OTE Hellenic Telecommunications Organization S.A.

Deutsche Telekom AG (DT) is committed to its U.S. operations, Chief Executive Officer Rene Obermann said Monday, as he faced down criticism over the unit's performance from shareholders at the company's annual meeting.

While conceding that Deutsche Telekom isn't "fully satisfied" with its U.S. performance, Obermann said the company believes in that market. "After all, it is making us a great deal of money."

T-Mobile USA was for years Deutsche Telekom's growth engine, but in 2009 it began to lose steam. In March this year, Chief Financial Officer Timotheus Hoettges told Dow Jones Newswires in an interview that an initial public offering "could be an option, among others," but it isn't a necessity to push the business forward.

Hoettges said at the time that the company would focus on operational improvements.

But at Monday's shareholders meeting, Klaus Kaldemorgen of German investment company DWS, a unit of Deutsche Bank AG (DBK.XE), urged management to reduce the risk from its U.S. operations, which require huge investment in spectrum and network expansion, particularly as the German market also requires a lot of investment right now.

"A partnership with a well-financed company or a listing could be a solution," Kaldemorgen said, while Marc Tuengler, representing shareholders' association DSW, questioned whether T-Mobile USA is really a key business.

T-Mobile USA trails AT&T (T), Sprint Nextel Corp.(S) and Verizon Wireless--a joint venture of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD)--in an increasingly competitive market where growth is declining.

In the fourth quarter, the most recent figures available, T-Mobile USA posted service revenue of $4.6 billion, a 3.5% decline compared with the same period a year earlier, while adjusted Ebitda fell 13% to $1.38 billion.

Meanwhile, in relation to its operations in Greece, Obermann said "there has been no clear indication to date that the current situation is having an impact on the business development of OTE."

Deutsche Telekom has a 30% stake and management control of Hellenic Telecommunications Organization SA (OTE), and consolidates its operations in full. The Greek government has options to sell more shares to Deutsche Telekom.

Obermann didn't provide any detail on Deutsche Telekom's first quarter performance, but said he remains confident it can achieve its 2010 goals.

The company previously said it expects adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of around EUR20 billion and free cash flow of EUR6.2 billion in 2010. In 2009, the company posted adjusted Ebitda of EUR20.67 billion and a free cash flow of EUR6.97 billion.

Company Web site: www.telekom.de

-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218, archibald.preuschat@dowjones.com

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