Deutsche Telekom to End McLaren Deal after Major Loss

German press reported last week that Deutsche Telekom will be ending its sponsorship deal with the McLaren team, after the company is set to record the largest-ever loss by a company on the German stock exchange.

Deutsche Telekom to End McLaren Deal after Major Loss

German press reported last week that Deutsche Telekom will be ending its sponsorship deal with the McLaren team, after the company is set to record the largest-ever loss by a company on the German stock exchange.

The German company had sponsored the Woking-based outfit through their digital T-D1 mobile communications network since they signed a deal at the start of 2000.

Deutsche Telekom's decision means that two major German companies have withdrawn from Formula One recently following today's announcement from Deutsche Post that they will discontinue their partnership with the Jordan team.

Deutsche Telekom AG is set to post a five-billion-euro nine-month net loss and a 28-billion-euro ($28.4 billion) loss for the full year as it writes down its costly investments.

Handelsblatt newspaper quoted company sources as saying full-year operating losses would be about eight billion euros while one-off writedowns on the group's UMTS next generation cellphone network licence spending and other investments would amount to 20 billion euros.

Telekom posted a net loss of 3.9 billion euros for the first six months of this year. According to a Multex analyst poll available on Reuters 3000 Xtra, the consensus of analysts' estimates for the full-year net losses is 5.78 billion euros.

Telekom's six-month adjusted earnings before interest, tax, depreciation and amortisation were 7.8 billion euros and the Multex consensus forecast is for a full-year core profit of 16.1 billion. Deutsche Telekom declined to comment on the Handelsblatt report. The German telecoms giant is due to release results on Thursday.

It will also outline details of a strategic review and is set to name its mobile unit head Kai-Uwe Ricke as new chief executive, sources close to the supervisory board told Reuters last week.

Ricke's appointment would make a sale or merger of the group's loss-making U.S. wireless business T-Mobile USA less likely, thus requiring Telekom to find other ways of cutting its 64 billion euros debt burden.

Handelsblatt said that as part of its cost cuts the company planned to shrink investment in its networks and cancel the dividend.

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