Mann Oberboard! CEO of Deutsche Telekom jumps ship
Mar 8, 2013
One of the trickiest decisions a chief executive can make is the timing of his or her departure. Many hang on for too long and are eventually forced out and leave under a cloud and with shareholder opprobrium ringing in their ears. Others step neatly aside at precisely the right moment, take the plaudits and let the successor walk straight into the oncoming custard pie.
Rene Obermann is one of the latter. Yesterday he announced his resignation as CEO of Deutsche Telekom (DT) after seven years in the hot seat - however he doesn't actually leave the carrier until New Year's Eve, thus allowing almost nine months for him to work with his designated replacement, Timoteus Hoettges, the current CFO at DT, on an orderly transition.
Mr. Obermann says he has decided to leave DT, after 16 years with the company, man and boy, to get back to his entrepreneurial roots (which may will have withered somewhat after all that time spent in one of the most structured, risk-averse organisations on the face of the planet) and so is converting from gamekeeper to poacher and taking over as boss of the Dutch cable operator Ziggo. He will find that a strange new world.
Rene Obermann's decision to mosey on up the road came less five months after DT announced, in October last, that it is merging T-Mobile USA (the business that the CEO used to run) with its MetroPCS Communications acquisition.
Meanwhile the fallout from the much-vaunted but comprehensively failed merger of T-Mobile with AT&T continues to sift gently down onto the shoulders of the grey-suited top management team at DT. It's dead, but it won't lie down.
Elsewhere, the carrier has been embroiled in a debt crisis that has continued now for three years with little sign of any real ending. Revenues are stagnating and DT recently cut its shareholder dividend - to howls of rage.
DT is still 32 per cent owned by the German government and is valued at €37.3 billion. However, The carrier's shares have taken a battering having lost 2.7 per cent so far this year and having fallen by close to 35 per cent since Rene Obermann took over as CEO from his predecessor, Kai-Uwe Ricke. The market made little of the announcement of Obermann's departure and DT shares rose by a mere 0.5 per cent as the news percolated through. Last year, the CEO was paid €3.7 million in "compensation".
A few days ago, at a time when his departure terms must already have been agreed with DT's supervisory board, the CEO, speaking at an investor meeting in Bonn, (in company with Hoettges, his replacement) promised that DT will sell more and increase profits by the end of 2014. That will be a tall order, but by the end of December next year Rene Obermann will have gone Dutch, leaving the erstwhile CFO to fulfill the mission on his lonesome. He could be in for a difficult time.
In Germany itself, DT is fighting to defend its share of the fixed-line market against piratical cablecos who are making strong headway on a flooding tide. DT's mainly copper network is aging and cannot compete with the speed and robustness provided by fibre optic networks being deployed by competitors. DT has announced that it will continue its drive to build-out more fibre of its own but that is a very costly process and Rene Obermann is known to be frustrated and angry about the regulatory regime at home.
This time next year, Rene Obermann will, to continue the nautical theme, be lying a mere cable's length from Germany, and no doubt waiting for a spring tide to sweep him and his new company onto the shore and into his erstwhile home market to do a bit of pillaging.
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