Europe’s largest telecoms group by sales Deutsche Telekom has changed bosses. Chief Executive Kai-Uwe Ricke has stepped down to be replaced by the head of its mobile phone division Rene Obermann. Klaus Zumwinkel, head of Deutsche Telekom’s supervisory board, said Obermann has its support and has been appointed for a five-year-period. Obermann said: “The market conditions for Deutsche Telekom will remain difficult. It’s no secret that we are up against very strong competition, plus there are there are huge cost pressures and major technological changes.”
No reason was given for Kai-Uwe Ricke’s departure, but there has been pressure from shareholders after poor results. Pre-tax third quarter profit, at 1.2 billion euros was a third lower than the same period last year. It seems Ricke was ousted because he 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. Analyst Jürgen Kurz said: “It is clear that Ricke hesitated for too long before taking things in hand and saying firmly that Deutsche Telekom really needed to be reformed, if it was going to become a market leader.”
Obermann has said he will focus on what he called the difficult balancing act of raising customer service levels, while reducing costs. But he may have the same trouble as his predecessor as the German government, which still owns a third of the shares of the former state monopoly, is reluctant to support job cuts.