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Does Deutsche Telekom Want BT's Boss?

Deutsche Telekom AG (NYSE: DT)'s supervisory board has identified BT Group plc (NYSE: BT; London: BTA) CEO Ben Verwaayen as the industry executive best equipped to lead the German carrier into its next phase of development, according to the latest speculation surrounding the carrier's executive offices.

According to one trusted source, who spoke on the condition of anonymity, Dr. Klaus Zumwinkel, chairman of DT's supervisory board, has created a "wish list" of top-level executives who could reinvigorate the German giant, and BT's current boss is at the top of that list.

Light Reading hasn't been able to corroborate that source's information with anyone with direct ties to DT brass yet, but the circumstances surrounding the claim are worth recounting.

First off, Deutsche Telekom's current CEO, Kai-Uwe Ricke, has been under increasing pressure in the past few weeks following poor recent financials that disappointed analysts.

Deutsche Telekom says it does not comment on speculation, but confirmed that Ricke's contract is up for renewal in mid November, one year before it expires. A spokesman also said Ricke is due to flesh out the carrier's new strategy before the end of the year. (See DT Outlines 'Telekom 2010'.)

BT declined to connect Light Reading with Verwaayen's office. "He's a very busy guy, and he's not going to comment on an issue like this," said a BT spokesperson.

In reponse to an emailed request for comment sent directly to Verwaayen, BT's director of communications, Peter Morgan, wrote: "Ben has asked me to respond to the email you sent him about Deutsche Telekom. This is the sort of speculation we would never respond to. Ben is totally committed to BT."

Former Lucent Technologies Inc. (NYSE: LU) executive Verwaayen, who took over as BT's CEO in February 2002, is known as a demanding, hard-bargaining character whose tough negotiating skills have helped the carrier strike some cost-effective deals for its next-generation network (21CN) development. (See BT Closes 21CN Deals, Touts IPTV and BT's 21CN Deals: Booty or Bloody? )

The 54-year-old Verwaayen has also been the driving force behind BT's leap into "New Wave" service sectors such as managed IT services, broadband, and fixed/mobile convergence, and initiated the carrier's latest international expansion program following its disastrous joint venture with AT&T Inc. (NYSE: T). (See BT Snares Lucent Exec, BT Goes Global – Again!, 'New Wave' Drives BT, and AT&T and BT to Unwind JV.)

The CEO recently boasted about how BT has reported 17 straight quarters of earnings growth, and 10 straight quarters of revenue growth. (See BT Reports Q1.)

Talk of the DT wish list has emerged as speculation mounts about the future of CEO Ricke. The German business press has reported that Ricke is under pressure following DT's first-half results and the performance of the carrier's stock. (See Deutsche Telekom Reports H1.)

DT's share price has slumped by about 18 percent in the past 12 months, from €15.19 to €12.45, on the Frankfurt Stock Exchange. In contrast, the DAX index, which tracks Frankfurt's 30 largest stocks, has risen by about 20 percent.

Most notably, German publication Manager Magazin recently claimed, citing sources in DT's supervisory board, that private equity firm The Blackstone Group , which took a 4.5 percent stake in DT earlier this year, wants Ricke replaced. DT rejected that claim.

The magazine also interviewed Blackstone CEO Stephen Schwarzmann, who told the publication his firm wasn't satisfied with the progress of its investment so far. (See DT Welcomes Blackstone.)

In April, Blackstone acquired 191.7 million shares at €14 each at a cost of nearly €2.9 billion (US$3.7 billion). Now that investment is worth just less than €2.4 billion ($3 billion).

Blackstone's representative on the carrier's supervisory board, Larry Guffey, had not responded to a request for comment as this article was published.

According to the German media, Karl-Gerhard Eick, DT's CFO, and Rene Obermann, head of the carrier's wireless operations, T-Mobile International AG , are considered to be possible successors to Ricke.

— Ray Le Maistre, International News Editor, Light Reading

Manu55 12/5/2012 | 3:38:00 AM
re: Does Deutsche Telekom Want BT's Boss? Good move as long as it's not BT's Bross.....Matt that is.
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