CEO of Deutsche Telekom Resigns

Deutsche Telekom chief executive Ron Sommer resigned from his post today, bowing to mounting pressure from the German government and the supervisory board, which blame his boom-time tactics for the company's soaring debt and stock price decline.

In his place, the supervisory board appointed Dr. Helmut Sihler as the interim CEO, "for a period of no longer than six months," as the company searches for a permanent CEO. The decision is unexpected, as the board has nominated company veteran Gerd Tenzer as a potential successor last week.

By Monday, however, the markets voiced firm dissatisfaction with Tenzer's potential appointment, after hoping for more drastic turnaround measures. Sihler is also the former chairman of the supervisory committee, which sought to remove Sommer.

Tenzer will instead serve as the deputy chairman of the board management, according to a company statement.

Deutsche Telekom American Depositary Receipts gained steadily through the morning in anticipation of his removal, up 35 cents, or 3.21% to $11.26. Shares surged higher on a day when most U.S.-based wireless carriers were lifted by early good news from Nextel.

Sommer's decision to resign rather than face the ax ends an illustrious seven-year career, during which he reinvented the former state phone monopoly into a global telecommunications giant. Last year the company snapped up VoiceStream for an estimated $31 billion, drawing the ire of shareholders when the telecom sector was obliterated this spring.

Last week, VoiceStream was named in reports as a potential merger candidate with AT&T Wireless (AWE Quote - Cramer on AWE - Stock Picks) in a deal valued at $10 billion. Some Wall Street analysts say Sommer's resignation may help speed the process as the company, which is 43%-owned by the German government, seeks to pare down debt.

Deutsche Telekom lost $3.5 billion last year, and $1.81 billion in the first quarter. But what's got investors really steamed is the $66.7 billion debt load it currently carries, the aftermath of Sommer's furious acquisition binge.