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Deutsche Telekom finance chief to replace CEO Obermann
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Mon, Dec 17 2012
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Analysis & Opinion
The Deutsche allegations
1 of 3. File picture shows designated new finance chief Timotheus Hoettges (L) and Rene Obermann, CEO of Deutsche Telekom AG before the annual news conference in Bonn February 27, 2009.
Credit: Reuters/Ina Fassbender/File
By Maria Sheahan and Christoph Steitz
Thu Dec 20, 2012 1:14pm EST
FRANKFURT (Reuters) - Deutsche Telekom chief executive Rene Obermann has unexpectedly announced he will step down at the end of 2013 and be succeeded by finance director Timotheus Hoettges.
Hoettges, 50, said on Thursday he was not planning major changes to strategy and would continue Obermann's drive of investing in the United States and Germany as the firm battles to return to revenue growth against a tough economic backdrop.
"I have worked with Obermann for 12 years, and I don't expect to change a lot in the way that we do things," he told journalists during a conference call.
He is, however, expected to bring a fresh spark to Germany's former state telecoms monopoly, as he is considered by analysts to have the energy to take on challenges and an ability to absorb knowledge. But he has a big job ahead of him.
The European telecoms industry is struggling with sluggish economic growth, costly investments and cut-throat competition, and on top of that Deutsche Telekom has had its hands full with trying to fix its troubled T-Mobile USA business.
The German government, Deutsche Telekom's biggest shareholder with a 32 percent stake, said it welcomed the choice of Hoettges as new CEO because it promised continuity.
"The chief strategist so far becoming the new captain indicates that the course will be held," a spokesperson for the finance ministry told Reuters.
Hoettges joined the group in 2000 after playing a central role in the merger of VIAG AG and VEBA AG to form E.ON, now Germany's biggest utility.
In 2009, he was promoted to finance chief at Deutsche Telekom and, among other things, oversaw the move to put its British mobile business in a joint venture with France Telecom,.
"Hoettges is extremely good as a CFO, he's well respected by investors, but it remains to be seen whether he has the vision and political clout to succeed as CEO," Espirito Santo analyst Will Draper said.
Hoettges said the company had not yet decided on a new finance director to replace him.
THE ENGINE ROOM
Obermann was the youngest-ever chief executive of a German blue-chip firm at the time when he took over in 2006, aged only 43. He gained a reputation for being eager to keep unions and politicians happy and wary of making big strategic decisions.
One of his boldest moves was a deal to sell T-Mobile USA, to AT&T, but it collapsed last year amid concerns from competition regulators, dealing a blow to Obermann's reputation.
T-Mobile USA was a growth engine for Deutsche Telekom in its early days but is a rundown asset now that has been haemorrhaging customers. Deutsche Telekom is now trying to merge the business with smaller rival MetroPCS.
Obermann said he was leaving to work for a smaller company where he was "closer to the engine room" than he could be at an international corporation, without providing details.
Analysts were split over whether to believe Obermann's assurances that he was leaving of his own volition.
"If the board or the main shareholders were unhappy about the CEO's performance, they probably would have appointed an outsider, not the CFO, who also has been responsible for what has happened at the company over the last few years," Exane BNP analyst Mathieu Robilliard said.
Espirito Santo's Draper meanwhile said: "Obermann has had a lot of opportunity to fix the U.S. and yet it still remains Deutsche Telekom's biggest problem."
Obermann also disappointed investors with a bigger than expected dividend cut announced earlier this month as the company's investment drive eats away cash.
European peers Telefonica, the Netherlands' KPN, Telekom Austria, and France Telecom had already cut their dividends earlier this year, hurt by a weak economy and fierce competition that has driven down prices.
Deutsche Telekom shares closed 0.5 percent higher at 8.63 euros, outperforming a 0.2 percent fall in the STOXX Europe 600 European telecoms index.
(Additional reporting by Paul Sandle and Rene Wagner; Editing by Mark Potter and Helen Massy-Beresford)
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