Deutsche Telekom profits crash as employees agree to strike

BERLIN: Deutsche Telekom reported a 57.4-per cent collapse of net profit in the first quarter, as its employees agreed on Thursday to strike in protest at restructuring measures.   

The company, the biggest telecommunications operator in Europe but sapped by constant desertion of its fixed-line customers to cheaper operators, said net profit from January to March fell by 57.4 per cent to 459 million euros (624 million dollars).   

Sales for the period increased by 4.1 per cent to 15.45 billion euros, higher than analysts' forecasts of 14.88 billion euros.   

The group lost 588,000 fixed-line customers in the first three months of 2007. Hours after the first-quarter results were announced, Telekom employees voted overwhelmingly in favour of holding a strike in protest at restructuring measures, the ver.di union said.   

Workers are angry at Telekom's plans to transfer up to 50,000 staff to its newly created T-Service customer service division, a measure designed to face up to the collapse in its fixed-line business.   

Unions are also angered by plans to slash entry-level wages by about one third to reduce staff costs. Profits for the first quarter of 2006 totalled 1.09 billion euros. But net profit last year slumped 43 percent to 3.165 billion euros.   

Telekom chief executive Rene Obermann appealed in vain to his staff to continue negotiations rather than take strike action.   

"A strike will solve nothing, the unions should return to the negotiating table," he told a press conference to announce the first-quarter results.   

Obermann said the figures underlined the importance of further restructuring: "These figures show how strong the competition is, and how great the need is for reform, especially in the fixed-line business."