September 18, 2019 / 12:11 PM / 3 months ago

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

BONN, Germany (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.

FILE PHOTO: Adel Al-Saleh, member of the board of Deutsche Telekom AG and CEO of T-Systems of Germany's telecommunications giant Deutsche Telekom is pictured before the company's annual shareholders meeting in Bonn, Germany May 17, 2018. REUTERS/Wolfgang Rattay/File Photo

Adel Al-Saleh, hired at the start of 2018 to staunch losses at 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 5,600, close most local offices and hire 3,000 offshore staff to round out its software skills.

“We plough on,” Al-Saleh told a briefing in Bonn, when asked what stage his restructuring drive had reached.

“We now have a portfolio that is fit for the marketplace - and the marketplace is changing dramatically,” he added. “In reality, your transformation never stops.”

The reshuffle at Europe’s largest telecoms group will leave T-Systems with top-line revenues of 4 billion euros ($4.4 billion) - down from nearly 7 billion euros last year. Around

30,000 employees will serve 1,000 clients.

COMPETITIVE, COST PRESSURES

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 the legacy of loss-making IT contracts struck by past management.

Al-Saleh is positioning T-Systems as a German-centric player offering a portfolio of services, with an emphasis on multinational companies like auto maker Daimler that generate the lion’s share of its revenues.

Its operations span areas including the industrial internet, cyber-security, road charging and a practice that manages business applications offered by SAP .

T-Systems is meanwhile running down classical IT outsourcing, having already halted services like remote desktop access. Al-Saleh said he was open to potential offers for these parts of the business.

Al-Saleh will now negotiate with social partners on the changes, which could see a few thousand positions move to Telekom Deutschland. Implementation is planned from the second quarter of 2020.

T-Systems is around halfway through delivering an estimated 600 million euros in cost savings from its restructuring that were forecast at a capital markets day last year. This target remains unchanged and the latest measures will have no impact on the group’s overall financial performance.

Reporting by Douglas Busvine; Editing by Michelle Martin, Mark Potter and David Gregorio

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