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The Return of Deutsche Telekom

Timotheus Hoettges, CEO of Germany's telecommunications giant Deutsche Telekom AG, smiles as he poses in front of the company's logo at Telekom's annual news conference in Bonn February 25, 2016. Deutsche Telekom reported better than expected fourth-quarter results in its domestic market, helped by expansion of its super-fast broadband network, boosting take-up of bundled fixed line, mobile and Internet TV packages. REUTERS/Wolfgang Rattay
Tim Höttges, CEO of Deutsche Telekom.
  • Why it matters

    Why it matters

    Deutsche Telekom, once stagnant, has flourished under CEO Tim Höttges, becoming one of German industry’s success stories. But can it cope with a challenging future?

  • Facts

    Facts

    • Tim Höttges became chief executive of Deutsche Telekom in early 2014, determined to drive growth and innovation in a company famous for sluggish performance.
    • In the last year, Telekom’s revenues have gone up 10 percent, hitting an all-time high of €69 billion.
    • Among the company’s many future-oriented projects is a bid, known as “Zero Outage,” to lead the German IT sector in a complete quality revolution.
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    Audio

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Anyone looking to understand where Timotheus Höttges is taking Deutsche Telekom should go back in time to 2014. Farewell tears for René Obermann, his beloved predecessor, were barely dry when the bald-headed man with a “grim look about him” (Mr. Höttges’s own words) took over as chief executive. Not quite a popular figure, it seemed. But early on January 8, 2014, hundreds of leading Telekom managers awaited Mr. Höttges’s first keynote speech with excitement. Which direction would the company take with a trained financial controller at the helm?

One point stood out clearly amid Mr. Höttges’ many ideas and plans that day. The new CEO declared an end to the long era of stagnant revenues and weak share price. “We have to get back to growth,” was his pledge. And second: “We have to strengthen the company’s value, more than our competition.”

Of course, growth doesn’t happen on command. If it did, which boss wouldn’t immediately order some? But somehow Mr. Höttges – who along the way ditched old-fashioned “Timotheus” for the more friendly “Tim” – managed to turn off Telekom’s stagnation like flicking a switch.

Two and a half years after Mr. Höttges took over, the company has become a stock market favorite. In the last year, its share price has grown particularly strongly, up 26 percent to €16.74 (around $18.75). With a market cap of €73 billion, Telekom is now the fourth largest German company. The company has increased its advantage over its European competitors: Britain’s Vodafone, Spain’s Telefonica and Orange of France. “The business is doing very well,” Mr. Höttges will tell Wednesday’s AGM in Cologne. In the past year alone, turnover grew 10 percent to a record-breaking €69 billion.

Deutsche Telekom has undergone a miraculous resurrection. Somehow, Mr. Höttges has crafted a combination of continuity (above all in personnel), new realism (above all retraining the mindset of older staff) and political backing. And together, they add up to a surprising success story.

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