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.


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