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Watch those core assets

Deutsche Telekom hasn't been that successful in 2002 in making asset disposals or cutting debt. The sale of its cable businesses, for example, has been delayed and the price it is negotiating is unlikely to reach the e2.5 billion it predicted halfway though the year.

But grappling with net debt of a mere e64 billion, DT treasurer Gerhard Mischkle has been at pains to point out that delays to non-core asset disposals will not hold up debt reduction plans.

He told an investor conference in December that not only was the company going to raise at least e2.2 billion from asset disposals but they could in fact amount to as much as e4.8 billion if everything went smoothly. "If the non-core asset disposals go ahead as planned, we won't need funds for the whole of 2004," he said. To prove the point, that day DT raised e732 million through a sale of a 10% stake in T-Online.

All of this sounded quite good - as did the net debt target of e50 billion by the end of 2003 - until Mischkle was followed to the podium by Merko Tigelaar.

Tigelaar is Dutch telecom KPN's corporate treasurer and the fact that his company had pretty much halved its debt from e22 billion to e13 billion in the space of a year was hardly going to make DT look great.