Sommer under fire as Deutsche Telekom losses mount

Ron Sommer's future as the chief executive of Deutsche Telekom was back under the spotlight yesterday after tough conditions and write-downs sent the German telecoms company deeper into the red in the first quarter.

The company, which has ¤67bn (£42.6m) debts, took a ¤1bn charge to cover the amortisation of goodwill and also made a ¤500m write-down, mainly to cover the fall in value of its stake in France Telecom.

The move forced it into a loss of ¤1.8bn in the first three months of the year, compared with a loss of about ¤400m in the same quarter a year ago. Sales were ¤12.8bn, up 15 per cent.

The deepening loss led to renewed calls for Mr Sommer to step down. Although he has the backing of the German government, the company's largest shareholder, other investors say they will not support him at the annual meeting later this month.

The figures also left the City fretting the company would have difficulties cutting debt to its target of ¤50bn by the end of next year. Deutsche Telekom's underlying, or Ebitda, profits rose just 4.4 per cent to ¤3.8bn after a slump in both revenues and profits at its core fixed-line telecoms business, T-Com. One bright spot was the mobile operation, T-Mobile, which includes the old One2One mobile phone business, where Ebitda rose to ¤1.2bn from ¤590m, on sales of ¤4.5bn, up from ¤2.7bn.

The company's forecasts of growth in revenues and Ebitda throughout 2002 also came in for criticism. Analysts said the vague language used left them concernedthe forecasts would be cut. "The company expects healthy revenue and Ebitda growth for the full year," said one, adding that compared with previous guidance of double-digit revenue and Ebitda growth over the next three years.