Adapting to rapid advancement in telecommunications technology: A conversation with José Perdomo Lorenzo, chief strategy officer of Deutsche Telekom Group
José Perdomo Lorenzo, chief strategy officer of Deutsche Telekom Group, sits down with Heidrick & Struggles’ Lukasz Kiniewicz to discuss Lorenzo’s primary strategic goals for Deutsche Telekom Group over the next five years, particularly in the context of fiber optic network expansion. Lorenzo also shares how he thinks about balancing AI with data privacy concerns, the role ESG concerns are playing in Deutsche Telekom’s overall strategic plan, what he feels leaders in the field need to be aware of right now, and more.
Below is a full transcript of the episode, which has been lightly edited for clarity.
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Lukasz Kiniewicz: Hi, I'm Lukasz Kiniewicz, partner in charge of Heidrick and Struggles’ Warsaw office and a member of the Global Technology and Services Practice. In today's podcast, I'm excited to speak to José Perdomo Lorenzo, chief strategy officer of Deutsche Telekom Group. José has been the CSO since the start of the year and previously held the position of CEO at T-Mobile Czech Republic and Slovakia Telekom. Before that, José was a CEO at Tigo Paraguay Millicom, and global director for Telefónica Digital.
José, welcome and thank you for taking the time to speak with us today.
José Perdomo Lorenzo: Nice to talk to you.
Lukasz Kiniewicz: What are the primary strategic goals for Deutsche Telekom Group over the next five years and how do you plan to achieve them, particularly in the context of fiber optic network expansion?
José Perdomo Lorenzo: I think there are challenges that are common to the industry and challenges that are specific to us. You mentioned fiber, right? Fiber, it's an absolute must, and that's definitely one of our priorities almost everywhere in our European footprint, in Germany, and we're starting to enter the fiber market in the US. It's about coverage and monetization, and the monetization part is connecting customers and achieving the right revenue per user of fiber, which is part of the business case and it's a very important part. So definitely fiber, coverage, and penetration is a big one. Why do I say that? For us, it’s a bit specific because we have decided to use our copper networks a bit longer because we have much better copper than others. So we are, I don't want to call it late to fiber, but we are in the second wave of fiber, which allows us to optimize a bit more, compete better, get it done better. So for us, it's a big priority. Overall, I think the industry has the challenge of growth. I'm very happy to see our company growing more than everyone, almost more than every peer on the core business, for sure. So growth acceleration is a theme for us, whether it's on B2B services or on B2C services. We have a lot of customers, 300 million customers worldwide. We are in the Western World, North America, and Europe. We have high-quality assets, high-quality relationships with our customers. We are the most valuable brand in telco and the most valuable brand in Germany as well now. So T, for Telekom, it's really a very strong brand that we can monetize. And there is, you know, the transformation topic that everybody's going through, whether it’s data and AI, whether it's scale and platform, whether it's ESG (environmental, social, and governance) challenges. So we have multiple challenges in our priorities to work together as a global company, more and more a global company. So those are I will say the priorities. If I can finish with one sentence, I think we can accelerate from a position of strength and that's the internal language that we—I mean compared to peers, we're very happy where we are in our performance.
Lukasz Kiniewicz: Reflecting on your previous roles, what key leadership lessons have you brought to your position as CSO at Deutsche Telekom?
José Perdomo Lorenzo: Yeah, that's a very good question as well, particularly that I’m talking to you guys, right? So, well there was a conscious decision of this company—and it is a conscious decision of this company to go global, to go diverse. I'm not German, I'm not Czech, I'm not Slovak, I am Spanish, right? Diversity is a reality in our company. It adds a lot of value, I have to say. So everywhere, you know, different angles of diversity. But there is one special aspect that I'm bringing to the table, which is I've been 20 years managing telco P&Ls, right, in Telefónica or in Millicom or in Deutsche Telekom. So now, I was offered the opportunity to come to the headquarters to run strategy. Beforehand, before my telco life, I was in McKinsey & Company for six years, so I have the background, I have the experience in the field, and now I'm at the headquarters trying to create a strategy that is really executable; that understands what needs to be done in the shops, in the call centers, in the networks, in the IT systems; how difficult it is to do new things when you have to transform all things; how you need to balance priorities. Being somebody who was there for so long, what I bring to the new role, it’s a market reality check and this has been done by design. I was chosen by design as someone who was in the field for a while, who—I think—delivered very good output, very good results, and who brings experience of multiple operators in multiple countries that have seen the industry. I call it: I've seen the movie three or four times, so that’s what I bring to the table. I've seen the movie and I know how it finishes.
Lukasz Kiniewicz: And looking into the future, how do you think Deutsche Telekom is adapting to rapid advancement in telecommunications technology such as 5G or in 6G, you know, deployment of Open RAN, and what initiatives are you prioritizing in these areas and which leadership skills do you think are necessary to adapt here?
José Perdomo Lorenzo: Yeah, that's now, that's definitely part of my agenda in the new role to think about what we call horizon three and technology disruption transformation. There are all kinds of things happening. I think we have to, I will differentiate topics that are a bit more—I don't want to call it already done but they are fully deployed, like 5G—and, 5G is very deployed. It's, you know, we have the networks on the ground, 90-something percent coverage almost everywhere, leading in the US, in Germany, and most of the European countries. Now the challenge for us is monetization and use cases, where we see the biggest opportunity in what we call campus networks for enterprises. So, 5G monetization is still a topic to accelerate for us. Then, you have topics that are happening today very, very fast, and—let's just call it that, it's unstoppable—AI is the name of the game. In my new role, and in the first months before the new role, let's call it I was announced in July last year, so I'm almost a year in the, informally or formally, in the role, and I would say half of my time has been on AI. That gives you an example. Now AI, it's a big word. Why now is it such a transformation? I mean this is a big disruption, generative, Gen AI, is really a big game-changer. It’s transforming our opportunities in the market to do consumer AI services or to do B2B AI services. It’s transforming internally, the way we operate everything: call centers, shops, networks, IT, legal, HR. I mean we have, I think, 115 projects on internal transformation. So IT development, it’s a lot more efficient using Gen AI, right? Which is… it's interesting that IT has been disrupted by its own creation, right? So internal AI, and then, what we call AI foundations, you know, compute. This is still a question for us as a telco, how do we play if we play on AI compute? And then we have topics that are more in the future—you mentioned 6G, Open RAN—to be honest, some of them we’re still navigating, still navigating the clarity words, the world of, you know, we need to clarify. Yes, network disaggregation is happening—look, we can call it Open RAN. To what extent Open RAN will be massified everywhere and will really disrupt the industry, it’s still to be seen. 6G, to be honest, we don't want to talk about 6G because it's way too soon. We just, we've just deployed 5G. And there are other trends, other topics, but definitely the one that keeps us busy today is AI.
Lukasz Kiniewicz: Yeah, it is a very hot topic. And actually, I was wondering how do you balance AI with, you know, data privacy concerns, particularly in light of evolving data protection regulations, and what do leaders in the field need to be aware of right now?
José Perdomo Lorenzo: Yes, that's a very, very hot topic. When we do AI and we comply with the maximum regulations that are being defined and the regulatory framework, it's still moving, but obviously, we comply with, you know, the maximum. Now, we are here facing this never-ending dilemma between approaches in the world, right? In the US world, you innovate, then you regulate. In Europe, we regulate, then we innovate. It's not a complaint, it's just an attitude to innovation, right? I think they're both, they have different approaches, right, to be honest. We see in Asia, a massive amount of acceleration of AI, sometimes even disrupting faster than some of our North American, you know, colleagues. So AI is everywhere, AI is, and data privacy and data regulation, it's at the core of the design of any AI. It is at the core, so you just cannot disregard it. And at least if there is value and transparency to the consumer, let the consumer decide. That's the most important principle. Transparency and value back to them. I mean this is a principle but it's not a regulation, right? But no, I mean it's in the table, data regulation, data sovereignty is a topic. Do we train the models only in Germany or in Greece, or in Poland where we operate, or are we talking about models that are being trained and data move all over the world? Where does the data come from? This is just at the core of the design of our AI topics.
Lukasz Kiniewicz: And how do you handle decision-making in this rapidly changing industry, and what strategies do you employ to stay ahead of the curve?
José Perdomo Lorenzo: So, we have already created our AI Competence Centre, it’s at the HQ level, in the area of technology. We're spending quite a few millions of euros already creating capabilities, but also assessing the different areas of the company on the usage of AI from all angles—from technology, from architecture, but also from a regulation point of view, as I mentioned before. So this AI Competence Centre is a big part of the answer to your question. We have some regular internal meetings and committees. We call them AI drum beat sessions in which we review; we empower, but then we ask people to bring back transparently what is happening, what they are doing, right? So it's a bunch of empower, innovate, come back and report, transparent, help, use the AI to see. So AI, it’s just everywhere. If it's happening everywhere in every corner of the company, we’d be wrong to stop it, to stop innovation on, I don't know, retail network in Slovakia, right, from using AI to improve the way we train newcomers, this is one example, right? At the same time, we try to bring it all together. So AI governance is not a small thing, I can tell you that, but so far so good. I cannot compare ourselves with others, but I can see that we are quite advanced.
Lukasz Kiniewicz: This is an absolutely fascinating topic. Also, another big topic for telecommunication operators is ESG, obviously. So I wanted to ask you what role does ESG play in Deutsche Telekom’s overall strategic plan, especially in the development and maintenance of the fiber optic networks, radio networks, and what measures are you taking to ensure operations are environmentally responsible?
José Perdomo Lorenzo: I think we have been very bullish in Deutsche Telekom about ESG commitments. Probably where, last time we check—last time I checked—we were one of the most ambitious ones. We take it for real. 20% of my bonus is ESG and that's not irrelevant. Focus on energy reduction, CO2 reduction. And it's not only my bonus, it's the whole company, right? There's no, it's joint target, so when you put skin in the game, then it's real. I will say many of the natural transformations in the company are ESG accelerators. Let me give you two examples. Fiber versus copper. Copper is a technology that is always using energy, it's always on and it’s electric. Optics fiber is light, it’s way more efficient, fiber optics versus copper. So as we deploy fiber and we accelerate, we will start to remove copper, and this totally dramatically changed the way we consume energy. Another example is the fleet, right? We have already decided in Germany to move our fleet to a 100% electric only, for what we call, benefit fleet, benefit cars, right? So I just moved to Germany, I can only order an electric car; full electric, no other option. So that's on energy, but I mean there are more examples. I mean maybe one I can, I want to share with you guys is when we transform, when we deploy 5G, we upgrade 2G, 3G, 4G, 5G. By the way, 3G is off almost everywhere. And we upgrade the whole stack of technologies. So the energy efficiency is massive versus still keeping 2G radio on, versus the new stack. So that modernization allows us to produce a lot more megabytes and bits with an energy that is not exploding, and megabyte, megawatts per megabit efficiency increases massively, right? So that's another core transition. And, you know, it's almost everywhere in the company, optimization of radios, maybe switching off radio when it's not being used. I mean there is a lot of topics around the company. So that's the way we're addressing ESG, on the energy part. Social, governance; you know, we have a social agenda, we have a governance agenda we are very, very active on. And if you look at our TV spots on many topics on social, against hate speech, respect for diversity. Diversities is a deliberate strategy in the company and it's happening, nationalities, gender, all kinds of angles of diversity. We have a very strong social inclusion agenda with our products and services to help bridge the digital divide. Governance, you know, you can imagine on anything, on compliance, GDPR, everything is super reviewed in this in the company. So, yeah, I know it's a big one, it's a big one and it's a big driver, and it really helps to make our employees proud of the company. I can also say that.
Lukasz Kiniewicz: Yeah, and it's also all related to, you know, innovation and being innovative all the time. And I wanted to ask you how do you foster a culture of innovation and agility within Deutsche Telekom, you know, to keep the pace with the fast-evolving tech landscape and increasing expectations in many areas of ESG.
José Perdomo Lorenzo: Again, there is, on ESG: it's everywhere, so everybody's responsible for it. I gave you a few examples of how we are committing. There are people scratching their brains every day about, you know, energy optimization, testing solar panels in our base stations and cell production in certain small cases, going straight to the green production of our energy sourcing. CO2 reductions here and there—it’s just everywhere, you know, in the company. But if you ask me about innovation overall, I mean this is a topic that I will say to you: We are good, but we could be a lot better. That's my opinion, right? But I think this is true for most of telcos, right? As telcos, we are big, big transatlantic boats. And we do have a global innovation unit. By the way, it's run by someone from Australia. That tells you, you know, that tells you that the diversity of new products and services. One that I'm very proud of, and we have launched it in both sides of the Atlantic, is our, we call it, engagement platform, Magenta Moments—or in the US is called T-Life—in which our customers just for being our customers, through the app, they access a world of benefits, value, deals, rewards, they can buy things earlier. So this is just for being with us. So that the power of the scale, the power of the customer base that we have, allows us to get them value. But this is not the end of it, you know, more to come on additional products and services delivered to them very efficiently, very digital, and with full power to them, right? So I'm very excited about this strategy we call Magenta Advantage. Just because you are with us, you will be better off, you will have more. So I'm very happy about that, that track record. Yeah, a lot more to come.
Lukasz Kiniewicz: That sounds absolutely great. And what about you, José, how do you stay motivated and inspire your team during those significant times of change?
José Perdomo Lorenzo: That's a good question. That's personal and very good. Listen, I, and people that know me, they always say how are you, I always say great. It doesn't matter how I am, because happiness is a choice. I'm an optimistic by nature. So that's the personal side. Motivation is a bit deeper, right? I always say that my biggest motivation is impact: impact on people, impact on society, impact on customers. I'm not personally motivated by a bid-down cash flow. I am personally motivated by impact. Yesterday, I was giving a speech to the HR community and that was the best part of my day, the motivation to share with them. And again it was not a speech, it was sharing the strategy, sharing the critical topics to the HR community, which is typically a bit, you know, not in the forefront of the core transformation topics. I think it's a mistake, but for them, it’s a bit farther away, so I was bringing them closer to the key topics. So it was very, very engaging from my point, at least for me, right? So how I stay motivated? You know, try to get energy balance every day from people and from impact from customers, and try to minimize the sometimes difficult corporate life. I will not lie if I said, if I will say to you that is easy, right? It's just part of the job.
Lukasz Kiniewicz: Looking ahead and keeping in mind what we just spoke about, what are the most important qualities for telco industry leaders for the next few years, in your opinion?
José Perdomo Lorenzo: One of the big ones for me when I hire people—I mean when I've been hiring people and when I'm still hiring certain people—is what I look for is attitude to change, right? So, I'm a bit less into expertise, more into your attitude to change, attitude to lead, attitude to transform, your ability to simplify complexity. You know, this industry, yes, we might grow 2, 3, 4%, but underneath there is so many moving parts, you cannot imagine. So many things go down, so many things go up, every technology changes, you lose and you gain, you know, it's just everywhere. You lose fixed voice revenues and SMS revenues, and you generate data revenues and broadband revenues. TV services is another game. In the B2B space, there’s a lot of moving parts. So the people need to have ability to be able to handle complexity, simplify structure, and prioritize very well. And, as you prioritize, you drive change with the people. That's what I'm looking for: positive thinkers, ability to handle complexity. You need to have the skills, you need to have the know-how, but I'm more into the attitude to address complex changes.
Lukasz Kiniewicz: Great. José, thank you for making the time to speak with us today. It was a pleasure.
José Perdomo Lorenzo: Thank you, Lukasz.
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About the interviewer
Lukasz Kiniewicz (lkiniewicz@heidrick.com) is the partner in charge of Heidrick & Struggles’ Warsaw office and co-leader of the Digital Infrastructure Sector in Europe.