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Tue, Nov 14, 2006 - Page 10 News List

Deutsche Telekom's chief quits over flagging profits


Kai-Uwe Ricke stepped down as chief executive of Deutsche Telekom AG yesterday, the company said yesterday, making him the second CEO in Germany to lose his job in less than a week.

Ricke, who took over as CEO of Europe's biggest telecommunications company four years ago, made the decision after the company's board meeting on Sunday. He had been under pressure from shareholders who were unhappy with the company's lowered profit and sales forecasts in the face of fierce competition in its home market.

German media had been rife with speculation since Thursday that Ricke's tenure was on the edge, after the firm reported a 20 percent dip in its third-quarter net profit and slowing growth in most of its markets, save for the lucrative cellular business in the US.

A replacement was not immediately named, but Dow Jones Newswires reported, citing people familiar with the supervisory board meeting, that Rene Obermann, the CEO of the Bonn-based company's wireless unit, was likely to be tapped to replace Ricke.

In a brief statement late on Sunday, Deutsche Telekom only said that "the supervisory board will discuss, and may resolve on, Ricke's succession as CEO in a meeting" yesterday.

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 govern-ment, which holds a 32 percent stake, and private equity group Blackstone, which has 4.5 percent -- were unhappy with the slide in Deutsche Telekom's profit and share price.

Shares of Deutsche Telekom closed on Friday at 13.14 euros (US$16.90), down 2.4 percent.

Ricke is the second high-profile German CEO to be ousted from his job in less than a week. On Tuesday, automaker Volkswagen AG announced that CEO Bernd Pischetsrieder, 58, who was given a contract extension in May through 2012, would leave the company on Dec. 31. He will be replaced by Martin Winterkorn, the head of VW's luxury car unit Audi AG.

Ricke, whose father was a former CEO for the former state-owned Deutsche Telekom, has been under intense pressure from domestic rivals for its conventional telephone 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 conventional telephone services bundled with high-speed Internet access.

In the third quarter, the company earned 1.94 billion euros (US$2.5 billion), down from 2.44 billion euros (US$3.14 billion) in the same period a year earlier.

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