expected, T-Mobile USA today announced, during a press conference in New
York, that the U.S.-arm of Deutsche Telekom will start to roll out its new
UMTS-based 3G service in Q4-2006 already.
T-Mobile USA is ideally positioned now to continue expanding its business, after
the company acquired a large amount of additional spectrum for data and voice
services in the Auction 66. T-Mobile USA acquired a total of 120 licenses in
various regional classes around the country for a total of US$ 4.2 billion, or
around EUR 3.3 billion. The costs for T-Mobile USA in Dollars per MHz of
spectrum per person of population (POP) of US$ 0.63 were considerably lower than
in most of the prior frequency auctions in the United States. T-Mobile USA has
more than doubled its average frequency coverage in the top 100 U.S. markets
from 25.9 MHz to 52.2 MHz. This creates additional room for future customer
growth and for the expansion of voice and data services.
"The auction and the resulting acquisition of additional spectrum here in
the USA is an important step forward for us. And not just for T-Mobile USA
but for the Deutsche Telekom Group as a whole, which benefits from the
growth of its U.S. business. We are aiming to maximize revenue market share
in the U.S. and make T-Mobile USA the largest single company within the
Group," said Kai-Uwe Ricke, CEO of Deutsche Telekom, during the press
The roll-out for the 3G network is scheduled to start in the fourth quarter of
2006 and most of the work will be completed in 2007 and 2008.
T-Mobile USA is budgeting around EUR 2.1 billion for this work from 2006 to
2009. The increase in investment by T-Mobile USA in its network infrastructure
will be lower, however, because some investments in the existing network can be
reduced as the roll-out of the new network progresses. The total costs of the
acquisition of frequency and the construction of the new network will therefore
be at the lower end of analysts' expectations voiced before the spectrum
auction. The results of the auction do not lead to any change in the Deutsche
Telekom Group's announced revenue and profit guidance for 2006 and 2007.
T-Mobile USA is preparing for continued strong growth in the American mobile
communications market where the current penetration rate of around 73 percent is
considerably lower than in Western European markets. Experts expect voice
traffic in the U.S. market to continue to grow two or three-fold in the coming
years until 2015, driven in part by continued fixed-mobile substitution. In
addition, mobile data business in the United States is also expected to grow
considerably. It already accounted for around 11 percent of T-Mobile's average
revenue per user in the second quarter of 2006, roughly 3 percentage points
higher than in the same quarter of last year.
The acquisition of spectrum in the United States supports the "Telekom 2010"
program. Part of this Group-wide program is for Deutsche Telekom's market share
in the U.S. mobile communications business to be maximized and to build up the
U.S. subsidiary to become the largest single company in the Group. T-Mobile USA
has continuously expanded its business to around 23.3 million customers since
its acquisition by Deutsche Telekom on June 30, 2001. In the first half of 2006,
the company contributed EUR
6.7 billion, around 22 percent of the Group's revenue and 43 percent of the
revenue of the mobile communications segment, as compared with 16 and 35 percent
respectively in 2004. The contribution to adjusted EBITDA has also inÃ‚Â¬creased
over the past years from 10 percent of the relevant figure for the Group in 2004
to 19 in the first half of 2006. For the T-Mobile group, these figures are 24
and 40 percent respectively.
T-Mobile USA's high level of service and quality orientation also contributed to
this success. In recent years, the company has again and again come out on top
of the JD Power Awards, the most important barometer for the image of mobile
communications companies among consumers. While T-Mobile USA can benefit in its
network construction from the expertise gained in Europe in the roll-out and
operation of 3G infrastructures and can realize price advantages in its
investments in network systems as a result of being part of one of the largest
mobile communications groups in the world, the transfer of the American service
culture to Germany will also be driven ahead. The proportion of customer
enquiries resolved upon first contact with Deutsche Telekom is to be increased
to 80 percent by 2008 as part of the "Telekom 2010" program.
Cheers ~ Arne