T-Online's boardroom battles

There's management disagreement at T-Online, the German Internet service provider that is 83 per cent owned by Deutsche Telekom. It seems that the focus of the row is over management interference by DT CEO Ron Sommer about the desire by T-Online to expand in Europe.

Two T-Online board members have resigned in the last month, "for personal reasons" according to DT. First to go was chairman Wolfgang Keuntje last month, but he made it clear that he had disagreements with Deutsche Telekom CEO Ron Sommer. This week marketing chief Ralf Eck also resigned.

A report in Die Welt yesterday suggested that the entire T-Online management board might resign if because of Sommer's interference in its operations.

Yesterday the FT, quoting source close to Sommer, said that the remaining T-Online management board would be replaced before the end of the year, although alternative jobs would be offered to them within the group. DT did act swiftly to replace Eck with Burkhard Grassmann, who previously looked after DT's advertising.

It is believed that Sommer did not like the $6.5 billion plan by T-Online to acquire FreeServe in May, although DT's senior VP Thomas Winkler did confirm in June that T-Online was looking for acquisitions. By mid-June, Keuntje had also decided against the FreeServe acquisition, questioning the price - then said to be $9 billion - and suggesting it would be "cheaper to set up a business from ground zero". Keuntje also said that T-Online was in talks with One2One, with a view to offering UK Internet access.

Nearly half of German online users use the Internet via T-Online, which has 8.3 million registered customers, with 6.4 million of them accessing the Internet through T-Online subsidiaries. T-Online claimed only last week to be Europe's leading ISP - although some 90 per cent of its subscribers are in Germany.

T-Online shares took a dive yesterday to the lowest ever- 25.46 euros - some way off their 47 euro high in April after the floatation. A Deutsche Bank financial analyst noted that investors would see little reason to hold T-Online shares if DT was in effect running the show.

Last month T-Online bought the Spanish portal ya.com for 550 million euros, and the French Club Internet ISP for a 6.5 per cent stake in T-Online International AG. With English dominating the Internet world, T-Online probably needs an acquisition in the UK, since the chance of a German ISP start-up being successful in the over-crowded UK market must be minimal. Furthermore, with relations between France Telecom and DT being tense, T-Online cannot be pleased at FT's ISP Wanadoo being on the acquisition trail in Europe.

A survey reported yesterday by ZDF, the German broadcaster, says that only 21 per cent of Germans over the age of 14 have used the Internet. However, the most enthusiastic users are the 2.1 million Turkish immigrants. ®