January 18, 2018 / 10:02 AM / 6 months ago

Deutsche Telekom to split T-Systems unit under new leadership

BERLIN, Jan 18 (Reuters) - Deutsche Telekom is planning to split its IT services and consulting business T-Systems into two separate units in a bid to halt a slide in earnings, a spokesman for Deutsche Telekom said, confirming a newspaper report.

The move will have advantages for T-Systems’ customers and the company itself as the two units would be closer to their respective markets and would be more flexible, he said, without providing further details.

German daily Handelsblatt earlier reported that T-Systems’ new head, Adel Al-Saleh, had presented plans to managers on Monday to create one unit focused on classical IT outsourcing and another responsible for the rest of the company’s business.

American turnaround specialist Al-Saleh replaced Reinhard Clemens at the helm of T-Systems earlier this month, after Deutsche Telekom booked a 1.2 billion-euro ($1.5 billion)impairment charge against goodwill at T-Systems for the third quarter.

Executives have admitted they were slow to anticipate a shift in IT services to a low-cost cloud-subscription revenue model. ($1 = 0.8191 euros) (Reporting by Nadine Schimroszik; Writing by Maria Sheahan; Editing by Georgina Prodhan)

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