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Deutsche Telekom Announces Huge Losses

August 21, 2002

Deutsche Telekom, Europe's largest telecoms company, announced massive losses on Wednesday. But the stock market reacted friendly as the company's interim chairman promised a strict savings course.

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Telekom needs to desperately clear up its tangle of debt.Image: AP

Deutsche Telekom posted first-half losses of more than 3.9 billion euro ($3.82 billion) on Wednesday, as new interim chairman Helmut Sihler vowed to hold a strict savings course at Europe's largest telecoms company.

"There are no sacred cows," Sihler said at the press conference announcing the earnings. "Everything is being evaluated."

Sihler, who replaced chairman Ron Sommer last month, plans to cut Telekom's debt from 65 million euro to 50 million euro by the end of next year.

A chronicle of mass layoffs foretold

The plans include more than 20,000 job cuts and the possible sale of American wireless company Voicestream to the U.S. wireless firm Cingular. Voicestream, acquired by Sommer during the height of the booming telecoms market two years ago, is valued at 10 billion euro. At the time, Telekom snapped it up for $51 billion (51.96 billion euro), or nearly five times as much.

The 3.9 billion euro losses for the first half of 2002 are 11 times more than losses in the first half of 2001, but were in line with analysts forecasts.

Telekom stock rose 0.5 percent on the Frankfurt Stock Exchange after Wednesday's announcement to just under 12 euros.

Sihler wouldn't speculate on the specific measures he had planned to trim the debt pile. He also said the search for a long-term successor to Sommer would only begin at the end of September.