BUSINESSWEEK ONLINE : DECEMBER 4, 2000 ISSUE
INTERNATIONAL -- EUROPEAN COVER STORY ONLINE EXTRA: Global Business Chief Hedberg: 'It's Not Just Winning the Deal' Jeffrey A. Hedberg, head of Deutsche Telekom's international business, is the point man in company's quest to join the ranks of global players in the telecommunications market. That's a sore point for the company, which failed in an attempt last year to merge with Telecom Italia and is struggling to build presence outside the German market. The company should take a giant step forward next year, though, when it closes the $51 billion acquisition of VoiceStream Wireless Corp. in the U.S. Hedberg spoke recently about company strategy with BusinessWeek Frankfurt Bureau Chief Jack Ewing. Here are excerpts: On priorities in an era of reduced financial clout: We are in a position right now where we have three things that are forcing us, rightly so, to focus on what we've acquired. Our share price doesn't present the acquisition currency that it once did. We've expended a lot of cash on UMTS licenses in Germany and the U.K. We are cognizant that there are limits to what we can do with our cash. The third [constraint] is the most important: We need to focus on integrating what we've acquired. It's not just winning the deal. On additional acquisitions: We will continue to systematically review opportunities. But I would say there will be quieter times over the next few months. We need to demonstrate to the financial markets that we can manage and grow the businesses that we've acquired. On managing acquisitions: A lot of it is choosing and providing incentives for management. That is the number one success factor: management, management, management. Also, making sure Deutsche Telekom doesn't send boatloads of Germans over to say this is the way we do it. It will be very much a two-way street. There are a lot of things that we can learn from VoiceStream -- for example, how they have increased the average revenue per subscriber. What we do not want is to try and make everything so much alike that we kill the key values we sought to introduce to Deutsche Telekom through the transaction. On what Deutsche Telekom can do for VoiceStream: From a technical perspective, there are a lot of things we can do to enhance VoiceStream's position.... Prepaid [mobile phone service] may be an important market opportunity in the U.S. just as it is in Germany and the rest of Europe, and we could offer our expertise there. On retaining VoiceStream management: [That] was the key component of the negotiations. You can't put people in chains and say you need to stay at your desk. [VoiceStream CEO] John [Stanton] and his team are motivated and committed to stay, as long as they're having fun. If John and his team were required to come every week to Germany and explain the new forecasts and how that's deviating from the budget and why these certain integration processes were not being followed and why they didn't adopt our standards for this or that, then I think we would very quickly lose [them]. These guys are famously wealthy, so there's not a lot we can do from a financial perspective. We need to keep the environment fun and challenging. On management turmoil at T-Online (Deutsche Telekom's Internet unit): That was not understood well by the press. It was a fundamental issue of how capable was the T-Online management of working with the other groups in Deutsche Telekom to generate synergies and market advantages through business services. What's therefore critical is that the management that we put in T-Online or T-Mobile obviously keep the interests of their shareholders as their number one priority, but also have a clear set of incentives to work with the other strategic pillars. On Deutsche Telekom's decision not to bid for a third-generation mobile license in Italy: We didn't see a big business case there. Omintel and Telecom Italia Mobile control 80% to 90% of the market there. That doesn't leave an awful lot of margin at the end, particularly if you're No. 5. There may be some interesting opportunities down the road, two to three years, when some of these consortiums start to go through painful periods and are looking for a sale. On chances of reviving a deal with Telecom Italia: I think it would make great sense. If I look at the footprint that Telecom Italia Mobile has and the footprint we have, it's quite nice. But there are no discussions. It's obviously an opportunity that we continue to monitor. Who knows? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Deutsche Telekom's Embattled Boss (int'l edition) COVER IMAGE: Deutsche Telekom's Embattled Boss CHART: Deutsche Telekom's Hard Year TABLE: The $80 Billion Spree ONLINE EXTRA: CEO Sommer: ``We Are Very Much Misunderstood'' ONLINE EXTRA: CFO Eick: ``A Huge and Incomparable Transition Period'' ONLINE EXTRA: Global Business Chief Hedberg: ``It's Not Just Winning the Deal'' INTERACT E-Mail to Business Week Online

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