Deutsche Telekom has confirmed it will cut 22,000 jobs in a drive to regain profitability.

The capital market is scarcely differentiating any more between winners and losers

Ron Sommer Deutsche Telekom

The group will eliminate 30,000 jobs from its workforce of 245,000 and create 8,000 new positions by the end of 2004.

Chief executive Ron Sommer confirmed the news at the group's stormy annual general meeting in Cologne.

Shareholders have suffered a dramatic slump in their investments, with the stock hitting a new low last week and falling below its issue price in 1996.

Money-saving measure

Mr Sommer told angry attendees that the collapse of the share price was no longer logical.

"The capital market is scarcely differentiating any more between winners and losers," he said.

"The events we have observed in the last few weeks are no longer comprehensible and can only be explained with psychological mechanisms."

Mr Sommer has previously blamed a cocktail of factors, ranging from negative press coverage to the overall tech sector downturn, for his firm's plight.

The firm is now wielding the job axe in the hope of saving more than 10bn euros ($9.2bn; �6.35bn).

Sell-off

Earlier this month, the company unveiled a 1.8bn euro first quarter loss, far greater than analysts had expected.

And it has had its outlook assessment cut from "stable" to "negative" by credit rating agency Moody's Investors Service.

The group now expects to rack up a loss of 5.5bn euros this year, and says it expects to remain in the red in 2002 unless the sale of a subsidiary boosts takings.

Deutsche Telekom, which is two-fifths owned by the German government, lost 3.5bn euros last year, after buying Voicestream and investing heavily in mobile phones and online services.

In 2000, the firm made a profit of 5.9bn euros.

Deutsche has debts of some 67.2bn euros, the heaviest load of any major European phone company, and is seeking to sell off non-core divisions to pay down that debt.

But a listing of the wireless unit T-Mobile remains on hold due to adverse market conditions.