T-Mobile IPO 'not crucial to cut debt'

Sommer: Debt target will be met by 2003

LONDON, England (CNN) -- Deutsche Telekom will not be rushed into floating its mobile phone unit before market conditions improve, Chief Executive Ron Sommer said on Thursday.

Sommer also said the timing of T-Mobile's initial public offering would not affect the group's plans to reduce its 62.1 billion euro ($54.43 billion) debt load.

"We don't have to make an IPO for financial reasons. We would like to do it for strategic reasons," Sommer told CNN.

The T-Mobile flotation, which was already delayed once last year, had been expected to go ahead either in June or November.

Sommer reiterated that the timing of the flotation would depend on market sentiment in order to get a good value for T-Mobile.

"When the market recovers, and at one point it will recover, we will be ready and we will do it," he said in an interview in London. "We will not do a fire sale on the backs of our shareholders."

The flotation, which is expected to raise 10 billion ($8.69 billion), has been key to helping the German telecom giant meet its commitment to cut its debt to 50 billion euros by the end of 2003.

Deutsche Telekom's debt reduction plan also includes the sale of its cable television assets.

A 5.5 billion euro bid by Liberty Media of the U.S. was blocked in March by German regulators after Liberty rejected a demand that it upgrade the cable networks faster than originally planned.

Deutsche Telekom, along with other European telecom groups, built up debt in the past three years through global expansion and massive spending on licences to operate high-speed third-generation (3G) services.

But many have delayed the introduction of 3G services while they attempt to pay off their debt amid a global economic slowdown.

Sommer told CNN that Deutsche Telekom is still on target to meet its debt reduction target.

"We have cut it in half in four years. We promised it in six years and we have done it in four years," he said. "We promised we'll cut this debt down to 50 billion [euros] and we'll do it."

The group has sold 20 billion euros in non-strategic assets over the past two years, he said. "Count on me. At the end of 2003, at the latest -- even without the IPO of the mobile [unit] -- we'll be at 50 billion."