Copyright 2002 Toronto Star Newspapers, Ltd.

Toronto Star…07/11/2002

From LexisNexis

Top German union representatives at Deutsche Telekom are resisting government and shareholder demands to fire chief executive Ron Sommer at a board meeting next week, sources say.

Labor and shareholder representatives clashed at a meeting of the board's powerful steering committee on Tuesday, with union officials trying to fend off government calls for a quick dismissal of Sommer, the sources said.

Hans-Dietrich Winkhaus, head of the supervisory board, and finance ministry official Manfred Overhaus were leading a shareholder group calling for Sommer to be ousted.

But sources familiar with the matter said they were resisted by union representatives Ruediger Schulze and Wilhelm Wegner, in the absence of an obvious Sommer successor.

"There was a serious argument at the meeting on Tuesday," one person said.

Union support is essential for the two-thirds majority required to sack a CEO who has presided over a nearly 280 billion euro ($277 billion U.S.) collapse in his company's market value since March, 2000. Deutsche Telekom's board meets next Tuesday.

Amid speculation that Sommer is reaching the end of his career at the helm of Europe's biggest telecom operator, fresh rumors rumbled that his indebted empire was in talks to merge its U.S. mobile business, VoiceStream, with larger rival AT&T Wireless.

Although sources close to the German giant said the firm may consider merging its losing U.S. arm - in the first sign that the group is willing to adopt to a new U.S. strategy - few expect a prompt deal.

"My impression is that this idea has been much talked about but hasn't really got off the drawing board yet," said one financier.

Sommer enraged investors by a costly, two-year expansion spree that buried the group under a staggering 67 billion euros ($66 billion U.S.) of debt.

If Sommer is ousted, he will join those already felled by over-ambitious expansion strategies that have left balance sheets shattered - French media giant Vivendi Universal's CEO Jean-Marie Messier, BT Group PLC's CEO Peter Bonfield, KPN Telecom CEO Paul Smits.