The German owner of T-Mobile is facing a shareholder revolt over a possible extension of its boss’s contract, amid misgivings over the company’s recent performance.
Some of Deutsche Telekom’s largest shareholders, including The Blackstone Group, the private equity firm, are understood to be calling for the company to refuse an extension to the contract of Kai-Uwe Ricke, chief executive.
A spokesperson for Blackstone was not immediately available for comment.
The Blackstone Group took a 4.5 per cent stake in Deutsche Telekom in April this year, in a €2.7 billion deal.
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The German government, which has a 31 per cent stake in the country’s dominant telecoms group, is also understood to be unhappy at the way the group has performed under Herr Ricke’s leadership, according to Germany’s Focus magazine.
The group’s supervisory board is thought to be considering possible replacements for Herr Ricke and two senior colleagues. Walter Raizner, head of Deutsche Telekom’s T-Com unit, and Lothar Pauly, head of the business clients division, are also understood to have come in for criticism by top shareholders.
Herr Ricke’s contract is due to expire in the autumn of next year, five years after he was appointed to the post. It had been expected that the group’s supervisory board would consider an extension of the contract.
However that was brought into question earlier this month after the company cut its sales and profits forecasts for this and next year and said second-quarter numbers had missed expectations because of tough competition in the German market.
Deutsche Telekom blamed intense price competition in Gemany, its core market, as it cut €1 billion from its core profits forecasts for 2006 and €1.5 billion for 2007.
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Deutsche Telekom is the largest fixed-line player in the German market, but is the main rival to Vodafone in the country’s mobile phone market. The UK mobile group was dealt a blow two weeks ago when Deutsche Telekom outlined plans to halve the price of mobile phone calls in Germany.
Separately the European Commission today sent a letter to the Bundesnetzagentur, endorsing the German telecoms regulator’s proposals to allow rivals to use Deutsche Telekom’s broadband network. The German government had tried to exempt Deutsche Telekom from EU competition law.