|Deutsche Telekom Renationalized? Union says yes|
|Saturday, 14 April 2012 12:08|
Disguised bailout. Once mighty Deutsche Telekom is reeling after paying $27B in dividends the last six years on only $10B in profits. They’ve milked the network to pay for that, with capex more than $10B less than depreciation. Continued low capex is a plan for disaster, especailly as cable covers 65% of the country and is rapidly taking broadband customers. They killed their plans to upgrade most of the country to fiber home and fiber/DSL (FTTN). Billions have been lost in expansion into Eastern Europe, especially Greece. Billions more - possibly tens of billions - have been tossed away at T-Systems, their huge IT outsourcing subsidiary.
They are now pleading for a state bailout of their shareholders. Vice Chairman Lothar Schroeder wants the government to reinvest in the company the $1.3B a year it collects in dividends. Germany owns 32% of the company, which has a market cap of $50B. It wouldn’t be long before the government owned virtually the majority of the company. Schreoder represents the ver.di union on DT’s board, which is concerned that DT’s massive disinvestment will force further cutbacks and wage concessions. “Leave the money in the company and take a higher share,” Schroeder tells Cornelius Rahn of Bloomberg. http://bloom.bg/HnGd6C “If you do that for five years, Deutsche Telekom would make some progress in broadband and the government would have something to show for.”
The union at France Telecom is going further in a battle between employees and shareholders for cash. The union fund, a minor shareholder, is proposing a dividend cut from 1,40 to 1,0 euro at the next shareholders meeting. Les Echos suggests that management is quietly backing the proposal although the CEO publicly denies that. Telefonica, KPN, TI, Frontier and British Telecom have already cut dividends. Others - especially AT&T and Verizon - are cutting back wherever necessary in order to keep dividends and presumably share prices up.
Verizon is prettying itself for a merger with a huge DSL price increase that brings up short run profits.
A year ago, DT was insisting that fiber was their future. Since then, they've cut back drastically to support the dividend.
Setting up modern high-speed networks
Feb 28, 2011
This year, Deutsche Telekom will kick off the expansion of the fiber-optic network: up to 160,000 households in 10 German towns and cities will be supplied in 2011 alone.
Managing Director of Telekom Deutschland, Niek Jan van Damme announced this in the run-up to this year’s CeBIT. Van Damme reminded listeners at a press conference that Telekom had presented its new "Fix - Transform - Innovate" strategy a year before. "Our decision to expand the fiber-optic network in Germany is a clear demonstration of our commitment to our home market. Today’s launch of the expansion shows that we are consistently implementing our strategy," said van Damme, member of the Board of Management and responsible for German operations. The press conference in Hanover focused on the future of the networks.
In his view, the future is fiber optics. Speeds of up to 1 Gbit/s download and 0.5 Gbit/s upload will be possible on Telekom’s network in the future. Selected districts of the cities of Brunswick, Brühl, Hanover, Hennigsdorf, Neu-Isenburg, Kornwestheim, Mettmann, Offenburg, Potsdam and Rastatt will be wired with fiber-optic lines in 2011. Telekom favors the fiber to the home (FTTH) solution.
Open for cooperation
Modern, investment-friendly regulation in particular is needed to speed up expansion of the FTTH networks, said the Managing Director of Telekom Deutschland. All existing equipment, like the cable ducts of other network industries or building networks, for example, would have to be made available for use to cut costs and achieve potential synergies. “We also have to avoid a patchwork of local fiber-optic networks in Germany, which means the industry has to agree to mutual, open network access,” said van Damme.
A mobile and fixed-line technology mix
At the end of the press conference, van Damme displayed a map of Germany, the surface of which turns more magenta in color as the Telekom network expands. "We’re focusing on our customers - you can see that on the map. We have a packed agenda for 2011," he concluded.
|Last Updated on Saturday, 14 April 2012 13:41|