Daimler to sell Debis stake

January 11, 2002 Posted: 1240 GMT

LONDON (CNN) -- DaimlerChrysler plans to sell its Debis Systemhaus stake to Deutsche Telekom for 4.6 billion euros ($4.1 billion) in the next six months.

Debt-laden Deutsche Telekom, Europe's biggest phone company by sales, bought 50.1 percent of Debis, which offers IT services from software to communications networks, in March 2000.

DaimlerChrysler Chief Financial Officer Manfred Gentz in a presentation to analysts at the Detroit auto show earlier this week said the group would exercise an option to sell the business in the first half of this year.

DaimlerChrysler, the world's third-biggest automaker by sales, needs cash to turn around its loss-making U.S. unit Chrysler. Daimler's industrial business had net debts of 4.5 billion at the end of September, Reuters said.

But the German automakers plans to force Telekom to buy the rest of Debis raises questions about the European telecom company's ability to reduce its 66 billion debt mountain.

Telekom (FDTE) has said it plans to reduce its debts to 50 billion by the end of the year. On Thursday, the German telephone giant joined seven other bidders for a majority stake in Czech carrier Cesky Telecom, which is expected to sell for more than $1.5 billion.

Its stock has halved in value over the last 12 months amid concerns about its spending spree -- $15 billion on mobile phone licences across Europe and acquisition of loss-making U.S. wireless operator VoiceStream for $24 billion.

Telekom's stock fell 2.2 percent to 18.28 in midday Frankfurt trading on Friday.

Meanwhile, DaimlerChrysler (FDCX) was little changed after losing more than 3 percent on Thursday as company executives sowed confusion about the group's 2002 profit goals.

Chief Financial Officer Manfred Gentz said market conditions would make meeting its 2002 targets a "tough job" but added he could give no real forecast because internal planning had not been completed.

"We are very confident that 2002 will be a much stronger year than 2001," said Gentz. "It's too early because we didn't completely finish planning for 2002 to confirm or not confirm our goals."

DaimlerChrysler said on January 4 it was on track for adjusted operating profit in 2001 of about 1.2 billion, the bottom end of its earnings target range. But it did not update its guidance for 2002, which sees Chrysler breaking even and the group as a whole posting adjusted operating profit of 5.5-6.5 billion.