January 18, 2018 / 10:09 AM / a year ago

Deutsche Telekom to split T-Systems unit under new leadership

FILE PHOTO: Deutsche Telekom logo is seen during preparations at the CeBit computer fair, which will open its doors to the public on March 20, at the fairground in Hanover, Germany, March 19, 2017. REUTERS/Fabian Bimmer/File Photo

BERLIN (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. [nL8N1MK281][nL8N1NF103]

Executives have admitted they were slow to anticipate a shift in IT services to a low-cost cloud-subscription revenue model.

Reporting by Nadine Schimroszik; Writing by Maria Sheahan; Editing by Georgina Prodhan

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