The policy by the German powers that be to run the phone company as a job-preservation charity means that Deutsche Bundespost Telekom, the state-owned telecommunications authority, warns that it expects to report no net profit in the current year after it makes the required transfers to the Bonn government and its sister units Deutsche Bundespost Postdienst and Deutsche Bundespost Postbank in 1993, Reuter reports from Bonn. Despite the vast subsidies, the payments, totalling $880m, covered only about 50% of the 1992 losses of its the two units, and their 1993 losses are expected to be only slightly lower than those of 1992, so it will be hard for Telekom to cover them. After the transfers, Telekom made a net loss of $771,000 last year, down from a $73.6m loss the previous year. Management board chairman Helmut Ricke says he expects a slight rise in operating profit this year compared with the $4,130m last year, despite extraordinary charges, one off write-offs and the introduction of value added tax for telecommunications. Europe’s largest investor invested almost $16,600m gross last year, up from $14,500m the year earlier. Of the total, more than $6,500m went to eastern Germany. The net loss and high rate investment boosted Telekom’s total debt above $60,000m. Despite its reduced capital base, the company says it will not trim its plans for necessary investment; the build-up of eastern Germany will lead to a clear drop in investment in three years’ time. Lower hardware prices also eased things a little.
Must reduce our workforce
We must reduce our workforce to 200,000 from 230,000 over the next few years, Ricke told a news conference. He said the planned liberalisation of the European telephone market by 1998 would increase competition, adding: This means that we have to speed up the transformation of the company. Turnover last year rose to $32,000m from $28,000m, helped by a 63% increase in cellular business to $1,200m. The growth was ahead of the company’s expectations and the number of C-net analogue mobile phone users alone increased to about 770,000 in 1992 from 550,000 in 1991, he said. Our high tariffs for long-distance calls, with which we currently subsidise local calls, would be a target for future competitors, management board member Dieter Gallist said. We want to start price reforms from April 1 1995. Gallist also said the price reforms should not lead to a rise or decline in Telekom’s revenues, adding the price hike for local phone calls would be limited to below 10%. Ricke kept up the pressure on the government, repeating his call for early privatisation, which should allow Telekom more flexible management and access to international financial markets to boost its capital. Transformation into a public limited company is of fundamental importance for the future of Telekom, he said. Telekom can only increase its competitiveness if we can operate equally in the market. Separately, German prosecutors yesterday confirmed media reports that they had extended an investigation into a possible bribery scandal at Telekom: 19 people were being investigated for receiving luxury presents from potential suppliers; the head of a film production company with close links to Telekom had been arrested on suspicion of bribery and breach of trust.
