Telekom plans transformation for B2B Services, IoT and Security Offerings

Deutsche Telekom

Deutsche Telekom (DT) will suggest a change in the set-up of business-to-business (B2B) Telecommunications (TC) Services to its supervisory board.

If the board agrees at its next meeting at the beginning of September, the set-up between T-Systems and Telekom Germany will change. No additional personnel reduction is planned. Consistently implementing the Group’s strategy pillar ‘Lead in Business Productivity’, the plan is to create an integrated TC Services business within Telekom Germany. The new unit will consist of the existing Telekom Germany B2B TC business, T-Systems TC Services and Classified Portfolio Units.

T-Systems also wants to become more responsive to market needs, by creating two independent companies. To support DT’s strategy pillar ‘Lead in Business Productivity’, two independent legal entities will be formed from the units “Security” and “IoT” (Internet of Things). Both companies will continue to be part of T-Systems. Implementation is expected in the first half of 2020.

End-to-End Telecommunications Services from a single source

“Our goal in creating an integrated TC Services unit at Deutsche Telekom is to significantly improve our effectiveness for our clients. Our clients want us to be easy to do business with and to have access to a team that manages the entire value chain”, says Telekom board member and T-Systems CEO Adel Al-Saleh. “In this set-up, we create a unit that is responsible for product development, service delivery management, product management, and product technical sales expertise, all in one unit. We will also eliminate internal charging across different legal units, which will help us remove unnecessary complexity and will allow us to be more competitive in the market.”

As a result, T-Systems will transfer its “TC Services” and “Classified ICT” (the latter primarily provides networks to government bodies) portfolio units to Telekom Germany. Both units will be merged into Telekom Germany’s B2B division. This transition affects both the national and international TC business at T-Systems.

Both TC departments at T-Systems focus on offering customers secure connectivity and a strong network. In the future, this will come from one single source – Telekom Germany’s B2B division, “in order to standardise production and give sales a boost”, says Telekom board member and Telekom Germany Managing Director Dirk Wössner.

The goal is to increase scalability and competitiveness through higher volumes. “With standardised production, we can better address growth areas such as SD-WAN, SD-LAN and Cloud Connect”, says Al-Saleh. And for Wössner it’s clear: “Our medium-sized enterprise business will also benefit.”

Faster and more flexible in the market

Two independent companies for Security and IoT should further strengthen Telekom’s position in both growth areas. Here, T-Systems comes up against particularly nimble competitors, who benefit from streamlined decision-making processes.

“Independent companies act in a more agile way. As such, they can better address the fast-moving market, including medium-sized enterprise”, explains Al-Saleh. “They’re more self-reliant in the market and help open up new opportunities, facilitating for example partnerships, or even cooperation with competitors – so-called coopetition.”

As a result, two integrated, agile units will emerge with end-to-end responsibility, from expert sales, to solution design, through to production and delivery of services. “These agile units will help enable faster growth for T-Systems, beyond what we see today.”

The transformation continues

These planned changes will not impact T-Systems’ transformation. All planned activities will continue unchanged. “As soon as the supervisory board gives the green light, we’ll negotiate the necessary steps with our social partners – and it is not about additional personnel reductions”, emphasises Adel Al-Saleh. “The ongoing transformation resolves our weaknesses, boosting revenue, order entry, and profits. We’ll further develop all T-Systems’ business areas, and as such, remain an attractive employer.”

The communicated financial guidance of DT Group won’t be affected.