Deutsche Telekom starts more restructuring at T-Systems, no job cuts planned

News IT Germany 2 AUG 2019
Deutsche Telekom starts more restructuring at T-Systems, no job cuts planned

Deutsche Telekom plans to reduce the size of its subsidiary T-Systems, Handelsblatt reports. The CEO of T-Systems, Adel Al-Saleh, has announced a restructuring strategy to executives of the company, the report added.  

One important step in the restructuring process is the transfer of the telecommunications services of T-Systems, which account for around one third of the business, to Telekom.  

The telecommunications services provided by T-Systems are divided into two parts, the "TC Core", with services such as landline and mobile communications for corporate customers, and "Classified ICT", for services for the public sector in Germany and the European Union. Both divisions will be transferred to Deutsche Telekom.   

The company also plans to rebuild the IT security, internally called "Security", and Internet of Things divisions as standalone companies. The units will remain part of T-Systems. The supervisory board of the firm will have to approve the reorganisation, which is planned for the first half of 2020. A decision is expected in early September. 

Deutsche Telekom said in a statement that it will propose a change in the set-up of the business-to-business (B2B) Telecommunications (TC) Services to its supervisory board. The plan is to create an integrated TC Services business within Telekom Germany. The new unit will consist of the existing Telekom Germany B2B TC business, T-Systems TC Services and Classified Portfolio units.

Deutsche Telekom also confirmed that two independent legal entities will be formed from the units "Security" and "IoT" (Internet of Things). Both companies will continue to be part of T-Systems. It said that additional job cuts are not part of the plan. 

The CEO has supported the changes at the company, targeting the reduction or relocation of 10,000 jobs within three years. However, at the end of the first quarter of 2019, T-Systems reported not a decline but an increase in full-time jobs by 1.5 percent to 38,000 compared with the previous quarter. T-Systems justified the increase with the establishment of a new service unit in India.  

In the first quarter of 2019, revenues in the systems business fell by 2.1 percent year-on-year to EUR 1.6 billion. The operating result (EBIT) was a negative EUR 49 million compared with a negative EUR 76 million in the same period last year.

Categories:

IT

Companies:

T-Systems,  Deutsche Telekom

Countries:

Germany

Tags:

Data services, Hosting - cloud - data centres, IT - applications, Corporate strategy

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