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D-Telekom posts record loss
BONN, Germany -- Deutsche Telekom posted the biggest loss in German corporate history on Thursday and said it would cut its dividend, reduce spending and sell non-core assets to meet its debt-reduction target. Europe's largest telecom group said net loss totalled 24.5 billion euros ($24.7 billion) in the first nine months as it wrote down 33.4 billion euros on the value of its mobile phone businesses. The group had a net loss of 2.8 billion euros in the same period a year earlier.
But the company it said it would not need to sell or merge its T-Mobile USA unit -- which it bought for 34 billion euros last year -- to cut it debt to about 50 billion euros by the end of 2003.
Deutsche Telekom's debt, which now stands at 64 billion euros, was built up during a buying spree that included the purchase of T-Mobile USA, formerly known as VoiceStream. The group said on Thursday its earnings before interest, tax, depreciation and amortisation -- seen as the key indicator of a company's ability to provide the cash needed to reduce debt -- rose 5.6 percent to 12 billion euros in the first nine months. Nine-month sales rose 12 percent to 39.2 billion euros. Deutsche Telekom said it expected to raise about 7.7 billion euros through the sale of non-core assets -- like real estate and cable television operations -- and hopes to reduce its investments by between 6.7 billion and 7.7 billion euros next year. Shares in Telekom (FDTE), which have lost 90 percent of their value, were up 4.6 percent to 11.75 euros in afternoon trading on Thursday in Frankfurt.
"There is nothing that can depress the stock any more," Boris Boehm, a fund manager at Nordinvest in Hamburg, told Reuters. "The balance sheet has been cleaned up, and now the new CEO can take over and restart Telekom's business trend." Earlier on Thursday, Deutsche Telekom confirmed it had appointed Kai-Uwe Ricke, the head of its mobile operation, as its new chief executive. (Full story) The decisions mark the end of the four-month leadership of Helmut Sihler, who took over as caretaker chief in July, when former boss Ron Sommer was ousted. "Deutsche Telekom's supervisory board has unanimously elected Kai-Uwe Ricke as the company's chief executive officer at today's meeting with effect from November 15, 2002,'' the company said in a statement. The group has already said it will cut of 50,000 jobs by the end of 2005 as part of its debt reduction efforts, although the move is likely to meet resistance by Telekom's strong unions.
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