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Deutsche Telekom facing shareholder revolt?

Germany’s incumbent carrier Deutsche Telekom could be facing a shareholder revolt, putting the future of chief executive Kai-Uwe Ricke in doubt.

One of the German telco’s largest shareholders, the Blackstone Group – a private equity firm with a 4.5 per cent stake – is reportedly calling for the company to refuse an extension to Ricke’s contract when it expires in the autumn of 2007.

Ricke has been at the helm for five years and it was widely expected an extension would be granted.

However, Ricke’s future at Deutsche Telekom was thrown into the balance earlier this month, when the company spooked the stock market as it reduced revenue guidance for 2006 by Eur600m (£405m) on the back of aggressive competition in its domestic market.

The operator recorded a 3.2 per cent drop in net profit for the first half of 2006, down from Eur2.15bn in 2005 to Eur2bn as both fixed line and domestic mobile revenues took a hit.

The German government, which holds a 31 per cent stake in Deutsche Telekom, is also believed to be discontented with the performance of the operator and may look at implementing other management changes.

Deutsche Telekom’s share price has been in decline for almost a year now, dropping from over Eur15 in 2005 to Eur11.29 today.

Meanwhile, the EU is this week expected to publish an enforcement order corresponding to a similar document from the German regulator, requiring Deutshce Telekom to allow access to its broadband network on a fair and non-discriminatory basis.


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