Deutsche Telekom Chief Defends U.S. Unit

COLOGNE--The Wall Street Journal
Deutsche Telekom AG is committed to its U.S. operations, Chief Executive Officer René Obermann said Monday, as he faced down criticism over the unit's performance from shareholders at the company's annual meeting.
Deutsche Telekom CEO René Obermann says T-Mobile USA is 'making us a great deal of money.'
While conceding that Deutsche Telekom isn't "fully satisfied" with its U.S. performance, Mr. Obermann said the company believes in that market. "After all, it is making us a great deal of money," he said.
For years T-Mobile USA was Deutsche Telekom's growth engine, but in 2009 it began to lose steam. In an interview in March, Chief Financial Officer Timotheus Höttges said that an initial public offering "could be an option, among others," but isn't a necessity to push the business forward. Mr. Höttges said at the time that the company would focus on operational improvements.
At Monday's shareholders meeting, Klaus Kaldemorgen of German investment company DWS, a unit of Deutsche Bank AG, urged management to reduce the risk from its U.S. operations, which require huge investment in spectrum and network expansion, particularly as the German market also requires a lot of investment right now.
"A partnership with a well-financed company or a listing could be a solution," Mr. Kaldemorgen said, while Marc Tüngler, representing shareholders' association DSW, questioned whether T-Mobile USA is really a key business.
T-Mobile USA trails AT&T, Sprint Nextel Corp. and Verizon Wireless--a joint venture of Verizon Communications Inc. and Vodafone Group PLC--in an increasingly competitive market where growth is declining. In the fourth quarter, the most recent figures available, T-Mobile USA posted service revenue of $4.6 billion, a 3.5% decline from a year earlier, while adjusted earnings before interest taxes depreciation and amortization, or Ebitda, fell 13% to $1.38 billion.
In relation to the company's operations in Greece, Mr. Obermann said "there has been no clear indication to date that the current situation is having an impact on the business development of OTE." Deutsche Telekom has a 30% stake and management control of Hellenic Telecommunications Organization SA, and consolidates its operations in full. The Greek government has options to sell more shares to Deutsche Telekom.
Mr. Obermann didn't provide details on Deutsche Telekom's first-quarter performance, but said he remains confident it can achieve its 2010 goals. The company previously said it expects Ebitda of about €20 billion ($27 million0 and free cash flow of €6.2 billion this year. In 2009, Deutsche Telekom posted adjusted Ebitda of €20.67 billion and a free cash flow of €6.97 billion.