State-owned German telecommunications company Deutsche Telekom AG has returned to profit in fiscal 1994, but it may have to postpone its proposed partial flotation until the second half of next year. Although the company still aims to carry out the flotation in the first half of 1996, chief finance officer Joachim Krske said the company might not have enough time to prepare its accounts; it must send consolidated accounts to the US Securities & Exchange Commission in September, if it’s to float in early 1996. The company reported net profits of $912.7m, swinging from a $2,040m loss a year earlier. But these figures represent parent-company results and are not directly comparable with the 1993 consolidated data. Krske told Reuters that in its consolidated accounts the company only broke even in 1994. He said the parent-company profit resulted from the sale, for more than $2,130m, of mobile communications assets to its mobile telephone subsidiary DeTeMobil GmbH, as part of the reorganisation to become a joint stock company in 1995. During the year the company had sales of more than $45,350m and Deutsche Telekom said it expects group sales to rise 7.5% to $48,890m in 1995 and a 6% rise in parent company turnover from $43,370m in 1994. He expects earnings to show a clear improvement in 1995, based on a reduction of mandatory transfers to the government to $2,130m from $3,540m in 1994, and a reduction in depreciation on telecommunications equipment. Deutsche Telekom has had to transfer 10% of its turnover to the state, regardless of whether it makes a profit; the rule expires in 1997 but then the company will have to start paying value-added tax, from which it is presently exempt. However, Deutsche Telekom still expects to cut more than 10,000 jobs, reducing the work force to 215,000 this year, as part of planned cuts of 60,000 jobs by the end of the decade, although those staff that are left will be offered shares when it lists around $10,500m of its capital on international stock exchanges next year.
More competitive
Company chairman Ron Sommer also announced plans designed to make the company more competitive. We are going to rethink our entire pricing system and will attract customers with a variety of sales offers, he said. Deutsche Telekom will soon slash calling charges from Germany to North America by 30%. The new rates will take effect as soon as the tariffs are approved by the company’s supervisory board. Charges for calling Finland, Sweden, Norway and Iceland will also be lowered, he said. Sommer also said that the European Commission would approve the company’s planned Atlas strategic alliance with France Telecom. The Atlas venture would initially merge all the two monopolies’ activities, or all their services, for business customers currently open to competi tion in European Community markets. The Commission’s Competition Commissioner Karel van Miert last week made an unexpected turnaround on Atlas, saying that he was more optimistic that the deal could be approved. Previously, the Commission had sent the companies a warning letter saying the deal could not win EU approval as it now stands (CI No 2,671). Sommer said the Commission had not had enough information about Atlas and that they had had met with van Miert and described their plans, which may have influenced the Commission.
