Deutsche Telekom AG has appointed the former head of its profitable T-Mobile phone business as the company's chief executive officer.

René Obermann joined the German network operator in 1998, working his way up the ladder to become a board member and head of the group's mobile phone division, the company said today.

Obermann succeeds Kai-Uwe Ricke, who resigned yesterday after a meeting with the supervisory board.

Ricke was appointed CEO on 15 November 2002, succeeding Ron Sommer, who lost his job after plunging Europe's largest telecommunications service provider into debt and allowing its stock to free-fall.

At the helm of Deutsche Telekom, Ricke successfully reduced the group's debt from more than €65bn (about £44bn) to less than €40bn (£27bn) at the end of September. But he was unable to stop declining revenue in its traditional landline business, as competitors with lower fixed costs nibbled away at its customer base for voice services.

One of Obermann's immediate challenges will be to dam the flow of customers to rivals.