Deutsche Telekom has announced losses of nearly €25 billion for 2002, the largest-ever loss in German corporate history, as the European telecoms giant struggles to reorganise.

Despite the huge loss, however, Telekom's losses in the fourth quarter were lower than expected at €100 million, suggesting that the company's new chief executive has managed to draw a line under the spending spree era of his predecessor.

"There is no way to put a good face on it. The past business year was the most difficult ever for Telekom," said Mr Kai-Uwe Ricke, the chief executive who took over in November. He said the losses, up from €2.5 billion the previous year, were the result of a "huge strategic clear-out" of the company. The company has written down by €19.3 billion assets bought during the dotcom boom to take into account their dramatic drop in value.

By making a clean breast of things now, the company hopes to reduce its €60 billion debt mountain to €50 billion by the end of this year.

"Our goals are clear: debt reduction and profit-oriented growth," Mr Ricke told a press conference yesterday.

To that end, the company has cut investment and introduced a radical cost-cutting programme, in particular selling off non-core assets.

Mr Ricke is determined to bring the curtain down on the era of his predecessor, Dr Ron Sommer, ousted last November. He was ousted with the backing of the Germany government, Telekom's largest shareholder, as punishment for buying companies at inflated prices during the internet boom, such as mobile subsidiaries VoiceStream in the US and One2One in Britain.

Central to Mr Ricke's cost-cutting plan is the shedding of 50,000 jobs by 2005, reducing the Telekom workforce to around 230,000.

But Mr Ricke said he was not interested in overzealous cost-cutting that would starve the company back to health only to cause long-term difficulties. For that reason he said Telekom would retain its mobile networks in eastern European countries.

Despite the attempts to bring its debt under control, Mr Ricke declined to say when he expects Telekom to return to profit or when the company would start paying a dividend, cold comfort for the 4,500-plus Irish investors who invested in Telekom shares.

Shares were down 9.58 per cent to €9.15 in trading yesterday.