He inherits huge problems, including a huge debt load from years of splurging, a slow-growth business and a hierarchical company culture dating from when Telekom was an arm of the post office, a monolith with more staff than the German Army. For all Sommer’s talk about the New Economy, he built on the old tradition, controlling the company through a team of feared lieutenants. Sommer hired Ricke away from a competitor in 1998 to run the fast-growing conglomerate’s mobile-phone business. He soon came to see him as a potential successor and promoted him to chief operating officer in 2001.
Ricke is emblematic of the next generation of European tech leaders. The challenge they face is to fix mistakes made during the boom years without discarding the enthusiasm and vision that accompanied them. Since taking over in November, Ricke has gotten rid of Sommer’s gang and put the heads of the company’s four main business divisions on Telekom’s management board. By loosening the grip of the CEO’s office on a company with 256,000 employees, he hopes to set the stage for a cultural revolution at Telekom. “I want a new leadership style,” he told his top execs on Dec. 12, during a 10-hour sit-down in the “fishbowl,” a round, glass-lined meeting room at the Bonn headquarters. “I want to encourage open and controversial discussion, but then I expect swift and speedy decisions.”
Ricke doesn’t have a lot of time. Telekom reported a loss of ¤20.6 billion in the third quarter, the largest ever for a German company. Its stock price has fallen 90 percent from its peak in March 2000. Other, more experienced executives turned down offers to take the job, often because of political meddling in the company, of which the German government still owns about 43 percent. Some disillusioned investors see Ricke as part of the problem. “He shares responsibility for the mistakes of the past, so I have little hope that much will change,” says Frank Heise, a fund manager at Union Investment in Frankfurt.
Like his peers at Europe’s other phone companies, the new CEO is working hard to dispel such doubts. He aims to slash debt from a staggering ¤64 billion to ¤50 billion by the end of 2003 and to cut 43,400 jobs by 2005. He is trying to sell Telekom’s cable business as well as its minority stakes in wireless companies in Eastern Europe and Asia.
Ricke, 41, is something of a corporate prodigy. He studied at the European Business School and began his career as a management assistant at Bertelsmann AG, the German media conglomerate. In 1990, at the start of the mobile-phone boom, he joined Talkline GmbH, an upstart mobile-phone service provider and Telekom competitor, where he drew Sommer’s eye. Ralf Hallmann, an analyst at Bankgesellschaft Berlin, describes Ricke as “an experienced manager who has proven that he could turn things around” at Telekom’s once troubled mobile-phone unit. But transforming Telekom itself will be a tougher trick. “The year 2003 is crucial for Deutsche Telekom,” he said at the Dec. 12 meeting. “We have to cut debt, and we have to grow. But growth cannot come at any cost. Everything must be put to the test.” Ricke is in the fishbowl himself, and he knows it.
