actual tasks such as access and application and service provision.”

Deutsche Telekom’s stock was trading above $17.20 per share on the New York Stock Exchange on Monday, after closing Friday at $16.92 per share.

The company’s stock price has been trending upward since September, after its most recent downward trend which started in January 2005.

According to Deutsche Telekom’s Web site, the company’s stock traded at nearly $100 per share in early 2000.

Source: RCR News