Deutsche Telekom to lay off 6,000 T-Systems workers: report

Deutsche Telekom is planning to cut up to 6,000 jobs at its T-Systems IT division, according to a report from German newspaper Handelsblatt.

The layoffs would reduce the size of the T-Systems workforce in Germany by more than a fifth from its current level of 29,000 employees, and is said to be aimed at streamlining operations to make the IT business more competitive.

Deutsche Telekom (Bonn, Germany) has confirmed that it is planning restructuring measures to the Wall Street Journal but refused to comment on speculation about the number of jobs that will be affected.

However, the operator did say the restructuring plans would be discussed at its supervisory board meeting on December 12, and at the supervisory board meeting of T-Systems in January.

According to the Wall Street Journal, any forced layoffs would represent the first in Deutsche Telekom’s history, with union heads saying they will oppose any such move.

News of the planned layoffs looks related to moves aimed at better aligning T-Systems with the growing demand for cloud-based IT services.

Earlier this year, Deutsche Telekom said it was aiming to grow revenues generated from the provision of cloud services to €1 billion ($1.35 billion) in 2015, up from just €400 million in 2012, and announced a reduction in the number of T-Systems operating units in line with this strategic reorientation.

However, while T-Systems has been able to grow profits and improve its margins over the first nine months of 2013, its overall revenues have remained under pressure.

For the three months ending September, the company flagged a 9.1% year-on-year increase in earnings before interest, taxation, depreciation and amortization, to €203 million, thanks largely to ongoing restructuring efforts.

While revenues grew by 1.8% over the same period, to €2.29 billion, the increase was entirely due to work carried out for other parts of the Deutsche Telekom Group.

Sales at T-Systems’ Market Unit, which generates most of its revenues externally, fell by 1.1% during the quarter, to €1.87 billion, compared with the same period in 2012.

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