Orange sign


Deutsche Telekomwatch
This release
: #75
September 2018: 81pp
Releases/year: 10+
Click for more details of this release

Executive brief

Management Update: Q2 FY18

DT uprates forecasts as TMUS steams on [p.6]

  • TMUS sets the agenda
  • Tables: Deutsche Telekom financial and customer summaries
  • Another watershed nears for “Trans-Atlantic” DT
  • Figure: Deutsche Telekom net revenue comparison

Group

Deals: New DTCP fund swings Fastly into action [p.10]

  • DT still seeking Capital Partners
  • First-fund fireworks
  • Table: DTCP ventures forth: selected VC and private equity investments and exits

Strategy: DT ends business in Iran [p.14]

  • BuyIn continues to flirt with new partners
  • JV still to seal a third operator deal, though

Table: People movements [p.20]

Technology & Innovation: SKT quantum comms tie-up moves to testing phase [p.23]

  • Korea advancement

Germany

Q2 FY18-19: TDE ekes out earnings growth despite sales dip [p.27]

  • TDE keen to display spend as under control, too
  • Tables: DT Germany financial summary, revenue area split, and operational indicators

Strategy: TDE pushes FTTH co-investment, super-vectoring [p.32]

  • Regulatory progress for pioneer JV with EWE
  • Exit of hand-holder Pruchnow suggests Group gaining confidence
  • Will Brussels play ball?
  • Still life in copper legacy
  • Table: TDE's summer broadband expansion

Dannenfeldt plays politics ahead of 5G spectrum auction [p.40]

  • Dommermuth warns of long-term impasse on roaming
  • A question of coverage

Europe 

Q2 FY18-19: NatCos deliver growth within macro constraints [p.44]

  • Tables: Europe area revenue by territory, financial objectives, and financial summary
  • Wallet still tightly zipped

Austria: TMAT to overhaul business after UPC deal wrapped up [p.47]

  • Name change

Croatia: HT lauds 5G success; won't take blame for slow internet [p.50]

  • Istria kicks off
  • Slow and pricey internet? Don't blame us

Poland: TMPL strikes fibre wholesale deal with Orange [p.54]

Systems Solutions Q2 FY18-19

Declining T-Sys still in early days of new overhaul plan [p.58]

  • Tables: Systems Solutions financial summary, and financial objectives
  • T-Sys still stuck in the weeds of Germany- and US-focused Group
  • Platforms and people changes

USA Q2 FY118-19

TMUS still breaking trail for “Trans-Atlantic” DT [p.64]

  • DT continues to flex American muscle
  • Tables: US operational indicators, and financial summary

TMUS pushes 5G boat out with Nokia and Ericsson [p.67]

  • Did Nokia dangle a financial carrot?
  • TMUS goes nationwide with NB-IoT
  • Table: TMUS's Cat‑NB1 goes head-to-head with Cat‑M1
  • TMUS powers up on cell site 'hardening'

Further reading

Index

Symbols

3rd Generation Partnership Project (3GPP) 18, 67, 70

A

AF Telecom (Alisher Usmanov)
- MegaFon (see Alfa/TeliaSonera/separate) 56
Alfa Group
- Altimo (Alfa Telecom International Mobile)
- MegaFon (see AF Telecom/TeliaSonera/separate) 56
Alphabet
- Google 13, 22, 73
-- Android 13, 73
Americas
- Brazil 61
- Mexico 21
- North America 68
-- United States of America (USA) 6, 7, 14, 15, 18, 22, 24, 46, 63, 68, 72, 77
-- Federal Communications Commission (FCC) 71
- States
-- Florida 24
-- New York 12
-- Washington 71
Anomali 12
Apple 13, 53, 66
AppNexus 13
AppsFlyer 12
Aras Corp. 61
Aryaka 12
Asia-Pacific
- Australia 22
- China 18
- Hong Kong 22
- India 45
- South Korea 24
- Taiwan 72
- Vietnam 18
AT&T 13, 64, 69, 70, 72
Automobile Association 70
Axiata Group Bhd (TM International)
- Indonedia (PT Excelcomindo Pratama Tbk/XL, see separate listing) 38
Singapore (Mobile One, see separate listing) 70

B

Baidu Inc. 12
Banco Santander, SA 21
Battery Ventures 10, 12
Benetton 11
BT Group 13, 17, 20, 22
- EE 22

C

Capgemini 21
Cellnex Telecom 11, 12
- Swiss Towers 11, 12, 22
China Unicom 18
Cisco Systems 12
City of Cologne
- Stadtwerke Köln
- RheinEnergie 30

D

Deutsche Bahn 20, 74
Deutsche Telekom 6, 7, 8, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 32, 33, 34, 35, 36, 37, 38, 39, 40, 42, 44, 45, 46, 47, 48, 51, 52, 53, 54, 55, 56, 58, 59, 60, 61, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77
- Corporate
-- Headquarters 25, 60
- Deutsche Telekom Capital Partners 10, 11
-- Anomali (see separate) 12
-- AppsFlyer (see separate) 12
-- Aryaka (see separate) 12
- Deutsche Telekom Strategic Investments 11, 13
-- AppNexus (see separate) 13
-- Dynamic Signal (see separate) 11, 12, 74
-- Dynamic Yield (see separate) 12, 74
-- Fastly (see separate) 10, 11, 12, 74
-- Fornova (see separate) 12
-- Keepler (see separate) 12
-- Morphisec (see separate) 12
-- Next Generation Enterprise Network Alliance (ngena) 18
-- NSONE (see separate) 12
-- Paxata (see separate) 12
-- SafeBreach (see separate) 12
-- StreetLight Data (see separate) 11, 12, 74
-- Swiss Towers (see separate) 11, 12, 22
- Europe 44, 45, 46
-- Austria 21, 44, 47, 48, 53, 76
-- Croatia (Hrvatski Telekom) 21, 50, 51, 52, 76
-- Czech Republic 21, 46, 48
-- Greece (see OTE) 46, 52, 61, 73
-- Hungary (see Magyar Telekom) 21, 45, 53, 73
-- International Carrier Sales & Services (ICSS) 12, 56, 76
-- Netherlands 8, 18
-- Poland (Polska Telefonia Cyfrowa/PTC) 44, 46, 54, 55, 76
-- Slovakia (Slovak Telekom/T-Mobile) 21, 25, 46, 73
-- UK (EE) 22
- Executives
-- Al Saleh, Adel 61
-- Batelic, Boris 21
-- Bierwirth, Andreas 48
-- Blankenburg, Dido 21, 35
-- Bothe, Sabine 21
-- Dannenfeldt, Thomas 6, 17, 20, 27, 34, 40, 44, 59, 65
-- Drilo, Boris 50
-- Elsner, Andreas 21
-- Goldenits, Walter 17
-- Gopalan, Srini 45, 47
-- Höttges, Timotheus 6, 11, 20, 32, 40
-- Illek, Christian 20
-- Kicker, Thomas 24
-- Langheim, Thorsten 11, 22
-- Legere, John 65, 66, 73
-- Maierhofer, Andreas 54
-- Mala, Frantisek 21
-- Nemat, Claudia 53
-- Pruchnow, Johannes 21, 35
-- Ray, Neville 68, 73
-- Rumpf, Thomas 21
-- Schuster, Wolfgang 20
-- Sievert, Mike 64
-- Tzoulas, Anastasios 21
-- Wilkens, Michael 17
-- Wittig, Hannes 6, 36
-- Wössner, Dirk 28, 35
-- Young, Jack 12
- Ex-executives
-- Arora, Nikesh 22
-- van Damme, Niek Jan 22
-- von Reventlow, Christian 22
-- Zamani, Phil 22
- Germany 17, 21, 22, 27, 28, 29, 30, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 53, 73
- Investments
-- Magyar Telekom (see separate) 21, 45, 46, 53, 73
-- OTE (see separate) 52
- Product and Innovation
-- hubraum 18, 24, 42
- Products and services
-- Binge On 73
-- immmr 25
-- MagentaEINS 29
-- MagentaZuhause 38
- Systems Solutions 7, 8, 21, 46, 57, 59, 60, 77
- T-Systems 8, 12, 14, 21, 25, 53, 58, 59, 61, 77
-- Detecon 13, 14, 15
-- USA 6, 7, 8, 13, 15, 20, 22, 44, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 77
Deutsche Telekom Capital Partners 10, 11, 12, 74
- Deutsche Telekom Strategic Investments 13
Dido 21, 35
DocuSign 12
Drillisch AG 33, 41
Dynamic Signal 11, 12, 74
Dynamic Yield 12, 74

E

Ericsson 50, 51, 67, 69, 70, 77
- Croatia (see Ericsson Nikola Tesla) 51
Ericsson Nikola Tesla d.d. (see Ericsson) 51
Europe
- Austria 21, 45, 47, 48, 76
- Belgium 17
- Central Europe 21
-- Croatia 45, 50, 51, 52, 76
-- Czech Republic 45, 48, 76
- France 13, 15, 17, 34
- Germany 7, 8, 12, 13, 15, 17, 20, 21, 25, 26, 28, 29, 30, 32, 33, 34, 35, 36, 37, 38, 40, 41, 42, 46, 56, 59, 60, 61, 74, 75
-- Bundeskartellamt (Federal Cartel Office) 34, 41
-- Bundesnetzagentur (BNetzA, or German Federal Network Agency) 30, 32, 34, 38, 41, 42
-- Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 30, 34, 41, 42
- Government 13, 37
- Greece 45, 52, 61, 76
- Hungary 8, 21, 45, 53, 73, 76
- Italy 11, 53
- Netherlands 18, 30
- Poland 45, 54, 55, 56, 59, 76
- Office for Competition and Consumer Protection (UOKiK) 55
- Romania 21, 44, 45, 53, 73
- Russia 12, 56
- Slovakia 45, 53
- Spain 11, 12, 53
- Switzerland 11, 12, 18, 22, 24, 35, 71
- United Kingdom (UK) 20, 21, 22, 25, 73
European Investment Bank 68
European Union 15, 32, 37, 50, 51, 52, 74, 77
- Council of the European Union 34, 37
- European Commission 21, 47, 48, 50, 51
- European Parliament 34, 37
EWE
- EWE Tel 30, 32, 34, 35, 75
Experian plc 66

F

Fastly 10, 11, 12, 74
Fireglass 12
Flybridge Capital Partners 12
Fornova 12
France Télécom
- Orange 13, 16, 17, 22, 54, 55, 76
- Poland (see Telekomunikacja Polska) 54, 55
- UK (see EE, DT) 22
Fraport AG 61

G

Goldman Sachs 12
GSM Association
- Mobile World Congress 23, 71
GSM Association (GSMA) 70, 73
GTS Central Europe 54

H

H1 Telekom 52
Hewlett-Packard 12, 70
Hrvatski Telekom (see DT, Croatia) 21, 50, 51, 52, 76
Huawei Technologies 13, 47, 53

I

Informa Telecoms & Media
- Ovum 77
Intel 12
- Intel Capital 12
International Telecommunications Union 24
Invitel 53

K

Keepler 12
KPMG International 16, 17
KPN
E-Plus 41

L

Liberty Global
- UPC Austria 21, 47
Liberty Global Inc. 47, 55, 76
- UPC Broadband 21, 47, 48, 55, 76

M

Magyar Telekom (see DT) 21, 45, 53, 73
- Macedonia (Makedonski Telekom/T-Mobile) 21
- T-Systems Hungary 8, 53
Market segments
- Machine-to-machine (M2M) 70, 71
- Mobile virtual network operator (MVNO) 33, 41
- Multinational corporations (MNCs) 20
- Over-the-top (OTT) 25
MegaFon (see AF Telecom/Alfa /TeliaSonera) 56
MetroPCS Communications Inc.
- Carter, Braxton 65
Microsoft 12, 22
Middle East 15
- Iran 14, 15, 74
- Israel 12
Mobile One (Singapore) 70
Morphisec 12
MTN 13, 14, 15
Multimedia Polska 55

N

NetCologne 33
Nexmo 12
NextWave Wireless Inc.
- Inquam Broadband GmbH 30
Nokia 24, 67, 68, 69, 70, 77
NSONE 12

O

Open Handset Alliance (OHA)
- Android 13, 73
Optima Telekom 21, 52
OTE (Hellenic Telecom. Org. SA, see DT) 52
- Cosmote 46, 52, 61, 73
- Albania (Telekom Albania) 73
Greece 46, 52, 61, 73

P

Palo Alto Networks Inc. 22
Paxata 12
Providence Equity Partners
- KDG Holding GmbH (Kabel Deutschland) 39
PT Excelcomindo Pratama Tbk (XL) 38

Q

Qatar Telecom (Qtel) 12
Qualcomm 69
Quantum Corp. 23, 24

R

RCS & RDS
- Digi Telecommunications 53
Reliance-Anil Dhirubhai Ambani Group
- Reliance Communications (RCom) 45
Replay Technologies 12
RWE AG 61

S

SafeBreach 12
Samsung 12, 13, 24, 73
SAP 21, 61
Sequans 70
Sequoia Capital 12
Siemens AG 61
Sierra Wireless 71
Sigma Prime Ventures 12
SK Telecom 23, 74
Slovak Telekom (see DT, Slovakia) 21, 25, 46, 73
SOFTBANK CORP. 13, 22
Sony Corp. 13
Sprint Corporation 6, 15, 22, 64, 65, 68, 72, 73, 74, 77
StreetLight Data 11, 12, 74
Sunrise 12, 18, 22
Swisscom 10, 11, 12, 13
Swiss Life Asset Managers 11
Symantec 12

T

Target Corporation 70
Technology
- 2.5G 68
- 2G 41, 50, 68
- GSM 70, 73
- 3G 41, 50, 70
- 4G 22, 30, 40, 41, 50, 53, 65, 68
-- Long Term Evolution (LTE) 18, 24, 28, 47, 48, 53, 65, 68, 69, 70
- 5G 17, 27, 28, 30, 33, 36, 38, 40, 41, 42, 48, 50, 51, 53, 65, 67, 68, 71, 75, 76, 77
- Bluetooth 34
- BSS 67
- DSL 33, 47, 48
- Fibre 24, 27, 28, 29, 32, 33, 34, 35, 36, 37, 38, 39, 40, 42, 48, 54, 55, 75, 76
- Fixed-mobile convergence (FMC) 45
- FTTH 29, 32, 33, 34, 35, 36, 37, 39, 75
- IP 8, 28, 29, 38, 56, 58
- IPTV 48
- LTE machine-type communications (LTE-MTC/eMTC) 70
- M2M 70, 71
- Narrowband Internet of Things (NB-IoT) 18, 25, 42, 69, 70, 71
- .Net 52
- RAN 50, 51, 67
- R&D 68
- SIM 18
- Smartphone 13, 53, 68, 73
- Spectrum 50, 53, 67
-- 450 MHz 30
-- 3500 MHz 50
- VDSL 29, 39
- Vectoring 39
- WAN 12
- W-LAN 13, 76
Tele2 48
- Netherlands 48
Telecom Italia 11
Telefonica Group 29, 35, 41
Telekom Austria 47
- Austria
-- A1 47
Telenor ASA 17
TeliaSonera 17
- MegaFon (see AF Telecom/Alfa/separate) 56
Telstra 13, 22
Time Warner
- AOL 73
Toyota 30
Twitter Inc. 73
Two Sigma Investments
Two Sigma Ventures 12

U

United Internet 32, 33, 41, 42, 75
- 1&1 Internet 21, 32, 33, 34, 35, 41, 42, 75

V

Verizon Communications 13, 64, 69, 70, 72, 73
- Verizon Wireless 70
Vertex 12
Viettel Group 13, 18
Vodacom Group 13
- Group 13
Vodafone 13, 29, 33, 34, 36, 37, 39, 41, 75
- Africa, Middle East, and Asia Pacific Region (AMAP)
-- South Africa (see Vodacom) 13
- Europe Region
-- Germany 29, 33, 41
Volkswagen AG
- Audi AG 30

  • Highlighting of internal controls suggests competitive concerns holding back move from “JV” to “Alliance”.
  • Antitrust sensitivity in procurement consolidation accentuated.

BuyIn, Deutsche Telekom’s (DT) procurement joint venture (JV) with Orange, continued efforts to attract new partners and add more negotiating weight with suppliers, by highlighting several “best practices” it has implemented internally to ward off antitrust violations.

In a move evidently designed to address trust issues with prospective new allies, the JV said auditor KPMG had certified anti-competitive risk-focused parts of its Compliance Management System as “deeply integrated” within its organisation.

According to documentation accompanying the “certification”, the JV has implemented numerous measures to ensure antitrust law compliance, across several business “components”. These include delivery of Antitrust Guidelines and training for employees, as well as “monitoring and improvement”, risk identification and reporting, and culture- and communications-related initiatives.

Every new BuyIn employee”, for example, undergoes “personal training” on antitrust rules and compliance, as well as subsequent “refresher” sessions, said the document. The Master Agreement signed by DT and Orange to govern BuyIn also “explicitly” mandates the JV’s Compliance unit to ensure “all staff” meet antitrust and other “applicable laws and regulation”. It is also said to have implemented “innovative, preventive IT controls embedded in business processes”, focused on anti-competition risks.

JV still to seal a third operator deal, though

BuyIn was no doubt keen to trumpet KPMG’s validation of the antitrust initiative, to quell concerns among prospective partners. The JV, formed in 2011 (Deutsche Telekomwatch, #4), has long shown eagerness to bring new operators (and possibly other businesses) into its ecosystem, but has so far scored a blank. It appears competitive concerns have played a part in it staying a mere two-operator platform.

The audit documentation made the impression that the new internal approaches would smooth concerns of any new associate.

“In light of its broader business model allowing to provide procurement services to third partners, BuyIn has further developed its existing policies and procedures by establishing an antitrust assessment scheme to evaluate and mitigate antitrust risk which could result from cooperating with a third partner. ” – BuyIn.

In another hint of BuyIn’s thinking, the JV’s statement also flagged how it had delivered the highest standard of antitrust compliance for “our Alliance members”. BuyIn increasingly refers to itself as the “BuyIn Procurement Alliance”, rather than a two-party joint venture, and seeks to highlight how it can offer other operators services such as “lever identification”, “price benchmarking”, and “procurement execution”. In 2017, BuyIn mooted plans to bring its business to a “new dimension with additional industry partners” (Deutsche Telekomwatch, #61).

Operating across Belgium, France, and Germany, BuyIn is a 50:50 JV between DT and Orange. DT manages its involvement in the JV centrally.

Former Group Chief Procurement Officer Volker Pyrtek has led BuyIn since its inception, while Thomas Dannenfeldt (DT’s outgoing Chief Financial Officer), Walter Goldenits (Telekom Deutschland Chief Technology Officer), and Michael Wilkens (Head of Group Controlling) represent the Group on its Board of Directors.

Areas where the JV is said to have at least part-melded procurement include cloud computing infrastructure, mobile and wireline network equipment (including 5G buying, recently – Deutsche Telekomwatch, #73), service platforms, and terminals.

Earlier in 2018, Orange indicated BuyIn was managing more than EUR25bn in annual spend across both parents. For comparison, DT reported EUR37.9bn of goods and services purchasing during its last fiscal year, to 31 December 2017 (Deutsche Telekomwatch, #73).

In 2015, DT held talks with minority investment BT Group regarding an entrance into BuyIn, although no deal subsequently materialised. In addition, prior rumours of proposed collaboration with Telenor and TeliaSonera have not come to fruition (Deutsche Telekomwatch, #41 and #61).

Image: Orange

Sign up to receive more from Deutsche Telekomwatch

Deutsche Telekomwatch

Information and Insight into Deutsche Telekom, its people, deals and strategy that you won’t find anywhere else

Telco insight for Telco leaders - making information work for you to help you get ahead

Teams that use Deutsche Telekomwatch accelerate and grow their business faster....

WHAT'S INSIDE the FULL REPORTS?

Insider information and analysis that you will not find anywhere else, including:

  • Strategy and objectives.
  • Vendor partnerships.
  • People movements.
  • Deals and trends.
  • Industry and analyst events/activity.

"I regularly find current activities I was not aware of” - VP, Deutsche Telekom

CRITICAL AREAS of focus include:

  • Challenges/Opportunities.
  • Disruption and change.
  • Strategy and objectives.
  • Contracts and deals.
  • Innovation.
  • OPEX/capex.
  • Technology developments.

“Deutsche Telekomwatch gives me a global vision of what is coming and what is happening now... and if this could affect me” - Business Manager, Ingram Micro

EXCLUSIVE INSIGHTS uncovered to help you:

  • Get ahead of rivals and colleagues.
  • Open doors, find more deals, faster.
  • Go native as the expert on DTAG.

"Deutsche Telekomwatch provides me with a comprehensive overview of important DT activities within a single source, saving me time having to search for it” - Account Director, Juniper

Click here to download a sample to evaluate.