|
Telekom targets more buys
|
 |
August 9, 1999: 10:29 a.m. ET
German phone giant aims to rebuild international strategy; may list cellular units
|
LONDON (CNNfn) - Deutsche Telekom sought to rebuild its crumbling global strategy Monday by stating it was still "hungry" to pursue large cross-border mergers following its proposed buyout of Britain's One2One.
Deutsche Telekom chief executive Ron Sommer told a London news conference that the German phone giant would need an equal footing in the United States and Europe to become global player.
"There is no reason for us not to go after large mergers," Sommer said. He added that Telekom would use mainly stock for such purchases.
Sommer attempted to calm investor fears in the wake of its failed bid for Telecom Italia.
The German phone giant last week sealed the $13.6 billion purchase of One2One, Britain's fourth-largest cellular operator, from Cable & Wireless and MediaOne. "The acquisition of One2One is clearly not the end of our ambitions in this respect," said Sommer.
Telekom raised $11.4 billion from a secondary share issue in June but plans to boost its war chest for future acquisitions by bundling its cellular units together for a separate stock market listing. "I am committed to take our mobile activities public in order to raise the necessary funds to create a mobile currency for future acquisitions, first in Europe and then globally," said Sommer.
Deutsche's international strategy has waned after losing the race for Telecom Italia to Olivetti, a bid which ruined relations with long-time partner France Telecom and threatened the future of GlobalOne, the joint venture between the two European firms and Sprint (FON) of the U.S.
A press report several weeks ago said Telekom was looking at buying part or all of Sprint. Deutsche Telecom already owns 10 percent of the phone company.
Deutsche (FDTK) shares, which have slumped in the wake of its humiliating Telecom Italia defeat, added 2.3 percent Monday to 38.30 euros, still well shy of their 1999 high of 45 euros.
Telekom has also suffered fierce competition in its domestic market following deregulation which has slashed international call rates.
Sommer said the One2One acquisition, which many analysts had termed expensive, would be earnings neutral by 2003 and carry goodwill of 7.3 billion pounds. He outlined potential synergies in purchasing, marketing and cellular access across Europe.
He said One2One would create a platform for rolling out the group's strategy for third-generation mobile phones which will allow Internet and data access over cellular networks. Britain plans to auction five third-generation licenses next year, and One2One is expected to be one of the bidders.
Deutsche also plans to refocus One2One away from its reliance on low-margin customers to target the business sector and aims to boost margins from 16 percent to 40 percent within three to five years. 
|
|
|
|
|
|
Deutsche Telekom
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
