Bloomberg News

Deutsche Telekom’s Obermann to Lead Cable Operator Ziggo

March 07, 2013

Deutsche Telekom CEO Rene Obermann

Rene Obermann, chief executive officer of Deutsche Telekom AG. Photographer: Ralph Orlowski/Bloomberg

Deutsche Telekom AG (DTE) Chief Executive Officer Rene Obermann, who is stepping down at the end of this year, will join Dutch cable operator Ziggo NV (ZIGGO) as the German phone company seeks to complete a merger of its U.S. wireless unit with MetroPCS Communications Inc.

Obermann will take over in January 2014 from CEO Bernard Dijkhuizen, who is set to retire, Utrecht, Netherlands-based Ziggo said yesterday. The 49-year-old will stick with a plan to stay on as CEO this year as he hands over responsibilities to his successor, Chief Financial Officer Timotheus Hoettges, said Deutsche Telekom spokesman Philipp Schindera.

The German carrier is going through the leadership transition as an agreed merger of its T-Mobile unit in the U.S. with MetroPCS faces opposition from some MetroPCS shareholders. Deutsche Telekom has increased spending to win over phone customers in Europe and the U.S., leading to a fourth-quarter profit before some items that trailed analysts’ estimates.

“This opportunity fulfills my strong wish as an entrepreneur to move closer to the operation activities and to be involved in a fast changing world of offering products and services in media and entertainment,” Obermann said in a statement of his appointment at Ziggo.

Cable Rivalry

Obermann has been wrestling with cable companies such as Kabel Deutschland Holding AG (KD8) in Germany and trying to persuade regulators to limit their grip on local markets. Bonn-based Deutsche Telekom is open to cooperation with fixed-line carriers in European markets -- such as the Netherlands -- where it offers only wireless services, Claudia Nemat, who oversees the German company’s businesses in the region, said last week in Barcelona.

Obermann’s appointment will be on the agenda of Ziggo’s April 18 shareholder meeting.

Ziggo shares fell 1.4 percent to 26.30 euros at 2:41 p.m. in Amsterdam. The stock has jumped 42 percent since the company’s initial public offering in March 2012. Ziggo, whose biggest shareholders are Warburg Pincus LLC and Cinven Ltd., has a market value of 5.3 billion euros ($6.9 billion). Deutsche Telekom dropped 0.8 percent on the Frankfurt exchange.

Europe’s cable assets have become more attractive this year, with billionaire John Malone’s Liberty Global Inc. (LBTYA:US) agreeing to acquire Virgin Media Inc. (VMED:US) in the U.K. for $16 billion last month. Neil Berkett, the Virgin Media CEO who is stepping down after the transaction, stands to get as much as $85 million, a person familiar with the situation has said.

Kabel Deutschland

Vodafone Group Plc (VOD) has held internal discussions about a possible bid for Germany’s Kabel Deutschland Holding AG, people familiar with the matter said last month.

Ziggo, with 2.9 million TV customers at the end of last year, didn’t take part in an auction for wireless spectrum for high-speed mobile-phone services in December. Royal KPN NV, Vodafone, Deutsche Telekom’s T-Mobile unit and Tele 2 AB paid 3.8 billion euros in total. Ziggo, in a joint-venture with Liberty Global’s UPC unit, considered the price too high and now plans to expand its mobile offering using some spectrum it acquired in 2010.

“We believe it is positive that Ziggo announces so early in the year who will replace Bernard Dijkhuizen as CEO as this avoids potential succession problems,” Emmanuel Carlier, a Brussels-based analyst at ING Groep NV, wrote in a note. “It is good that Obermann has experience in fixed and mobile services as Ziggo intends to launch a mobile product, which could become one of its most important growth drivers.”

‘Engine Room’

Still, Ziggo’s 2012 revenue of 1.5 billion euros compares with more than 58 billion euros at Deutsche Telekom, Germany’s largest phone company. Obermann, in explaining to directors his resignation in December, cited frustration with efforts to persuade regulators to rethink rules that govern a shrinking industry, a person familiar with the matter said at the time.

Telecommunications stocks were the worst-performing industry group in the Stoxx Europe 600 Index last year. The subindex has gained 3.5 percent this year through yesterday. Virgin Media jumped 40 percent in the same period, while Kabel Deutschland is was 21 percent.

Obermann has said that he wanted to return to the “engine room.” His career began when he co-founded ABC Telekom, a retailer of answering and fax machines, as a 23-year-old student at the University of Muenster in Germany. He ran the company from his apartment and later rented a 60-square-meter office with a double garage.

Hong Kong billionaire Li Ka-Shing’s Hutchison Whampoa Ltd. (13) bought ABC in 1991, after the company had grown to 20 million deutsche marks ($13 million) in annual revenue and 60 employees.

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

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


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