Bloomberg News

Deutsche Telekom to Cut Administrative Jobs at Headquarters

August 01, 2011

(Updates with analyst comment in fourth paragraph.)

Aug. 1 (Bloomberg) -- Deutsche Telekom AG plans to reduce administrative employees at its headquarters as Europe’s largest phone company tries to improve profitability.

The Bonn-based company may cut as many as 400 jobs per year through 2015, spokesman Christian Schwolow said today. The plan, which isn’t yet finalized, would decrease the number of employees at various levels through means including early retirement and voluntary departure, he said.

The measures are part of the Save for Service program at Germany’s former phone monopoly, which cut costs by 5.9 billion euros ($6.1 billion) from 2007 through 2009, with an additional 4.2 billion euros targeted by 2012. Dutch competitor Royal KPN NV plans to decrease headcount in the Netherlands by as much as 5,000, or a quarter of its total.

“Employee numbers in the German segment are going to keep decreasing in coming years,” said Stefan Borscheid, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart with a “buy” recommendation on Deutsche Telekom shares. The rollout of fiber- optic cables and the transition to fully Internet Protocol-based networks may allow further cuts in the longer term, he said.

Deutsche Telekom declined 1 percent to 10.73 euros in Frankfurt trading as of 11:16 a.m.

Schwolow declined to say how much the company may have to pay for severance packages, or by how much the plan may reduce labor costs. Its global headcount declined 2 percent to 252,000 last year.

Compensation Payments

The company is facing compensation payments totaling as much as 400 million euros, German newspaper Handelsblatt reported today, citing unidentified people within the company

Deutsche Telekom has revamped its workforce through cuts, partial or early retirement and by seeking alternative employment opportunities, especially for civil servants. Its T- Systems unit, which targets corporate clients, slashed 3,000 jobs through the end of last year.

France Telecom SA and Deutsche Telekom’s U.K. joint venture Everything Everywhere said last year they would cut about 1,200 jobs following the merger which created Britain’s largest wireless operator.

--Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net


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