Word: telekom
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...Ricke, the embattled CEO of German telecommunications giant Deutsche Telekom AG, efforts to revive the company's sagging domestic business and boost the share price were just too little too late. Shareholders of Europe's biggest telecommunications company, which also owns the successful American wireless company T-Mobile, have lost confidence in management's ability to stop the dramatic decline in its domestic business, according to people familiar with the situation. One of those big shareholders is the U.S. private equity firm Blackstone Group, which has been exerting American-style, do-it-now pressure on one of Germany's iconic...
...American operation's success might not be enough to save Ricke's job. In Germany, where Telekom still generates more than half its sales, the company is bleeding, and its biggest U.S. shareholder, the Blackstone Group, is agitating for Ricke to take an American-style ax to expenses. Telekom's sales outside Germany surged 13.5%, to $17.2 billion, in the first half of this year. But in the same period, sales at home plunged 4%, to $20.6 billion, as customers abandon fixed lines for mobile and Internet-based services...
Once a state phone and mail monopoly, the sprawling Bundespost had more employees than the German army had soldiers. In the 1990s, the government split it into three companies--Deutsche Telekom, Deutsche Post and the Postbank--and floated them on the stock market. The most successful, Deutsche Post, grew into a global logistics company. Again, the critical expansion was in the U.S., where it bought freight company...
...Telekom's top shareholders--the German government, which holds 33% of the company, and Blackstone, which has 4.5%--have become unlikely allies in activism. Previously the government has been more concerned with preserving jobs...
When Blackstone bought Telekom shares last April, it committed to holding them for two years. So at the current price, neither the German government nor Blackstone is prepared to exit, a circumstance that is fueling rumors that Ricke could be replaced in December with a CEO with global chops who would aggressively cut costs and implement a viable strategy. A Blackstone spokesman confirmed that the company is unhappy with Telekom's share price, but declined to comment on Ricke's performance. Still, Ricke doesn't appreciate the interference, and his relationship with Blackstone boss Stephen Schwarzman has chilled so much...