German telecoms giant Deutsche Telekom said today it was embarking on a cost-cutting drive which could soon result in savings of more than euro one billion.
The former German monopoly, one of Europe's top three telecoms operators by market value, is trying to reduce its debt burden and increase profit margins which have been squeezed by competition and rapid expansion in its mobile business.
A spokesman for the group, responding to a Financial Times Deutschlandreport that it is aiming to cut operating costs by about euro four billion by 2004, said no target had been set for savings.
Deutsche Telekom shares were 0.66 per cent lower at euro 24.19 today in Frankfurt, underperforming a rise of 0.27 per cent on the Eurostoxx telecoms index. Germany's DAX index was down 0.32 per cent, with Telekom the most-traded issue.
Deutsche Telekom aims to cut its debt to euro 50 billion from 69 billion by the end of 2002 by selling non-core assets and floating a stake in its T-Mobile cellphone division.
The planned sale of six German cable television operations to Liberty Media Group for about euro 5.5 billionis part of that debt reduction programme.