September 18, 2019 / 11:57 AM / 2 months ago

Deutsche Telekom to take on telecom ops from slimmed-down T-Systems

BONN, Germany, Sept 18 (Reuters) - Deutsche Telekom is taking back responsibility for corporate telecoms clients from its restructured T-Systems unit, which will emerge as a slimmed-down operation focused on IT and digital services.

Adel Al-Saleh, hired at the start of 2018 to turn around loss-making T-Systems, told staff on Wednesday that the business would in future be “an integrated end-to-end IT player and reliable enabler for our clients’ digitization”.

American Al-Saleh, who gave himself two years here to get the job done, has already acted to reduce T-Systems' German headcount by 6,000, close most local offices and hire 3,000 offshore staff to round out its software skills.

The reshuffle at Europe’s largest telecoms group will leave T-Systems with top-line revenues of 4 billion euros ($4.4 billion), Al-Saleh told staff at a town hall meeting. That’s down from nearly 7 billion euros last year.

Around 30,000 employees will serve 1,000 clients.

Several European telecoms have found themselves saddled with IT operations poorly placed to compete against more dynamic pure-play rivals. T-Systems has also struggled with loss-making IT outsourcing contracts struck by past management.

Al-Saleh, according to notes of his remarks, said he would now negotiate with social partners on the changes, whose implementation is planned for the second quarter of 2020.

No impact on Deutsche Telekom’s group financial guidance is expected. Al-Saleh has said he expects T-Systems to boost core profits this year, but only to generate a cash contribution from late 2021 or early 2022.

$1 = 0.9052 euros Reporting by Douglas Busvine; Editing by Michelle Martin and Mark Potter

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