Deutsche Telekom could delay bond issue

Deutsche Telekom (DT) is likely to cancel a new €8bn (£5bn) bond issue planned for this week, traders in Frankfurt warned...

Deutsche Telekom (DT) is likely to cancel a new €8bn (£5bn) bond issue planned for this week, traders in Frankfurt warned today.

After seeing its own bonds and those of rival WorldCom plummet in value over the past four weeks, the highly indebted German operator is believed to be seeking a more opportune time to go to the market.

A company spokesman declined to comment on the speculation.

DT is struggling to cope with a debt of around €67bn, after making costly wireless acquisitions in the United States and buying pricey spectrum for third-generation (3G) mobile Internet services in its domestic market.

Suppliers of hardware and software to the operator are already feeling the pinch: DT has taken steps to cut €1bn in capital expenditures alone this year.

So far corporate users have not complained about cutbacks in service and support, though most are concerned about the long-term financial health of the country's largest telecommunication service provider.

Rumours are rife that DT is considering the sale of Voicestream, formerly Voicestream Wireless, to curb its debt. DT chief executive Ron Sommer has reiterated in recent weeks that he has no intention of selling his US wireless assets.

Klaus Martini, director of bonds management at DWS Investment, said he doubts DT "will unload Voicestream" but urges the German company "to seek strategic partners" to achieve at least 20% market share, as consolidation sweeps the US wireless sector. The operator currently has around 10% of the US cellular market.

A retreat from the US wireless market would be a blow to DT corporate customers who can now use their phones on both sides of the Atlantic.

In recent months, the carrier has rolled out a seamless service allowing users with dual-mode handsets to roam on both continents with the same phone number and other features.

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