Less Employees for Deutsche Telekom: 32,000 jobs to be cut by 2008

[ShoresGuy]

November 2, 2005

Ad hoc notification from Deutsche Telekom in accordance with § 15 of the Security Trading Act (WpHG)

Deutsche Telekom faces major staff restructuring measures

- 6,000 new staff are to be employed for the next three years
- 7,000 Vivento employees to change employer
- Reductions mainly at T-Com
- Total of 32,000 employees to leave the Group within three years
- No compulsory redundancies within DTAG
- Cost of the entire program at EUR 3.3 billion

Due to the massive changes in the industry, Deutsche Telekom faces comprehensive staff restructuring measures. These will include socially acceptable measures to reduce the number of employees, new positions for junior experts as well as the divestiture of Vivento units. The Board of Management has informed the employee representatives of this and has initiated negotiations.

The worldwide realignment of the industry, the rapid pace of technological development and, in particular, the tough competitive environment in the fixed network and broadband sector in Germany imposed by the regulatory situation, intensify the challenges facing the entire Deutsche Telekom Group. On the one hand, jobs must be cut in old core markets; on the other, there are opportunities to create jobs in new innovative markets.

In the next three years, about 32,000 employees in Germany will leave Deutsche Telekom. This includes about 7,000 employees whose positions will be outsourced from Vivento on a permanent basis. While a further 25,000 employees are to leave the Group, around 6,000 new staff are to be employed. Thus, the net reduction of jobs over the next three years will be 19,000.

The background of this net job reduction of 19,000 is the comprehensive restructuring of jobs within the Group. The gross reduction of 27,000 jobs is partially offset by the creation of about 8,000 jobs. Future and present employment potential is greatly dependent on regulatory decisions. For instance, if the development of a high-speed fiber-optic network were endangered by regulation of this new market, an additional 5,000 jobs would be jeopardized.

The cost of the entire program is about EUR 3.3 billion spread over three years.

Job cuts are to be made via voluntary measures, such as old-age part-time work and severance payments. With regard to civil servants, talks with the federal government about early retirement programs will be necessary. As agreed with the employee representatives, there will be no compulsory redundancies before the end of 2008.

The collective agreement for Deutsche Telekom AG concluded last year includes a moratorium that stipulates that after the planning phase and before any final decision is made by the Board of Management, discussions must be held with the employee representatives concerning any staff reductions. These discussions have already begun.

Source: http://www.telekom3.de/en-p/inve/5-p...turing-ar.html

Deutsche Telekom made this announcement today which probably came as a surprise. Most of the job cuts will affect Deutsche Telekom's landline division, T-Com. T-Mobile Germany is not affected by this decision.

T-Mobile did miss out on the opportunity to buy O2 since the plan to buy and carve up O2 together with KPN (Dutch landline/cellular provider) fell through and now O2 is being bought by the Spanish landline/cellular provider Telefonica.

http://news.bbc.co.uk/1/hi/business/4399272.stm

[Andy]

What? T-Mobile buying O2?? Then they'd have two networks in most parts of Germany...is something like that fine with the RegTP, Shoresguy?
It would have definitely made sure T-Mobile keeps the spot as biggest wireless company in Germany.

[ShoresGuy]

T-Mobile and KPN made a joint initial offer in August which was dropped a few weeks later. I'm sure that an O2 purchase would have benefitted T-Mobile and E-Plus since KPN is E-Plus' parent company. Vodafone would probably have gotten some assets as well as a way to fairly distribute the network technology.

[Andy]

That's kind of how I would imaging it would have happened, but wasn't sure how they do things over there. I'm sure everyone could have used additional spectrum.

[ShoresGuy]

I don't think the German GSM/UMTS networks will ever be at overcapacity since there are rarely dropped calls or network busies. Those do happen on New Year's Eve though.

[Andy]

Still surprising to me that it happens on New Years. I've never had a network busy in Europe...ever.

[ShoresGuy]

Try it between 11:59 PM and midnight in any major German city on New Year's Eve. Most of the time, the SMS Service Centers are a bit overloaded for that 1 minute and the SMS won't always go directly through.

[Andy]

I've successfully made a few phonecalls right at midnight in ULM(lol, I guess it's not considered a major city lol) and sent/received SMS without a problem a few years ago.
Not surprising though that networks are stressed. Here in Salt Lake, Cingular/AT&T was having major capacity issues last New Years.