Deutsche Telekom wants to sell IT subsidiary

Deutsche Telekom is setting the course for a possible separation from its loss-making IT subsidiary T-Systems. "We have growth plans. But we are also examining other options," said a T-Systems spokesman for the Reuters news agency. According to "Handelsblatt", talks are already being held with potential buyers in the division, including the consulting firms Accenture and Capgemini. The subsidiary, which offers IT services and cloud services for major customers, has long been the problem child of the Bonn-based Dax group and has been rebuilt for years. Thousands of employees lost their jobs. The "Manager Magazin" reported, citing corporate and financial circles, that a contract could be concluded as early as September. The sensitive business with the public sector could be separated beforehand. According to the magazine, talks with buyers should begin in February. In the "Handelsblatt" it was said that Telekom was examining a new structure for T-Systems in an alternative scenario in which it would still hold around a third of the shares in the major customer subsidiary. Another third will stay with the major Telekom shareholder Bund. One or more partners would be sought for the remaining third. Capgemini declined to comment on the report. Initially, no comments were received from the federal government and Accenture. Telekom brought US manager Adel Al-Saleh on board in 2018 and initiated a radical restructuring of the division. Today around 28,000 employees work for T-Systems, around 10,000 fewer than when Al-Saleh took office. The renovation took longer than planned and the daughter is not yet back on the growth path. In 2020, T-Systems achieved a negative operating result of just under 4.2 billion euros, including all special items, of 650 million euros. In April the Telekom board of directors had emphasized that T-Systems was an integral part of the group. Most recently, however, the Bonn-based company had already announced that it would analyze options for the large customer division. T-Systems plans to launch a new strategy in early 2022. The subsidiary now only accounts for a fraction of the total revenue of the telecommunications group. The "Manager Magazin" reported, citing insiders, that Telekom might have to pay extra for a sale. A dowry of up to one billion euros is possible. Because T-Systems works for major customers such as the Bundeswehr and the Federal Intelligence Service, the sales process will not be easy. It is critical if a buyer is neither from the European Union nor under the protection of the federal government.