T-Mobile USA is an interesting business and something of the upstart in the North American marketplace. As the un-carrier, they’ve disrupted the established market for some time now; their innovative ideas and plans have won them subscribers and supporters across the industry, but now Deutsche Telekom Chief Executive Officer, Timotheus H¶ttges, has announced that “We have done what we had to do. We had built an infrastructure and this infrastructure had to get utilized and we did that with very aggressive promotions.” Timotheus’ expects that in order to compete with the bigger networks in the US, AT&T and Verizon, T-Mobile USA will have to pay between $4 to $5 billion a year. His comments are that the un-carrier business is unsustainable without a merger.
The challenge facing T-Mobile is how to invest into improving its wireless networks and to prevent AT&T and Verizon from buying up more and more spectrum and increasing their lead in this area. This is something the FCC, Federal Communications Commission, is passionate about: giving the smaller networks a fair crack at the spectrum auctions (by fair, we mean here, preventing the bigger networks from throwing cash at the spectrum auctions so that the smaller networks cannot afford to compete). T-Mobile is leaking cash at both the network development and at the un-carrier sides of the business. “The question is always the economics in the long term… and earning appropriate money. You have to earn your money back at one point in time.” And there you have it: Deutsche Telekom are a business after all and need to make their cut from T-Mobile USA.
What does this mean? If there was ever any doubt that Deutsche Telekom were looking for an exit from T-Mobile USA, that’s now eradicated. After the planned merger between T-Mobile USA and Sprint was scrubbed last year, T-Mobile did the whole, “we don’t need to merge, anyway” statement but it seems that daddy is pulling the reins on the kiddy. So whilst Timotheus very much enjoys John Legere’s aggressive, brave management style and desire to win, he added, “His management style will never be adaptable to Germany… I like people being disruptive… I like people who are brave. He is very much fitting to our DNA, how we want to be, even if he is very American in his approach.”
Looks like T-Mobile USA is back on the menu, then, for any business that fancies a slice of the North American cell ‘phone market. Let us know your thoughts and observations below!