D. Telekom hits record low

More trouble for CEO Sommer as company posts sixth loss in a row

LONDON, England (CNN) -- Deutsche Telekom saw its stock fall to an all-time low after a credit rating agency cut Europe's biggest phone company's debt rating.

Its stock fell more than 4 percent to 11.91 euros in midday Frankfurt trading on Thursday, with Moody's decision to cut the rating wiping 8.8 billion euros of its market value of 52 billion euros.

Ron Sommer, Chief Executive of Deutsche Telekom, has come under intense pressure to reduce the company's debt pile built up over a two-year acquisition spree.

His position was further undermined by the company's revelation on Wednesday that its cash cow fixed-line business was no longer producing a strong stream of profit that was required to pay dividend and interest payments on debt.

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Moody's affirmed Deutsche Telekom's Baa1 rating but changed the debt outlook to negative from stable, saying it was concerned that a trend toward declining fixed-line traffic growth rates might be proceeding at a faster pace than expected.

"This places even more emphasis on the need for rebalancing and restructuring, to enable Deutsche Telekom to continue to enjoy very strong cashflow generation from its fixed line operations at a time when the company is already undergoing considerable change, and continues to face the challenge of successfully enacting its current debt deleveraging strategy,'' Moody's said in a statement.

Moody's changed its outlook on Deutsche Telekom hours before the company was about to price a 5 billion euro bond sale.

Its decision to downgrade the company's debt rating to Baa1 from A3 on March 28 --amid concerns Deutsche Telekom may not be able to meet its debt reduction target of 50 billion euros from 67.3 billion euros at present -- added 100 to 120 million euros to its annual interest bill.

The new bonds are expected to offer similar compensation for further downgrades.