22,000 Deutsche Telekom jobs to go

Deutsche Telekom is 43 percent owned by the German government

FRANKFURT, Germany -- Deutsche Telekom says it will cut 22,000 jobs -- nine percent of its workforce -- by the end of next year to slash costs and pull the telecommunications giant out of debt.

The announcement on Tuesday came as Vodafone, Europe's largest mobile phone company, posted an annual net loss of £16.2 billion ($24 billion) after writing down the value of its fixed line assets. (Full story)

Deutsche Telekom's president Ron Sommer said the German firm, whose shares hit a new low last week, would save more than $9.2 billion through the measures.

Telekom will cut almost 30,000 jobs from its 245,000-strong workforce in Germany by the end of 2004, Sommer told shareholders at their annual meeting in Cologne. But he said Telekom plans to hire staff in the same period, meaning the total number of job cuts will be 22,000.

Deutsche Telekom, which is 43 percent owned by the German government, lost $3 billion in 2001 after buying 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.

'Slap in face'

Sommer has come under fire from shareholders, who hold him largely responsible for the company's $60 billion debt and continued losses. In the first quarter of this year it lost $1.66 billion.

He sought on Tuesday to deflect shareholder anger over a dramatic fall in the group's share price by blaming markets for ignoring Deutsche Telekom's growth story and for simply following fashion with their pessimistic view.

Institutional and small investors said they would not approve the actions of the board of Europe's largest telecoms group by revenue, nor a proposed dividend cut, and vented their anger over the share price collapse and a rise in executive pay.

"This is a slap in the face for every (Telekom) shareholder,'' said Jella Brenner-Heinacher of small shareholder lobby group DSW.

"He who orders caviar in times of cholera can't expect any sympathy,'' she said to prolonged applause.

About 9,000 shareholders greeted Sommer with thin applause and booed supervisory board chief Hans-Dietrich Winkhaus when he defended the 90 percent rise in management board remuneration.

Winkhaus said the jump in executive pay last year appeared high because it included severance payments for two departing board members, but did not provide further details.