Optical/IP Networks

Deutsche Telekom Faces Strike

Deutsche Telekom AG (NYSE: DT) will have had better days. First the carrier announced a dramatic slump in first-quarter profits, and then its main workers' union announced that about 20,000 staff had voted to strike and would walk out starting tomorrow (Friday). (See Deutsche Telekom Reports Q1.)

Despite a 4.1 percent rise in revenues to €15.45 billion (US$20.8 billion), net income slumped by more than 50 percent to €459 million ($619 million), a far greater drop than expected. That put DT in a growing group of European operators that have seen their first-quarter profit margins cut. (See Euro Carriers Suffer Profits Dip.)

Then the Ver.di trade union announced that more than 96 percent of its members had voted to strike in protest against DT's plans to cut back staff wages at its T-Service unit in return for fewer redundancies. Up to 20,000 staff are expected to walk out, starting Friday, a move that will affect services to corporate rather than domestic customers.

The news sent DT's share price down $0.22, about 1.2 percent, to $16.98 on the New York Stock Exchange.

There were some crumbs of comfort for the carrier, though. It has further reduced its reliance on its home market and now generates about half of its revenues from outside Germany, with mobile the main contributor in markets such as the U.S., the U.K., Poland, Austria, and Hungary. (See T-Mobile USA Adds Nearly 1M Subs.)

DT now has 109.2 million mobile customers -- 83.2 million in Europe and 26 million in the U.S.

And DT added 572,000 new broadband customers in Germany to take its total to 7.6 million. In Eastern Europe, DT now has more than 1 million DSL customers.

— Ray Le Maistre, International News Editor, Light Reading

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