Even before the European telecom industry could digest the news of resignation of Chairman of Telecom Italia, Germany's Deutsche Telekom's CEO Kai-Uwe Ricke stepped down in November, this year, as poor performances raise a big question mark over their future. While the German carrier did not cite any reason for the sudden exit of its top man, s attribute it to the firm's dwindling performances in recent times which invited shareholders' wrath. Consistent run of poor show resulted in Ricke losing support from his board as well as some major shareholders that include the German government and private equity players like Blackstone; although Blackstone, which owns 4.5% has denied pressurizing the top management of the carrier.
Ricke who took the charge of the company in 2002 had been under increasing pressure from key investors, including the government and private equity major Blackstone to quit after the carrier lowered its 2006 and 2007 earnings and sales outlook in August due to intense competition in the domestic telecom market. Though immediately after announcing the first half-year results for 2006, the carrier announced that it would reduce prices and offer cleared price packages for customers in an effort to defend its domestic market share. "Ricke's departure did not, in our view, originate from any lack of desire for radical surgery on his part, but in the constraints of his political situation", commented Simon Weeden, an at Goldman Sachs, in an interview. Reportedly these key investors were unhappy with the inability of Ricke to execute layoffs and also his failure to acquire British mobile operator 02, which was acquired by Spanish rival Telefonica.
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