Report: Deutsche Telekom to post highest loss ever

Deutsche Telekom AG (DT) expects to post a full-year net loss of €5.5 billion (US$5.06 billion), its largest ever. Earlier in May, DT reported a first-quarter loss of €1.8 billion.

DT Chief Financial Officer Karl-Gerhard Eick said in an interview with the Sunday business newspaper Die Welt am Sontag this week that he doesn't expect the debt-laden German telecom company to see a full-year net profit until 2005 at the earliest. DT's total debt currently stands at €67 billion.

At the annual shareholders' meeting on Tuesday, Eick and his boss, Chief Executive Officer (CEO) Ron Sommer, expect to face a grilling by investors furious over the freefall of DT's shares over the past year. They have seen the share price plummet from a high of €104 per share to €12.51.

Eick said Voicestream, formerly Voicestream Wireless Corp., in Bellevue, Washington, will be a major contributor to DT's full-year net loss, with around €17 billion in associated acquisition costs. Although some shareholders have called on Sommer to unload Voicestream, the CEO has repeatedly defended the U.S. purchase. He views the mobile operator as a crucial beachhead in the important North American market, where the German company is trying to make inroads in the corporate sector.

Eick said that DT still plans an initial public offering (IPO) for its mobile unit, T-Mobile International, next year. The IPO was slated for this year.

Moreover, DT is reducing its workforce to curb costs, while selling off real estate and other noncore business to generate cash, Eick said. The company also plans to cut dividends, from €0.40 per share to €0.37, he added. With these and other moves, DT aims to reduce its debt to €50 billion in the current fiscal year, Eick said.

Last week, T-Online International AG said its net loss for the first-quarter narrowed to €89.7 million from €121.1 million a year earlier. In January the Internet service provider (ISP) began charging for select content. The subscriber base rose 584,000 to 11.2 million, including 142,000 new customers from its Austrian, French and Spanish units.

In recent months, corporate customers in Germany have restrained from publicly criticizing the former German monopoly telephone company. Criticism flowed in abundance during the early years of opening Europe's largest telecom market to competition. But the past several months have seen numerous new entrants abandon the market, resulting in a dwindling choice of alternative telecom service providers.

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