* D.Telekom unit plans price rises, cost cuts
* New CEO Bierwirth says market is broken
* Top execs to spend 2 days a week developing new strategy
* Strategy to include new tariffs giving away less free data
By Georgina Prodhan
VIENNA, Oct 17 T-Mobile Austria plans a strategy
of rising prices and cost cuts, the unit's new chief executive
said on Wednesday, as the group tackles the tough competition
and price pressures which are endemic in the sector.
The company, a Deutsche Telekom AG unit which
ranks as Austria's second-biggest mobile provider after Telekom
Austria AG, saw its sales fall 6 percent and core
profit drop 11 percent last year despite an 8 percent increase
in customer numbers to 4.1 million.
"I see only that the market here is broken," said T-Mobile
Austria CEO Andreas Bierwirth, a former CEO of Austrian
Airlines, which has been bought by Lufthansa. "We must
turn the negative spiral we are in into a positive spiral."
The trend of rising mobile data consumption coupled with
falling prices is particularly acute in Austria, where four
operators compete in a population of just 8.4 million, but is
afflicting the whole telecoms sector.
T-Mobile Austria's parent Deutsche Telekom, which is merging
its U.S. unit with MetroPCS in a bid to win scale
without massive new investments, has said it will have to cut
more jobs to halt a broader slide in European revenue.
And Sweden-based TeliaSonera said earlier it would
shed thousands of jobs as part of a cost-cutting plan and warned
of stagnation until companies find a way to profit from surging
smartphone and tablet data traffic.
Bierwirth said most of the company's top management, up to
two dozen people, would spend two days a week until the end of
January developing a new strategy, which would include new
tariffs that would give away less data usage for free.
"We will naturally continue to take part in price
competition because we have to keep our market share, but what
we want to do in the field of data is to match the prices more
closely to the volumes," he said.
He said the company would cut annual costs by 15 percent, or
close to 100 million euros, by 2015, with the savings reinvested
in the company.
Bierwirth added that most cuts would be achieved by greater
efficiency and infrastructure cooperation with rivals, and would
involve only "selective" job losses.
He said his company aimed to reduce its sales decline in
2013, reach stability in 2014 and rebound in 2015. Profits
should stop falling from next year.
T-Mobile Austria made adjusted earnings before interest,
tax, depreciation and amortisation (EBITDA) of 253 million euros
last year on sales of 924 million.
To combat the downward trend in which all-inclusive packages
are on offer for as little at 7.50 euros ($9.77) per month in
Austria, the country's two smallest mobile companies - France
Telecom SA's Orange and Hutchison's H3G - are
trying to merge.
European competition regulators are examining H3G's agreed
1.3 billion euro acquisition of its larger rival and are due to
approve or reject it by the end of November.
Orange Austria said on Wednesday it had won 100,000 new
customers in the first nine months of the year and improved its
core profit by 8 percent, thanks largely to SIM card-only deals
in which it does not subsidise handsets for customers.
Sales fell 4 percent to 362 million euros but EBITDA rose to
124 million euros and the number of customers rose to 2.4
million. Orange Austria said a drive for better customer service
had helped it retain subscribers.
($1 = 0.7679 euros)
(Editing by David Holmes)