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TRANSFORMATION

Deutsche Telekom indicated it is planning to hold an Investor Day in July 2011 — bwhere the agenda appears set to include details of a new, less capital intensive model for its fibre expansion programme in Germany. The announcement will no doubt be closely watched for evidence of reining in of ambitions for the network, and whether the Group will adopt a more conciliatory approach towards rivals and other prospective rollout partners. [p.22.]

Following the AT&T deal, Deutsche Telekom announced plans to establish an expansive but potentially controversial procurement partnership with European peer France Télécom — reawakening visions of a wider merger, and resultant creation of a ‘European Union incumbent’. Building on the Groups’ recent Smart Industry cooperation, and other collaborations (including UK joint venture Everything Everywhere), the deal aims to combat Deutsche Telekom’s revenue pressures through generation of “above EUR400m” in annualised savings. However, it also faces multiple hurdles — not least antitrust approvals, and longer term operational risks. [pp.11,14.]

INNOVATION

Deutsche Telekom is seeking to cultivate stronger ties with Chinese media and telecoms players — particularly around value added service innovation, according to Edward Kozel, the Group’s Chief Technology & Information Officer. [p.14.]

Deals started to filter through in the Group’s drive for growth from Intelligent Network Solutions — including expansion of smart meter deployment in the T-City of Friedrichshafen; although the company conceded it is yet to ‘show any significant revenues” from these operations. [pp.25,26.]

Europe area activity in the infrastructure and software as-a service markets continues to grow — with Hrvatski Telekom preparing to debut a family of cloud computing solutions in June 2011, and Slovak Telekom flagging that a long awaited new data centre is close to going live. [pp.41,63,65.]

FINANCIAL

Deutsche Telekom (DT) published its Q1 FY11 financial results, reporting a 9.8% drop in sales — as competitive, economic, and regulatory difficulties took their toll across most of its markets, particularly in Central and Southern Europe. Continuing international operations were especially badly hit. Nevertheless, management maintained guidance and showed measured optimism regarding outlook across most operations — as well as indicating willingness to “front load” investment where signs are more positive. [pp.4-10, 20-23, 27-29, 36-40, 43-45, 47-51, 53, 54, 56, 57, 61-65, 67, 68, 85, 86, 90-92.]

OPERATING AREAS

There were suggestions that OTE, like Deutsche Telekom, may hit the brakes on fibre expansion — after seeing imposition of tougher regulatory controls on its high profile VDSL rollout programme. [p.49.]

Romtelecom boosted its presence in the country’s fast consolidating pay TV sector — releasing an online video portal and agreeing two acquisitions of direct to home players. Reports also suggested it may seek to head off the competitive threat offered by cable operator rivals RCS&RDS and UPC’s mooted merger, with its own bid for the latter. [p.58.]

T-Systems stated intent to bolster its marginal French business, following recent restructuring, as well as announcing a slew of new contracts — in the financial services, healthcare, and local government sectors. The latter saw an IT services deal with the eastern German city of Cottbus, positioning the provider for a push for greater business from local authorities. [pp.91,94.]

PEOPLE

21 year Deutsche Telekom veteran Roland Mahler is reported to have come out of retirement — to serve as interim head of the Group’s Europe region, following Guido Kerkhoff’s recent, unexpected exit. It was also reported that Deutsche Telekom has recruited former BSkyB executive Gerry O’Sullivan to push international growth of its Entertain television business via a newly created role of Vice President of Global TV & Entertainment. [pp.16,30,32.]

Everything Everywhere (EE) made a series of senior executive and reporting line changes in its Commercial function — including refashioning Marketing and Products teams, as the joint venture continues to rationalise and unify operations. Huawei was awarded a contract to revamp EE’s 2G infrastructure. [pp.33,69.]

MORE FROM THIS DEUTSCHE TELEKOMWATCH REPORT

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