May 29, 2002 By Melissa Eddy Associated Press Writer 3 min read

FRANKFURT, Germany (AP) – Deutsche Telekom’s embattled chief executive said Tuesday the company would reduce its work force by some 22,000 jobs, or 9 percent, by the end of 2004 as the telecommunications giant struggles to cut costs and pull itself out of debt. Ron Sommer said that Deutsche Telekom, whose shares hit a new low last week following a weak first-quarter earnings report and a ratings downgrade, plans to save more than 10 billion euros ($9.2 billion) through its cost-cutting efforts. “Already, it is clear that our efforts will generate cumulative savings worth a double-digit amount in the billions,” Sommer told shareholders at their annual meeting in Cologne.

Sommer said Telekom would cut almost 30,000 jobs in from its 245,000-strong workforce in Germany by the end of 2004, but that plans to hire staff in the same period would bring the net number of job cuts to about 22,000.

Deutsche Telekom also will shed some of its real estate holdings and its remaining stake in cable networks, although not immediately. Sommer said a partial listing of the company’s German wireless unit T-Mobile would remain on hold for now.

“We have to wait until the conditions are right. We will neither sell our cable network nor go public with T-Mobile at terms and conditions that we cannot justify to you, our shareholders,” Sommer said. “We are optimistic, however, that the conditions for these measures will improve within the foreseeable future.”

Deutsche Telekom, which is 43 percent owned by the German government, lost 3.5 billion euros ($3 billion) in 2001 after buying lossmaking U.S. mobile-phone company VoiceStream and investing heavily in mobile phone services. The shares have also suffered as earnings disappointments hit other major telecommunications companies. Sommer has come under fire from shareholders, who hold him largely responsible for the company’s 67.2 billion euros ($60 billion) worth of debt and continued losses.

that have driven stock prices to new all-time lows.

The slump in share prices is “no longer comprehensible and can only be explained with psychological mechanisms,” Sommer insisted Tuesday, defending his strategy in running as future-oriented. The bulk of Deutsche Telekom’s debts stem from investments in licenses for new mobile networks.

First-quarter losses for the company totaled 1.81 billion euros ($1.66 billion), compared to a deficit of 358 million euros for the January-March period last year.

One day after those figures were released, Telekom shares plummeted last Thursday to a new all-time low of 11.76 euros ($10.89) as Moody’s rating agency lowered the company’s rating to negative from stable.

Deutsche Telekom shares were up 3.48 percent at 12.80 euros ($11.79) in early afternoon trading Tuesday in Frankfurt. The stock, which was first offered at 14.47 euros in 1996, has fallen from a peak of 102.90 euros in early 2000.