Prices Climbing at Deutsche Telekom

Deutsche Telekom's financial crisis is winding its way down to the German consumer.

Beginning on Nov. 1, 3.5 million cable TV subscribers in Germany will be forced to pay six percent more for Telekom's cable service than before, with the base price increasing to 14.13 euro each month. The increase, the first in five years, comes as the beleaguered Kabel Deutschland GmbH, which is 100 percent Telekom-owned, is looking to get back in the black.

"It's primarily because we want to put the firm back on healthy feet," said Hans-Ullrich Wenge, Kabel Deutschland's CEO.

But the move could also make the business more attractive to buyers. Telekom has been trying to find a buyer for its cable TV businesses ever since Germany's cartel office blocked Denver-based Liberty Media from acquiring Telekom's cable TV division in February. Regulators feared Liberty would not do enough to upgrade Telekom's aging cable network.

Now, with Telekom on a six-month savings course that aims to reduce the company's debt from 65 billion euro to 50 billion euro, the sale of the cable business remains a top priority. But analysts say the value of the unit has plunged and that the company will have trouble getting more than 3 billion euro for the network right now, 2.5 billion less than what Liberty offered to pay for it.

Potential buyers have until this Friday to present their proposals, Wenge said. Telekom is seeking to find a buyer and finalize a sale before the end of the year.

The German telecoms giant also plans to raise the price customers pay for hooking up a telephone for the first time. Until now, Telekom charged 44.45 euro to set up the phone and opening the line. Now, it's asking customers to take over some set-up costs.