Restructuring Plans

While Deutsche Telekom Chief Executive Rene Obermann is expected to detail the savings plan at a news conference on Thursday, labor leaders and other sources said the key change would be the transfer of staff to a new division with longer working hours.

Hampered by high personnel costs, the former German monopoly has seen its market share steadily eroded by low-cost competitors. It lost 2 million German fixed-line customers in the past year. The restructuring plan aims to save the telecommunications giant up to 5 million euros ($6.6 million) by 2010.

Company sources said Obermann aimed to step up acquisitions abroad, especially in eastern Europe, and to improve customer service in Germany. The daily Süddeutsche Zeitung said he would require up to 55,000 staff members work longer hours without pay increases.

New service division

The cost-savings strategy would create a new division, T-Service, with working hours of 40 or 40.5 hours weekly, staffed by employees in the current T-Com division, who now work a 34.5-hour week, the paper said.

T-Service would handle Telekom's customer relations: One of its primary goals would be to improve service at Europe's biggest telecoms company and help stem the customer hemorrhage.

The Verdi labor union warned at a demonstration in Bonn on Wednesday that it would oppose restructuring and that pro-labor members of the Telekom board would vote against it.

Verdi leader Frank Bsirske said a lower hourly rate would mean "poverty wages" at the telecommunications company. The union expressed fears that up to 60,000 employees could be transferred to the new division.

"We won't stand for this nonsensical restructuring plan," said Lothar Schröder, a Verdi director who is also on the Telekom surpervisory board.

A Telekom personnel chief, Dietmar Welslau, said T-Service would be retained as a group division and not sold to outside investors.