February 1, 2018 / 10:23 AM / a year ago

UPDATE 1-Thyssenkrupp ends IT cooperation with T-Systems

* Blow to Deutsche Telekom IT services arm

* Thyssenkrupp under investor pressure to restructure

* T-Systems has new CEO, plans to split into two

* Deutsche Telekom had 1.2 bln euro T-Systems writedown in Q3 (Adds background)

DUESSELDORF, Germany, Feb 1 (Reuters) - German industrial group Thyssenkrupp said on Thursday it had ended its business relationship with T-Systems, in a setback to Deutsche Telekom’s IT services arm as it embarks on a restructuring.

“Thyssenkrupp and T-Systems have by mutual consent ended their cooperation on IT consolidation,” Thyssenkrupp said in a statement. A spokesman for T-Systems confirmed that the business relationship was over.

Earlier, business weekly WirtschaftsWoche cited a source at Thyssenkrupp as saying the company had scrapped the seven-year contract, worth 700 million euros ($870 million), because T-Systems “had promised solutions it could not deliver”.

A spokesman for Thyssenkrupp said these statements were untrue.

The cancellation of the IT deal comes as Thyssenkrupp faces pressure from activist shareholders to restructure its conglomerate structure after several years of weak share price performance.

Deutsche Telekom has meanwhile appointed a new CEO for T-Systems, Adel Al-Saleh, to halt a slide in profits at the business. It plans to break up the company into two in order to bring it closer to its customers.

Deutsche Telekom could not immediately be reached for comment.

Deutsche Telekom booked a 1.2-billion-euro ($1.5-billion)charge against goodwill at T-Systems in the third quarter, reflecting the adverse business environment as clients increasingly shift to cloud service providers. ($1 = 0.8039 euros) ($1 = 0.8036 euros) (Reporting by Tom Kaeckenhoff and Nadine Schimroszik; Writing by Douglas Busvine; Editing by Maria Sheahan)

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