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Deutsche Telekom Renationalized? Union says yes
Saturday, 14 April 2012 12:08

DT logo in lightsDisguised 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.

Greater efficiency
The demand for bandwidth continues unabated, explained van Damme. According to studies, fixed-line network data traffic will increase fivefold by 2013, and 60-fold in cellular networks. To meet this increasing demand, DT will continue to drive the expansion of the necessary broadband networks, which must be powerful and intelligent. "New networks will enable us to have greater efficiency, and they are the foundation for profitable growth in growth areas like cloud computing, for example," said van Damme.

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
Van Damme emphasized that the new network will not be a purely Telekom one: "We are open and are looking for cooperation with others. We’re thinking of companies in the telecommunications industry, energy providers and also the housing sector. Wherever possible, a fiber-optic line must become just as normal as electricity and water supply in every household."

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 
In addition to the expansion of fiber optics, Deutsche Telekom will be investing heavily in other networks this year. "Only through an intelligent mixture of wireless and fixed network technologies can we offer our customers fast connections, high quality and attractive prices," van Damme explained. An overview of the goals for 2011:

  • Telekom plans to expand its HSPA/UMTS network once again, doubling available bandwidth to up to 42 Mbit/s by the end of the year.
  • LTE technology provides even greater speeds. The target is up to 100 Mbit/s. Cologne will become the "LTE city," where the new technology will be rolled out on a large scale.
  • Fast mobile connections are intended to close an additional 1,500 gaps in coverage.
  • This year, Deutsche Telekom once again expects to sign 700 to 800 cooperative agreements with local communities. In the future, such agreements will enable VDSL technology - with bandwidths of up to 50 Mbit/s – to be implemented much more frequently: approximately 600,000 additional households will be supplied with VDSL in 2011.
  • The Group is expanding its "HotSpot" public WiFi offering, which is currently available at nearly 8,000 locations in Germany. Among other advances, DT will equip additional high-speed ICE trains from Deutsche Bahn (German Rail) and Lufthansa aircraft with WiFi technology.

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