May 11 (Bloomberg) -- More than 10,000 Deutsche Telekom AG workers across Germany walked off their jobs at the fixed-line division today, the first full-blown strike in more than a decade at Europe's largest phone company.

The strike affects the company's call-center, cable installation and technical services and is centered in the western states of North Rhine-Westphalia, Hesse and Lower Saxony, Ver.di union spokesman Jan Jurczyk said by telephone today. The workers are among the 50,000 people Bonn-based Deutsche Telekom wants to move to a new service division that pays lower salaries.

Ver.di, Germany's largest union, announced the walkout plan yesterday after 96.5 percent of 22,000 members who voted backed a strike, the biggest since Deutsche Telekom was privatized in 1996. Chief Executive Officer Rene Obermann yesterday called on union leaders to resume negotiations.

The strike will hamper Obermann's efforts to revive earnings with through a 4.7 billion-euro ($6.3 billion) cost-reduction program. First-quarter profit fell 58 percent as German fixed- line customer losses accelerated, the company said yesterday.

Shares of Deutsche Telekom fell as much as 1.3 percent to 12.48 euros, and traded at 12.56 euros as of 11:33 a.m. in Frankfurt. Before today, they had lost 8.6 percent this year.

Deutsche Telekom wants to complete the job transfer plan, first announced in October, by July 1. After five rounds of talks with Ver.di failed to result in an agreement, Deutsche Telekom offered to cut workers' salaries by 9 percent instead of 12 percent, a proposal Ver.di also rejected.

Other conditions that were negotiated included increasing the weekly working time to at least 38 hours from 34 hours.

Obermann, 44, already cut Deutsche Telekom's earnings forecast in January, two months after he became CEO, blaming intensifying phone and Internet competition. Two million fixed- line phone customers in Germany disconnected their service or defected to rivals such as Vodafone Group Plc's Arcor unit in 2006. The line losses accelerated to 588,000 connections in the first quarter.

To contact the reporter on this story: Kenneth Wong in Berlin at kwong11@bloomberg.net.

Last Updated: May 11, 2007 05:36 EDT