German phone giant’s chief to step down
Deutsche Telekom Chief Executive Kai-Uwe Ricke will step down from Europe’s biggest telecommunications company today, the company said late Sunday, the second high-profile German CEO to fall from glory in less than a week.
Ricke, who took over as CEO four years ago, made the decision after the company’s board met Sunday. He had been under pressure from shareholders who were unhappy with the company’s lowered profit and sales forecasts amid fierce competition in the Bonn, Germany-based company’s home nation.
German media had been rife with speculation since Thursday that Ricke’s tenure was on the edge after the company reported a 20% drop in its third-quarter profit and slowing growth in most of its markets except for the lucrative cellular business in the United States.
A replacement was not immediately named, but Dow Jones Newswires, citing people familiar with the supervisory board meeting, reported that Rene Obermann, the CEO of the company’s wireless unit, was likely to be tapped to replace Ricke.
In a brief statement, Deutsche Telekom said only that “the supervisory board will discuss, and may resolve on, Ricke’s succession as CEO in a meeting” today.
The company did not say why Ricke resigned, but analysts had said that the board and two of Deutsche Telekom’s main shareholders -- the German government, which has a 32% stake, and private equity group Blackstone, which holds 4.5% of the company -- were unhappy with the slide in Deutsche Telekom’s profit and share price, which on Friday fell 2.4%.
Ricke’s departure comes just days after carmaker Volkswagen announced Tuesday that CEO Bernd Pischetsrieder, 58, who was given a contract extension in May through 2012, would leave the company Dec. 31. He will be replaced by Martin Winterkorn, the head of VW’s luxury car unit Audi.
The decision came as VW cuts as many as 20,000 jobs, institutes longer working hours at its German plants and trims costs -- a difficult program that Pischetsrieder instituted in a bid to compete with Asian automakers and snare a large piece of the U.S. market.
Ricke, whose father was a CEO for formerly state-owned Deutsche Telekom, has been under intense pressure from domestic rivals for traditional phone line business, as well as for high-speed Internet connections and cellphone services. He announced a program last year to cut as many as 32,000 jobs by 2008.
The company has been losing customers to rivals such as Arcor and Mobilcom, which offer lower prices for traditional telephone services bundled with high-speed Internet access.
The company said that from July to September, it lost half a million land-line connections, leaving it with 52.3 million customers -- down 5.8% from the 55.5 million it had in the year-earlier period.
In the third quarter, the company earned 1.94 billion euros ($2.5 billion), down from 2.44 billion euros in the same period a year earlier. Revenue increased 2.8% to 15.48 billion euros ($19.91 billion).
