Deutsche Telekom to set up new service units

Despite a massive walkout by staffers opposed to the move, Deutsche Telekom will move forward with a plan to set up three new service units as it moves to pare costs, an Associated Press report said.

The Associated Press report said Deutsche Telekom hoped to have the new units, part of its T-Services initiative, in place and running by July 1.

The Associated Press report also quoted CFO Karl-Gerhard Eick as saying that the move would continue even as the company has endured the walkout of as many as 20,000 workers since this month, its biggest strike since it went public in the 1990s.

The union, ver.di, authorized the strike after weeks of talks about transferring thousands of jobs to the new units at lower pay with a guarantee against layoffs, collapsed, the report said.

The company still hopes to find some common ground with ver.di, it added.

Ver.di, Germany's biggest services union, did not immediately comment.

Deutsche Telekom will transfer as many as 50,000 staffers from its fixed-line unit into three new service units, including call centers, technical service and infrastructure, the report said.

According to German labor laws, a company must have the approval of the staff and its unions when it moves to make changes in valid labor contracts, the report added.

Deutsche Telekom had proposed trimming salaries by 12% over two-and-a-half years with a pledge to avoid layoffs through 2010 at the earliest, the report further said.

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