Deutsche Telekom AG is considering the launch of an Internet telephony service that could siphon some of the milk from its cash cow — its circuit-switched telephone business.

“We are taking on the challenge of Voice over Internet Protocol (VOIP),” said Chief Executive Officer (CEO) Kai-Uwe Ricke, at a news conference here in Bonn, Germany, on Wednesday.

The remark comes as numerous telephone companies, including MCI (formerly WorldCom Inc.) and AT&T Corp. in the U.S., have announced plans to introduce VOIP services.

Acknowledging that the move to VOIP will have an impact on Deutsche Telekom’s traditional phone business, Ricke said the service opens up new opportunities at the same time.

“We see Internet telephony as something that isn’t going to replace our telephone network but rather as a value-added service to complement our broadband offering,” he said. “And if it is something we can add to a service, it’s also something we can charge for.”

The German operator is currently reviewing its VOIP strategy, according to Ricke. He declined to say when the first offerings would be available.