Deutsche Telekom weighs options for future of T-Mobile USA
Faced with an increasingly tough go with its US arm, Deustche Telekom met with investors on Thursday to reaffirm its commitment to the division. According to executives, the German telecommunications giant is considering a sale of some of its non-core assets in order to raise cash.
Deutsche Telekom CEO Rene Olbermann and T-Mobile USA Philipp Humm both were in attendance, reportedly aimed at soothing the concerns surrounding the future of the unit. While an outright sale of the division appears very unlikely, the company appears ready to do what is needed to turn things around.
One option is to sell some of its towers to a third party -- it noted that out of all US carriers it owns the most towers. The company could then lease the equipment back, thus reducing costs associated with maintenance and the like.
Customer growth has slowed dramatically to about 10 percent per year, as opposed to a 40 percent annual growth from 2002 through 2008. In addition, churn has become an issue, and the iPhone apparently accounted for as much as 10 percent of defecting customers, the company said.
"It's time to rethink the way we do business," Humm said candidly.
T-Mobile would first focus on churn this year, aiming to push it below 2 percent this year and down to 1.8 percent by 2012. Part of the strategy includes "going big" with Android to compete with the iPhone -- although nothing was said that would give any reason to think Deutsche Telekom was not trying to bring the device to its US arm.
LTE is on T-Mobile's radar, but the carrier appears to be taking a wait-and-see approach. Its launch strategy would be dependent on readily available and reliable LTE devices, although it likely would not be for several years. Until then, it plans to lean heavily on its HSPA+ network, which it already has dubbed "4G."
Humm said that its network has the capability to rival currently available LTE speeds, reaching speeds of 42 megabits per second by the end of the year. That said, T-Mobile USA would continue to pursue partnerships with other companies to acquire the necessary spectrum for future upgrades.
T-Mobile declined to name any potential partners, although in the past WiMAX provider Clearwire has been rumored to be in discussions with the carrier. Any LTE network build-out would cost the company between $1 and 2 billion USD, capital the division right now does not have.