Deutsche Telkom Won’t Be Pressured into Putting T-Mobil on the Market

Despite massive threats from ratings agencies to lower the credit rating of
Deutsche Telekom because of its high debts, Telekom does not want to be
pressured into putting T-Mobil, its mobile phone subsidiary, on the stock
market.

Ron Sommer, the head of the Telekom group, told the news magazine
“Der Spiegel” that a credit downgrade would cost Deutsche Telekom “around 90
million euro per year.” However, Sommer said, “No one would like to have to
pay this amount, but an unsuccessful market entrance would cost much more.”

Telekom will therefore examine its general conditions in the fourth quarter
and then decide if the time is right for the mobile phone subsidiary to go
public. At the Deutsche Telekom general meeting on Tuesday in Cologne, which
around 10,000 shareholders are expected to attend, the head of Telekom does
not foresee a public tribunal due to the extremely weak stock performance.

“I don’t think that emotions will boil over,” said Sommer. He “can’t
understand” proposals from small investors not to approve the activities of
the management board. “We have a very good year behind us, despite the
difficult environment.”

According to Sommer, Telekom’s real estate affair
and the massive devaluation of 3.9 billion German marks on the balance sheet
has not had an effect on the performance of the stock and has also not led
to a loss of confidence amongst investors.

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