Bloomberg News

Deutsche Telekom CEO Said to Hand Off Oversight of U.S. Unit

October 22, 2012

Deutsche Telekom AG (DTE) Chief Executive Officer Rene Obermann plans to hand off responsibility for the U.S. unit so he can focus on boosting sales outside traditional phone services, according to a person familiar with the matter.

Chief Financial Officer Timotheus Hoettges will assume oversight of T-Mobile USA on the executive board to allow Obermann to concentrate on new services, including online offerings and telemedicine, said the person, who asked not to be named because the plan isn’t public. The reorganization may be ratified by the supervisory board of the Bonn-based company in December, the person said.

The company wants to turn new services into dependable sales more quickly to offset declining phone revenue, another person has said. Obermann took charge of innovation strategy this year after board member Ed Kozel stepped down. The CEO spent much of 2012 revamping subscriber-losing T-Mobile USA after the unit’s failed $39 billion sale to AT&T Inc. (T:US) last year.

When T-Mobile chief Philipp Humm left in June to join competitor Vodafone Group Plc (VOD), Obermann travelled to the U.S. to find a successor. John Legere assumed the post in September. This month, the CEO presented an agreement to merge the U.S. unit with MetroPCS Communications Inc. (PCS:US), an attempt to make the operations more competitive against rivals Sprint Nextel Corp. (S:US), Verizon Wireless and AT&T Inc.

Client Losses

T-Mobile USA, which had lost 2.76 million contract customers in the two years through June, aims to overtake Sprint to become the third-largest U.S. mobile-service provider, Legere said in an internal interview published on Deutsche Telekom’s website, adding the operator may not reach that goal by 2014.

The division is adding 18,000 new subscribers to its unlimited data plan every day, he said. Getting Apple Inc. (AAPL:US)’s iPhone “is more a question of ’when’ than of ’if,’” he said.

Deutsche Telekom shares closed down 0.8 percent at 8.93 euros in Frankfurt today. MetroPCS rose 0.8 percent as of 11:47 a.m. in New York trading, while Sprint stock was little changed.

Deutsche Telekom has said it plans to raise revenue from new businesses, which include mobile data and TV services, to about 29 billion euros ($37.9 billion) in 2015 from 15 billion euros in 2009.

The German phone company has taken steps this year to accelerate expansion into non-phone offerings. Its venture arm may now take majority stakes in startups. The operator has rolled out its De-Mail secure electronic letter service and announced a partnership for mobile payments with Mastercard Inc. (MA:US)

Andreas Fuchs, a Deutsche Telekom spokesman, declined to comment on the reorganization. Handelsblatt reported the plan earlier today.

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 at kwong11@bloomberg.net


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