Sharpening the Axe
October 22, 2007
Sales and restructuring could lead to major job cuts at Deutsche Telekom, according to a report published Monday, Oct. 22, in the weekly newsmagazine Der Spiegel.
The article cited "internal calculations" within the company, which employed some 249,000 people at the end of 2006, 89,000 of them outside Germany, as the reason behind the redundancies.
The magazine said Deutsche Telekom boss Rene Obermann refused to comment on the figure, while stressing "the need to adapt and restructure" the group he has headed for the past year.
"I think a job reduction of this size is realistic," Lothar Schröder, chairman of the Verdi trade union, told the Süddeutsche Zeitung on Sunday. Schröder is also the deputy head of Telekom's supervisory board.
Schröder added that the union would fight any plans to cuts jobs. The magazine did not say when the reported job cuts could take place.
Jobs outside the company
A Deutsche Telekom spokesman, however, said the company's calculations did not call for job cuts.
"It's not about dismissals, but employees who will keep their jobs outside of the company," the spokesman said.
Deutsche Telekom is Europe's biggest telecoms group. It has had problems in its core German market because of heightened competition and has lost numerous clients to rivals.
Under Obermann, Telekom is in the process of cutting 32,000 jobs by the end of 2008 and has shaved off another 50,000 in the service sector.
"There are business areas that we will sell or look for partners for -- that's well known," Obermann told Der Spiegel. "If we did not do this, the company as a whole would become less and less competitive."
Buying and selling to continue
The former German telecommunication monopoly has sold off subsidiaries in Spain and France, but has also bought a cellular phone company in the United States. At the beginning of July, Telekom upset trade unions by shifting 50,000 jobs in its troubled T-Com land-line unit into three independent companies, where employees would be forced to work longer hours for less pay.
In an interview Sunday, Obermann said the group would step up investments in developing nations, where the telecommunications sector is booming.
"In the long term, I can see us investing in developing countries because there is a dearth of infrastructure in these nations," he said on the n-tv news channel. "We are far from achieving our full potential."
Earlier this year, Obermann had said the company did not have immediate plans to invest in emerging markets, and was accused of falling behind its rivals.
Since becoming a private company in 1995, Telekom has cut an average of 10,000 jobs per year, according to n-tv.