Deutsche Telekom rings in management changes

Communications giant reshuffles board responsibilities and announces an ambitious strategy for growth

Deutsche Telekom has announced an ambitious restructuring programme to increase revenue market share and become a top three player in the European business space in the next three years.

The news forms part of a seven-point charter for change and renewed focus called 'Telekom 2010'.

The communications giant is particularly eager to bolster its position in its home country of Germany, where sales have stalled.

"We are Europe's No. 1 and are determined to remain so," Deutsche Telekom chief executive Kai-Uwe Ricke told shareholders at a meeting earlier this year.

"Competitive developments have forced us to massively adjust our cost structures - across the board - to offset price pressure. We will do everything in our power to take Deutsche Telekom forward into a secure, stable and successful future."

Under the proposed changes, Ricke will look after advertising budgets and media planning and coordination in addition to brand management.

Lothar Pauly, chief executive of the T-Systems business unit, will take on purchasing, IT and networks responsibilities worldwide. While T-Mobile head Rene Obermann will focus on German sales.

In addition to the management responsibility reshuffle, Telekom 2010 will also focus on increased innovation, greater efficiency and enhanced customer services.

"With our new strategic alignment we are emphasising the need to strengthen the coordination of our activities in Germany," said Ricke when announcing the new management structure.

"At the same time we must radically adjust our cost structures to the changing market conditions. This will happen whilst keeping the worldwide responsibilities of T-Mobile, T-Com and T-Systems intact."

Analysts have welcomed the changes, adding that they are long overdue as other European players have already made headway on restructuring efforts.

"Whilst Deutsche Telekom's competition has certainly made significant inroads in recent quarters and has inflicted significant financial pain, only a fool would write off the combined marketing machinery that makes up Deutsche Telekom," said Daniel Bieler, research director at Ovum.

"Deutsche Telekom now has the opportunity to demonstrate the might of the assets that it has at its disposal. Its competitors will have to take notice of these changes."

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