DEUTSCHE TELEKOM, Europe’s biggest telecoms operator, denied yesterday that its plans to cut 33,000 jobs in Germany — 12 per cent of its workforce — had been triggered by its failure to snatch O2 from rival Telefónica.

Deutsche Telekom, which is to spend more than €3 billion (£1.7 billion) to cover the costs of the cuts, said stiff competition and new technologies had necessitated the move.

However, the announcement came only hours after the group said that it would not bid for the British company.

A spokesman for Deutsche Telekom said: “We have to develop our business into the future even if we cut jobs.”

Telefónica’s bid for O2 will put pressure on Deutsche Telekom in the British and German markets by creating a more formidable competitor.

T-Mobile, Deutsche Telekom’s mobile unit, is fourth in the British market behind Vodafone, Orange and O2, and its average customer spend is the lowest at about £19 a month compared with an average of about £23.

Like rival operators, it has been forced to open up its networks to competitors and the prices it can charge have been capped.

Analysts have also noted other worrying trends, pointing to declining revenues and earnings before interest, depreciation, tax and amortisation (ebitda) at its German mobile unit.

Whereas there is no market overlap between Telefónica and O2, Deutsche Telekom is present in O2’s key markets of Germany and the UK and European regulators would have scrutinised any tie-up.

It is understood that the group, which has €44 billion of net debt, was put off from bidding for O2 mainly because of these regulatory risks.

The former monopoly has been cutting back since it was privatised in 1995 — averaging about 10,000 job cuts each year — but its task has been made more difficult by tough German labour laws and its status as a former monopoly.

Many of the telecom group’s employees are considered civil servants and the company must enter into special negotiations with the Govenment about their future.

The job cuts, which will be made in Germany over the next three years, will initially be voluntary and will be offset by the creation of 8,000 new positions. A further 7,000 jobs will be outsourced.

However, Deutsche Telekom also said that thousands more cuts may be needed and would depend on the decisions made by the regulator going forward.

The group declined to say when it would book the charges or how much it aimed to save but said there would be no compulsory redundancies before 2008.

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