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T-Systems loses more operations to Deutsche Telekom’s German unit

Adel Al-Saleh.jpg

Deutsche Telekom is to slim down its T-Systems IT and digital services operation yet again, this time moving corporate telecoms clients into the main company.

The move, announced yesterday to staff by T-Systems boss Adel Al-Saleh (pictured), follows a series of other moves by the CEO over the past year.

Last month Al-Saleh previewed this move, saying it will “significantly improve our effectiveness for our clients”. He said at the time: “Our clients want us to be easy to do business with and to have access to a team that manages the entire value chain.”

Among the services that will move from T-Systems to Telekom Deutschland – the German operating unit of Deutsche Telekom – is the group’s provision of networks to government bodies and other large organisations.

In September 2018 Al-Saleh, an American who became CEO in January 2018, started a two-year strategy to turn the loss-making unit around. Reports at the time, sourced to the chairman of the central works council who is also a member of the supervisory board of T-Systems, said T-Systems will lose 10,000 of its 37,000 global staff.

And then, in January 2019, Deutsche Telekom agreed to sell part of the T-Systems business to IBM, for a reported €860 million. Both parties positioned this as a cooperation agreement, with the two jointly providing mainframe services to the existing customer base.

T-Systems said at the time: “Existing customer contracts remain unaffected. T-Systems will continue to offer mainframe services, but with IBM in the future.”

Now, according to Al-Saleh’s presentation yesterday, reported by the Reuters news agency, Deutsche Telekom will take over responsibility for corporate telecoms clients.

The series of moves will reduce T-Systems’ annual sales from €7 billion to €4 billion.

Reuters quoted Al-Saleh as saying that the T-Systems business would in future be “an integrated end-to-end IT player and reliable enabler for our clients’ digitisation”.

Last month Deutsche Telekom and Ericsson announced a strategic partnership to serve industrial enterprise customers with 4G and 5G campus networks, with T-Systems apparently leading on the project. Al-Saleh said in August: “Our enterprise and mid-sized customers demand secure, reliable, and high-performance network solutions tailored to their specific requirements. Deutsche Telekom and Ericsson have a longstanding partnership in innovation, technology and services.”

 

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