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Deutsche Telekom CEO to step down

Deutsche Telekom AG Chief Executive Kai-Uwe Ricke will step down from Europe’s biggest telecommunications company on Monday, the company said late Sunday, the second German CEO to fall from glory.
/ Source: The Associated Press

Deutsche Telekom AG Chief Executive Kai-Uwe Ricke will step down from Europe’s biggest telecommunications company on Monday, the company said late Sunday, the second German CEO to fall from glory.

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

German media had been rife with speculation since Thursday that Ricke’s tenure was on the edge after the company 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 United States.

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, Deutsche Telekom only said that “the supervisory board will discuss, and may resolve on, Ricke’s succession as CEO in a meeting” on Monday.

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 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 Friday at 13.14 euros ($16.90), down 2.4 percent.

Ricke is the second high-profile German CEO to be forced from his job in less than a week. On Tuesday, car maker 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.

The decision came as VW is cutting up to 20,000 jobs, instituting longer working hours at its German plants and trimming costs — a difficult program that Pischetsrieder instituted in a bid to compete with Asian automakers and to try and snare a large piece of the U.S. market.

Ricke, whose father was a former CEO for the former 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 cell phone 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.

From July to September, the company said it lost half a million landline connections, leaving it with 52.3 million customers — down 5.8 percent from the 55.5 million it had in the year-ago period.

In the third-quarter, the company earned 1.94 billion euros ($2.5 billion), down from 2.44 billion euros ($3.14 billion) in the same period a year earlier. Sales rose 2.8 percent to 15.48 billion euros ($19.91 billion).