Deutsche Telekom seals quick wage deal to avoid hindering new network launch

FRANKFURT, April 9 Wed Apr 9, 2014 12:00pm EDT

FRANKFURT, April 9 (Reuters) - Deutsche Telekom quickly reached a two-year wage deal for about 72,000 of its German workers, avoiding drawn-out negotiations which could have hampered the roll-out of its high-speed fibre optic broadband network.

Effective April 1, about three-quarters of Deutsche Telekom's workers in Germany will get a 2.9 percent or a 2.5 percent pay rise, depending on their position. As of Feb. 1 next year all 72,000 will receive another 2.1 percent wage increase.

"As we currently are under high pressure to expand our broadband infrastructure we have made an offer at an early stage of negotiations, indicating our willingness for an agreement," said Deutsche Telekom management board member Thomas Kremer.

"At the same time we have also made it clear that the company must continue to compete in a highly competitive market and therefore faces high costs."

In December 2012, Deutsche Telekom announced a three-year, 18 billion euro ($24.83 billion) network investment plan for Germany, including an upgrade of its broadband networks to faster fibre.

Cable operators such as Liberty Global's Unity Media and Kabel Deutschland, now part of Vodafone, are chipping away at Deutsche Telekom's share of the broadband market with faster, cheaper offerings.

Their cable lines, designed to deliver TV to homes, have been upgraded to carry voice calls and Internet at speeds often five times faster than competing services from the telcos.

Negotiations on a wage deal for Deutsche Telekom's other 25,000 workers in Germany - at its enterprise unit T-Systems - are still going on, according to their union.

These talks have been separated from the rest of the group as T-Systems faces a tough restructuring.

The unit plans to cut almost 5,000 jobs in Germany and up to 2,500 jobs outside the country to focus resources on meeting surging demand for cloud computing. ($1 = 0.7249 Euros) (Reporting by Harro ten Wolde; Editing by Mark Heinrich)

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