Search for CEO for Telekom Nears End

A four-month long search for a replacement for former Deutsche Telekom CEO Ron Summer looks set to end next week. According to Germany’s "Frankfurter Allgemeine Zeitung" newspaper on Saturday, senior members of the company’s supervisory board have settled on Kai-Uwe Ricke.

Sources close to board members told the paper that the interim chief executive Helmut Sihler had spoken with the board’s steering committee and informed them that the search for a suitable candidate for the top job had been completed and that the results would be presented at a meeting on November 14. At that time it is expected that the 20 members on the telecom’s supervisory board will be asked to endorse or reject Ricke. No alternative candidate has been named.

"In theory there could still be discussions, disputes and surprises, but in practice we expect a unanimous vote," one of the board members told the "Financial Times" on Friday.

Selection from within

The 41-year old Ricke has been at Deutsche Telekom since 1998 and currently serves as chief operating officer for the company’s mobile phone and online activities. He is widely regarded among his colleagues as competent, and should have no difficulty receiving votes from the workers’ representatives, who comprise half of the supervisory board’s members and have made no small secret of preferring an internal candidate.

The new CEO will face the monumental task of pushing ahead with restructuring plans, cost-cutting measures and sales boosts to bring the telecom’s debt of 64 billion euro ($64.9 billion) under control. Sihler has already instituted a wide-ranging strategy aimed at cutting debt down to €50 billion by the end of next year by selling off the company’s cable TV assets and downsizing the 240,000 workforce by a fifth.

If elected CEO, Ricke says he will not call for more job cuts beyond the 50,000 suggested by Sihler. This has already endeared him to the workers and trade union representatives voting on the board, but may present some difficulty for the investors, who question Ricke’s ability to define a new strategic direction for the company.

Ricke is considered by many of the investors’ representatives on the board as being too close in thinking to former CEO Ron Sommer, who hand-picked his protégé to head the mobile operation. Critics point to Ricke’s firm support for Sommer’s acquisition of U.S. mobile operator VoiceStream in 2001, which is regarded as one of the main contributors to the company’s hefty debt.

End in sight

Europe’s largest telecom operator has been seeking a permanent head to direct the company since Ron Sommer was ousted under pressure from the German government last July. At the time, Chancellor Gerhard Schröder had raised concern about the partially state-owned company’s debt and growth strategy. Shares were at an all-time low, and Sommer was seen by many as the source of the problem.

Neither the Deutsche Telekom nor the German finance ministry, which still holds 43 percent of the former state monopoly’s shares, have come out with official statements endorsing Ricke as the next chief executive. But given the lengthy search process and the number of eligible candidates who have declined the position (including former CEO of Bertelsmann Thomas Middelhof and Ulrich Schumacher, head of Infineon), it is unlikely that either side will be willing to wait much longer.