Deutsche Telekom's chief executive, Dr Ron Sommer, resigned yesterday, after weeks of speculation, ending a turbulent seven-year reign that has left Europe's largest telecom firm €67 billion in debt.
Telekom's supervisory board appointed Prof Helmut Sihler (72) a former board member, to serve as chief executive for six months and find a permanent successor.
"When a chairman doesn't have the full trust of the supervisory board, then resignation is the only step," said Dr Sommer in a prepared statement at a press conference yesterday.
"With my resignation I hope to end at least the part of the debate that has to do with my character," he said.
Telekom shares jumped 14 per cent on the Frankfurt stock exchange at the news, but settled down to close up 4 per cent at €10.98. Prof Sihler said his task was to find a permanent successor and to continue Telekom's consolidation course.
He did not rule out that Mr Gerd Tenzer (58), head of the firm's networks division, would succeed him.
Dr Sommer (52) faced numerous calls to resign during his tenure, most recently after company shares fell below the €14 issue price, a 90 per cent drop in value from a high of €103 two years ago.
But the pressure to resign grew too great last week when the government, the largest Telekom shareholder with a 43 per cent stake, withdrew its support for the chief executive.
Dr Sommer's resignation could give the ruling Social Democratscrucial votes from disaffected Telekom shareholders in September's general election. Chancellor Gerhard Schröder has denied he played any role in pushing out Dr Sommer. Yesterday the supervisory board said there was "no pressure" from any side.
But business and opposition leaders believe Berlin interfered, something they say will do long-term damage to the credibility of Telekom as a company and Germany as a business location.
"Investors in the US are losing faith in the concern," said Mr John Stanton, chairman of Voicestream, Telekom's recently-acquired US mobile phone subsidiary.
Telekom staff gathered outside the firm's Bonn headquarters yesterday carrying placards reading: "Don't Go Ron". But millions of small shareholders will welcome Dr Sommer's departure.
