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MarketScreener Homepage  >  Equities  >  Xetra  >  Deutsche Telekom AG    DTE   DE0005557508

DEUTSCHE TELEKOM AG

(DTE)
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IBM, T-Systems scrap mainframe venture after German criticism

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06/07/2019 | 07:32am EDT
A man stands near an IBM logo at the Mobile World Congress in Barcelona

FRANKFURT (Reuters) - IBM has withdrawn an application for anti-trust approval for a mainframe computing venture with T-Systems, the IT services arm of Deutsche Telekom, after the German cartel office made a critical initial assessment of the plan.

Pulling the deal marks a setback for T-Systems CEO Adel Al-Saleh, who since being hired at he start of 2018 has reduced staff, closed offices and sought to hive off business lines that are not expected to generate profitable growth.

"According to our preliminary assessment IBM holds a dominant position here in the European Economic Area which would have been further strengthened by acquiring personnel and essential infrastructure from its competitor, T-Systems," said Cartel Office chief Andreas Mundt in a statement on Friday.

The firms said in January they would team up to provide computing services at on-site servers, a traditional strength of IBM that has been challenged in recent years by the explosion of 'cloud' computing hosted at remote datacenters.

The companies did not disclose terms, but reports at the time said IBM would pay 860 million euros ($962 million) to T-Systems as part of the deal to take on the business that employs 400 staff.

Al-Saleh of T-Systems said IBM's withdrawal of its filing to the cartel office was by mutual agreement and he would explore further options.

"The mainframe services partnership with IBM would have been beneficial for all parties," he said in a statement. "Given the Federal Cartel Office position, we have decided to pursue other alternatives to drive value to our clients."

Al-Saleh added that mainframes would continue to be an important part of the T-Systems portfolio. "We are exploring other alternatives how we get latest technology and solutions to our clients."

No comment was immediately available from IBM.

(Reporting by Douglas Busvine, Editing by Mark Potter)

Stocks mentioned in the article
ChangeLast1st jan.
DEUTSCHE TELEKOM AG -0.45% 15.39 Delayed Quote.3.85%
INTERNATIONAL BUSINESS MACHINES CORPORATION -0.45% 135.15 Delayed Quote.18.90%
VALUE8 1.82% 5.6 Delayed Quote.18.14%
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Financials (€)
Sales 2019 79 145 M
EBIT 2019 10 948 M
Net income 2019 4 517 M
Debt 2019 56 947 M
Yield 2019 4,89%
P/E ratio 2019 16,83
P/E ratio 2020 14,56
EV / Sales 2019 1,65x
EV / Sales 2020 1,58x
Capitalization 73 269 M
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Number of Analysts 23
Average target price 16,8 €
Spread / Average Target 9,1%
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NameTitle
Timotheus Höttges Chairman-Management Board & CEO
Ulrich Lehner Chairman-Supervisory Board
Christian P. Illek Chief Financial Officer
Claudia Nemat Head-Technology & Innovation
Michael Sommer Member-Supervisory Board
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