Berlin, Düsseldorf Timotheus Höttges is to lead Deutsche Telekom until the end of 2026. At the meeting of the supervisory board on Wednesday, the committee should decide to extend it by a further five years, as the Handelsblatt learned from three people entrusted with the process. In a preliminary negotiation, an agreement was reached among the members of the supervisory board by Tuesday evening.
At the same time, the way is to be paved for the CEO of Deutsche Post, Frank Appel, as the new chief supervisor. He is to be appointed as the new chairman of the supervisory board at the general meeting of the group and thus succeed Ulrich Lehner, who is leaving. On Tuesday, Appel and the supervisory board had already connected virtually to discuss Wednesday’s decisions.
An early contract extension is unusual because the Telekom boss is still under contract until the end of 2023. An extension is normally negotiated around a year before a term expires. At Höttges there would be two. The Telekom boss himself forced an early extension, it is said from his environment. He wanted to create facts before the board of directors was reorganized.
The body is facing a major upheaval. The federal government, as the largest shareholder with around 30 percent of the shares, will send two new representatives to the supervisory board after the change of government in Berlin; In addition, the conglomerate Softbank, which rose to become a major shareholder in September, is claiming another seat. The federal government, Softbank and Appel have their own ideas, said three people familiar with the considerations.
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Höttges will consolidate his position at the top of the group even before the newly composed committee begins its work at the annual general meeting in the coming year. In return, he was supposed to use it to push ahead with the restructuring of the Dax group, the Handelsblatt learned. First of all, it is intended to strengthen Europe and thus create a counterweight to the high-volume US mobile communications arm, which today contributes around two-thirds to group sales.
The group has to be rebalanced
The next step is expansion in the USA. T-Mobile US is to develop from mobile communications into a broad-based telecommunications provider and, above all, to win over corporate customers and financially strong customers. T-Mobile has not been well positioned there so far.
The success of Telekom in the USA is brilliant – but it has thrown the corporate structure out of balance. America is dominant, the activities in Europe are smaller in terms of sales. This makes some people uneasy, especially among the employees and the federal government as the largest shareholder, as it was called in the environment of the supervisory board. So that the home market of Germany in particular does not lose importance at some point, Höttges is to build a counterweight to the great importance of the USA in Europe.
A big step is necessary for this, i.e. a takeover of the British BT Group or the Orange Group from France. These ideas are not new. Orange and Telekom in particular have tried out the possibilities of a merger several times. The simulation games failed because of the respective evaluations, but more because of the question of who would be in charge of the new company. To this day, Telekom has a stake of around twelve percent in BT through its pension fund.
Most recently, a merger with Orange failed due to the veto of the French government. Paris, so their demand, should have become a central location for Orange / Telekom. Unacceptable for Höttges. With a rigid course, he got the often troubled company on track and thus increased its value considerably. With a valuation of around 80 billion euros, the Rhinelander are three times as valuable as orange. BT even ranked only with a market capitalization of just under 17 billion pounds (20 billion euros).
The former state-owned companies were once on an equal footing. The Telekom is now playing in a league of its own, said Höttges once in a small group. Orange or BT would be junior partners in a merger.
The rise of Telekom is closely linked to Timotheus Höttges. He is only the fourth regular CEO since going public in 1996.
Telekom boss number one – the self-confident Ron Sommer – had promised the shareholders blooming landscapes. Because the takeover of the American cellular operator Voicestream was significantly too expensive at 50 billion dollars, he was thrown out. Sommer’s successor, the pale Kai-Uwe Ricke, was followed by René Obermann, a manager who gave the company a functioning strategy.
Höttges followed in the Obermann fairway. He was promoted to the board of directors as chief financial officer in 2009 and organized the processes for his emotional boss. When he then took over from Obermann in January 2014, the employees expected severe cuts. Höttges started with costs, but he also developed a strategic profile for the company.
The chief financial officer has become a strategist
Höttges is not a natural leader. People who have worked closely with him for years describe him as insecure, but at the same time loud in his appearance. He worked meticulously on his deficits and sought advice from outside parties. He changed. Instead of wooden speeches, he now makes brilliant appearances with which he impresses the workforce and investors. He doesn’t win hearts with it. He keeps people at a distance. The tall manager is respected but not loved.
The 59-year-old is not a visionary, but he does bring the right people into his management team. Thorsten Langheim is crucial here. For years he worked out the big deals for Höttges in the background. Since 2019, Langheim has been a member of the board of directors in the “USA and corporate development” department, which was created especially for him.
The trend reversal in America is largely due to him. From the one-time total write-off from the Sommer era, Langheim built the Group’s most important growth driver. Today, T-Mobile US is worth around $ 144 billion on the stock exchange.
Ever since the USA turned into a guarantor of growth, Höttges has been tackling long-smoldering problems. The focus is now on T-Systems. The business customer division has been a burden on the consolidated balance sheet for around two decades. Several attempts at renovation failed. The US-based board member Adel Al-Saleh dismantles T-Systems into its individual parts, in close coordination with Höttges. Al-Saleh is now looking for solutions for the remaining trunk business. That can be a sale, but also a partnership with a third party, as one manager said.
Orange would be a good partner for Telekom
Wait and see is also the motto for the expansion of the European business. Geographically, Orange would be better suited to Deutsche Telekom than BT. Whether the proud French will hand over the company will be revealed after the election in spring. “It’s unlikely – the neighbors are too vain for that,” said a senior manager.
Orange is a hope – it could be easier with BT. Telekom is already involved in the group. But the Telekom is running out of time there. Billionaire Patrick Drahi has joined BT. Only on Tuesday did he announce that he had already increased his stake in the company to 18 percent. If Höttges wants to strike, he would have to act soon. But at the moment he lacks the leeway. With a record debt of 130 billion euros, Telekom cannot currently afford any expensive purchases.
However, a long-term strategy in Europe is a prerequisite for further expansion of the US business. The supervisory board agreed on this procedure with the management board when Telekom significantly increased its stake in the listed T-Mobile US in the summer. After the merger with Sprint, Höttges gave up the majority last year. With the acquisition of shares from co-shareholder Softbank, Telekom can secure control – and let the US subsidiary flow into its balance sheet.
Years after the entry initiated by Ron Sommer, T-Mobile US has become a success story. And Höttges would like to continue this. To do this, he has to reach the corporate customer business and convert T-Mobile from a shrill attacker to an established corporation and possibly expand mobile communications to include a fixed line business, as high-ranking circles report. It is not necessary today, but in the years to come.
The strategy cannot be implemented quickly. It will take years – and patience is required, said a high-ranking representative of the group. Höttges is the right person for the job – despite some reservations – integrated into his team.
More: Record dividends: Dax companies will pay out more than ever before.