Esser finally plugs gap in European telecoms circuit

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The Independent Online

Back in June, Klaus Esser, the chief executive of Mannesmann, described Britain as the "hole" in his strategy to make the German company the pre-eminent force in European mobile telephony. That gap was plugged yesterday, with Mr Esser's £20bn swoop on Orange, the country's third-largest network.

Back in June, Klaus Esser, the chief executive of Mannesmann, described Britain as the "hole" in his strategy to make the German company the pre-eminent force in European mobile telephony. That gap was plugged yesterday, with Mr Esser's £20bn swoop on Orange, the country's third-largest network.

The bold move is typical of the 51-year-old executive, who took up the reins at the Dusseldorf-based conglomerate only five months ago. Mr Esser has been a key force behind the transformation of a dull-but-worthy engineering concern into one of the pacesetters of the telecommunications sector.

Founded in 1890, by brothers Max and Reinhard Mannesmann, the group was for many years an archetypal heavy-industry player. Then, as now, it manufactured steel tubing, before branching into auto parts in the 1970s. The critical leap into telecoms came just 10 years ago as Werner Dieter, then chief executive, teamed up with AirTouch of the US to win a German mobile-phone licence to compete with Deutsche Telekom. Their D2 network proved a spectacular success, becoming the country's lead operator five years ago.

In the mid-1990s, Joachim Funk, Mr Esser's predecessor in the top job, expanded Mannesmann's interests into fixed-line services, confirming telecoms as the company's fastest growing interest. Before yesterday's bite of Orange, telecoms contributed a quarter of sales but more than two-thirds of operating profits.

Mr Esser joined Mannesmann in 1977, after studying law at Munich, Tubingen and Geneva universities, and rounding off with a degree in management from the Massachusetts Institute of Technology. He worked his way up through the tax-accounting department, winning promotion to the post of chief financial officer in 1994.

There followed a clampdown on expenditures and swift sale of businesses that failed to meet targets. In the past few years, about 40 ventures have been placed on the block.

Observers say Mr Esser combines a meticulous attention to the bottom line with a swift grasp of fresh opportunities. He was instrumental in the 1997 decision that spread Mannesmann's telecoms reach into Italy, which eventually resulted in it buying out Olivetti's phone business. The Mannesmannempire also includes interests in Austria's tele.ring and Cegetel and SFR of France.

The Orange tie-up places Mr Esser at the top of the European mobile league, with more than 20 million customers, ahead of Telecom Italia Mobile's 18 million and Vodafone AirTouch's 12.7 million.

"Yes, the price is high," Mr Esser said yesterday. With the markets doubtful about the rich price-tag - Mannesmann shares fell about 10 per cent yesterday - it now falls to him to make the £5,500-per-subscriber deal work.

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