HANOVER, GERMANY (02/22/2000) - Deutsche Telekom AG's chief executive officer today said the carrier is not attempting to protect Germany's fixed-line telephone network from other technologies that provide customers with broadband access.
"It's our strategy to focus on all broadband access channels," said Ron Sommer, chairman and chief executive officer of Deutsche Telekom. "We are not protecting or hogging the fixed network." That means the carrier is emphasizing cable networks and satellites, as well as technologies such as ISDN or ADSL (asymmetric digital subscriber line) which can run over its copper local loop.
Sommer made the comments today at a press conference here ahead of the CeBIT trade fair, which starts Thursday.
"We must invest in the broadband capabilities of the last mile," Sommer said, referring to the access to consumer's homes. That includes DSL technology, cable and GPRS (General Packet Radio Service) wireless technology.
As part of that effort, Sommer also announced the sale of a 55 percent stake in its cable network in the state of Nordrhein Westfalen to U.S.-based Callahan Associates International LLC. The remainder is held by Deutsche Telekom subsidiary Kabel Deutschland GmbH. The sale will take effect on July 1.
The companies will equip the network for two-way broadband traffic, according to a statement from Callahan Associates. The Denver-based company's main investors are Blackstone Capital Partners III, the investment vehicle of the Blackstone Group, and Capital Communications CDPQ, a subsidiary of Montreal-based Caisse de Depot et de Placement du Quebec.
The sale marks the first in a series of planned partnerships for the carrier's regional cable network companies. Sommer estimated that the value of Deutsche Telekom's entire cable network totals about 30 billion marks (US$15.2 billion).
The deal announced today is valued on that basis, Sommer said, but wouldn't disclose the financial details.
In another move to provide customers with broadband access, Deutsche Telekom is moving forward with equipping its network with ADSL technology. By the end of the year, it will connect 17 million households and more than one million business customers via ADSL, Sommer said.
Sommer also today gave the first details of recently announced plans to introduce a flat-rate pricing scheme for users of its online service, T-Online International AG, which he said will be market-ready around mid-year.
But Sommer, who often last year said he was against a flat-rate fee for online users, differentiated it from the pricing model prevalent in the U.S, where users are charged one monthly fee for unlimited online time.
"A flat-rate like that in the U.S. makes little sense. You have infrequent users subsidizing frequent ones," Sommer said. Instead of having one monthly flat-rate charge for all users, Deutsche Telekom will have different flat-rate offers aimed at different kinds of users, he said.
That will include a monthly fee for less than 100 marks a month, a fee aimed at students during school hours for less than one mark, and a 5 mark flat fee for ISDN customers for use on Sundays, he said.
No surprise to the conference attendees were Sommer's comments that the carrier would continue to look for acquisitions outside of Germany, part of a plan both to internationalize and to increase its market capitalization.
"There could be a merger, but this is in no way necessary," Sommer said.
Asked whether that included an acquisition of British Telecom PLC -- a much-rumored target in recent European press reports -- Sommer would not comment. "We will look at acquisitions in all areas on a permanent basis," he said.
Deutsche Telekom, in Bonn, can be reached at +49-228-181-4949, or at http://www.telekom.de.