Hardly sounding like a company that should be less than a year away from a grand flotation, Deutsche Telekom AG said yesterday that it only broke even in 1994 after transfers to the government to shore up its sister postal monopoly and the state savings bank, but forecast a considerable increase in profits this year. Chairman Wilhelm Pllmann reckons the company made an operating profit of around $3,500m according to preliminary data, but it had to transfer $140m more than that to the government under the rule that says it must transfer 10% of its turnover to the state, regardless of whether it make a profit. The figure for next year is $2,100m, and the rule expires in 1997, when it will be allowed to dispose of its own profits – but it will then have to start paying value-added tax, from which it is presently exempt. Turnover for 1994 rose over 8% to $45,000m, with turnover from basic telephone service up 8.5% to $32,400m. But according to this week’s Der Spiegel, the company’s telephone equipment sales business is a disaster area, and made an operating loss of $915m on sales of $1,760m. The magazine quotes the Bundesrechnungshof federal auditing body blaming the catastrophic operating results on co-ordination problems between product and sales managers, saying that $5.5m was spent on ineffectual press advertising for products which were unavailable to consumers at the time. And buyers had estimated demand inadequately, leading to shortages or overstocking. Meantime at a press conference in Hannover, Deutsche Telekom officials speaking ahead of the CeBit information technology trade fair said they were confident that a global alliance with France Telecom and Sprint Corp would not be blocked by antitrust authorities, and criticised the US for still restricting foreign ownership of telecommunications companies, while many telecom services were open to competition in Germany with sizeable foreign investment. Germany allows competition in data transmission, corporate networks and paging, but not in basic telephone services or infrastructure.
