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Silence over plan for T-Mobile
Source: Agencies |
December 21, 2011, Wednesday
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DEUTSCHE Telekom offered no detailed plan of how it will bounce back from the collapse of a deal with AT&T, only assuring investors yesterday that it was working on a long-term plan for its subscale United States wireless unit.
On Monday, AT&T said it had dropped its US$39 billion bid for T-Mobile USA, bowing to fierce regulatory opposition and leaving both companies scrambling for alternatives.
"In the long term, we need more spectrum and network capacity. We are working on that. But we will not speculate about any inorganic steps or deals," Rene Obermann, Deutsche Telekom chief executive, told reporters.
T-Mobile USA, a growth engine in its early days but now a run-down asset, is badly lacking in the spectrum it needs to build a network capable of handling the vast data volumes that US consumers and businesses use on smartphones.
"For Deutsche Telekom, the collapse of the deal leaves it with one more subscriber-losing business as it confronts the fallout from Europe's debt crisis," Silvia Quandt analyst Jacques Abramowicz said.
Bleeding money and losing customers, T-Mobile USA ranks fourth among US carriers behind AT&T, Verizon and Sprint. Obermann bet all his chips on a deal with AT&T and, while Deutsche Telekom is walking away with a US$6 billion breakup package, analysts said he has lost a lot of time and will now still have to either invest in the US market or find a new way to exit the country.
Will Draper, head of telecoms research at investment bank Espirito Santo, said the only long-term solution he saw for T-Mobile now was a merger with Sprint.
"If Deutsche Telekom wants to be in the United States on a 10-year view, that's what it has to do. It needs a bit of surgery now," he said.
Adding to its woes, Deutsche Telekom missed out on spectrum sales in the US while it was busy negotiating the T-Mobile mega-merger, leaving it even more vulnerable.
Wireless carriers such as AT&T, Verizon Wireless and Vodafone Group Plc have clamored for access to more airwaves to stave off a looming spectrum crunch that would mean clogged networks, more dropped calls and slower connection speeds for wireless customers.
As part of the breakup, Deutsche Telekom will receive mobile spectrum in cities such as Los Angeles, Dallas and Boston as well as about US$3 billion in cash.
On Monday, AT&T said it had dropped its US$39 billion bid for T-Mobile USA, bowing to fierce regulatory opposition and leaving both companies scrambling for alternatives.
"In the long term, we need more spectrum and network capacity. We are working on that. But we will not speculate about any inorganic steps or deals," Rene Obermann, Deutsche Telekom chief executive, told reporters.
T-Mobile USA, a growth engine in its early days but now a run-down asset, is badly lacking in the spectrum it needs to build a network capable of handling the vast data volumes that US consumers and businesses use on smartphones.
"For Deutsche Telekom, the collapse of the deal leaves it with one more subscriber-losing business as it confronts the fallout from Europe's debt crisis," Silvia Quandt analyst Jacques Abramowicz said.
Bleeding money and losing customers, T-Mobile USA ranks fourth among US carriers behind AT&T, Verizon and Sprint. Obermann bet all his chips on a deal with AT&T and, while Deutsche Telekom is walking away with a US$6 billion breakup package, analysts said he has lost a lot of time and will now still have to either invest in the US market or find a new way to exit the country.
Will Draper, head of telecoms research at investment bank Espirito Santo, said the only long-term solution he saw for T-Mobile now was a merger with Sprint.
"If Deutsche Telekom wants to be in the United States on a 10-year view, that's what it has to do. It needs a bit of surgery now," he said.
Adding to its woes, Deutsche Telekom missed out on spectrum sales in the US while it was busy negotiating the T-Mobile mega-merger, leaving it even more vulnerable.
Wireless carriers such as AT&T, Verizon Wireless and Vodafone Group Plc have clamored for access to more airwaves to stave off a looming spectrum crunch that would mean clogged networks, more dropped calls and slower connection speeds for wireless customers.
As part of the breakup, Deutsche Telekom will receive mobile spectrum in cities such as Los Angeles, Dallas and Boston as well as about US$3 billion in cash.
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