News > International
Telekom pressured at home
May 27, 1999: 6:10 a.m. ET

German phone giant seeks to calm shareholders as local rivals turn the screw
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LONDON (CNNfn) - Embattled Deutsche Telekom Chief Executive Ron Summer faced a grilling from shareholders Thursday while domestic rivals Mannesmann and Veba boosted their own competitive position to place the privatized giant under even more pressure.
     Summer faced urgent calls from shareholders at the company's annual meeting to resuscitate the company's international strategy. Deutsche's plans are in disarray after the collapse of its planned merger with Telecom Italia following Olivetti's hostile $65 billion takeover of the Italian firm.
     Deutsche's (FDTK) margins in the $59 billion domestic market have been squeezed by a combination of regulatory constraints and competition in its fixed-line and cellular markets. These have brought down long-distance charges by 70 percent over the last year.
     Sommer's insistence at the meeting that the group would seek to expand through acquisitions helped to steady the slide in the company's stock, with its shares unmoved in Frankfurt at 35.50 euros.
     Sommer also said the company wanted to continue its joint ventures with France Telecom (PFTE), the erstwhile partner which is suing the German company for not informing it about the proposed TI deal.
Mannesmann ups Arcor stake

     Mannesmann is still basking in the glow of its own success in the TI saga. As part of the deal Mannesmann acquired Olivetti's interest in highly-regarded cellular operator Omnitel Pronto Italia and the fixed-line provider Infostrada for $8.34 billion, giving it a majority stake in both companies.
     Mannesmann is the number two cellular operator in Germany and is keen to boost its international presence. It already has strong penetration in the French and Austrian markets.
     Olivetti's success allowed the German firm to launch a 3.25 billion euro ($3.41 billion) bond -- the largest ever corporate issue -- to pay for the Italian assets and the acquisition of German fixed-line operator by its Mannesmann Arcor arm.
     Mannesmann (FMMW) shares have climbed 5 percent since Olivetti's victory last week and rose another 1.6 percent to 135.60 euros in morning trading in Frankfurt Thursday.
     The German group also agreed Thursday to buy another 7.5 percent stake in Mannesmann Arcor for 1 billion marks. U.S. giant AT&T (T) and global telecom alliance Unisource are selling the holding, which will boost Mannesmann's stake in the company to above 70 percent.
Cellular battle intensifies

     The battle in the cellular market intensified further Thursday when Veba (FVEB), the diversified utility, announced that it and fellow utility RWE (FRWE) would sell their jointly-owned Telecolumbus cable TV unit to Deutsche Bank (FDBK) for 1.45 billion marks.
     The two groups plan to focus on their own mobile phone business, though investors marked Veba shares down 0.30 euros to 56.85 euros while RWE stock fell 0.52 euros to 43.48 euros.Back to top
     -- from staff and wire reports


Olivetti savors Telecom Italia spoils - May 24, 1999

Mannesman doubles profits - Feb. 19, 1999


Deutsche Telekom




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