Deutsche Telekomwatch Report #3 August-September 2011 Executive Brief
7 October 2011
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- Q2 FY11 MANAGEMENT UPDATE: Deutsche Telekom published its Q2 FY11 financial results, reiterating guidance and bringing the rate of its revenue decline down to 6.8%, from 7.7% in the previous quarter. However, malaise in Central and Southern Europe remained to the fore, and T-Mobile USA continued to be afflicted by customer departures, amid aggression from rivals and uncertainty surrounding its proposed buyout by AT&T. Enterprise arm Systems Solutions remained the only reporting area to grow sales, but at a slower rate than the previous three months, and at low margin. [pp.4-9, 20, 21, 25, 28, 29, 31-34, 37, 38, 41-44, 53, 54, 56-58.]
- GROUP: The Group suffered a serious blow, following the results, with news that the US Department of Justice is to block the sale of T-Mobile USA – a move seen as giving the deal a much slimmer chance of survival, as well as the raising the prospect of a drawn-out regulatory process that would leave T-Mobile USA vulnerable and distracted. DT reiterated commitment to saving the acquisition, and insisted it remains “on schedule”. [pp.48-52.]
- Group activity continued to flourish around near-field communications service rollout, with, among other things: DT revealing work with automotive group Continental on “virtual” car key fobs; and, forming two more cross-network, in-market initiatives, in Germany and Hungary. [pp.12-15.]
- Venture capital arm T-Venture announced two further small-scale investments — adding Dutch enterprise mobility specialist VeliQ to its investment portfolio; and, contributing to another financing round in apprupt, a mobile affiliate network. [pp.18, 19.]
- GERMANY: DT furthered its ongoing Growth Areas push with the announcement of a new smart home “management platform”, dubbed Smart Connect, for release in Germany during 2012. Separately, Brazilian utility authorities and companies visited the T-City research and development project in the southern town of Friedrichshafen, with the Group highlighting smart metering offerings. [pp.12, 23.]
- Executives remained coy on the customer response to Telekom Deutschland’s LTE offering, revealing uptake remains small — 20, 000 subscribers at early-August 2011 — but refraining from giving detail on spend. Similarly, the OpCo did not provide a detailed update on its push for fibre-to-the-home rollout partnerships, merely claiming “huge interest” from housing associations. [pp.21, 22.]
- Two vendors flagged activity with Telekom Deutscland’s fixed-line business — UK location-based technology supplier Ubisense, to support the OpCo’s fibre infrastructure rollout; and, telecoms software specialist Convergys, which passed a “milestone” in a long-running business support system upgrade that was first highlighted in August 2008. [pp.22, 24.]
- EUROPE: New regional head Claudia Nemat began to build a team to progress the troubled Europe division’s turnaround efforts, appointing Kalls Mueller as her Strategy Director. [p.11.]
- Two Europe OpCos reshuffled backhaul supply arrangements, amid ongoing pressure from mobile data usage growth — T-Mobile Austria tied with utility Wien Energie on support for its Long Term Evolution rollout; and, Everything Everywhere’s Mobile Broadband Network Ltd infrastructure-sharing vehicle handed a contract to cable player Virgin Media Business, posing a threat to local incumbent BT. [pp.26, 45.]
- T-Mobile Austria and T-Mobile Poland appeared to become the first ‘T-Mobile’ OpCos to release HD voice functionality, following network upgrades. [pp.25, 38.]
- Elsewhere in Europe, activity continued to revolve around the Group’s more recent network-sharing arrangements, with: reports suggesting that T-Mobile Austria and Orange Austria are to expand the ambitions of the cooperation they flagged earlier in 2011; and, T-Mobile Czech Republic partner Telefónica Czech Republic mooting talks over a deal on LTE rollout. T-Mobile Poland’s NetWorkS!-branded venture with PTK Centertel was reported to be testing delivery of 3G services over 900MHz spectrum. [pp.26, 30, 39.]
- T-Mobile Hungary enabled HSPA+ 64QAM connectivity on parts of its mobile broadband network, and is to gain an opportunity for further infrastructure enhancement with confirmation of Hungary’s plans for a new spectrum auction later in 2011. T-Mobile Slovakia highlighted the “successful” completion of a Single Carrier-based HSPA+ infrastructure trial, alongside Ericsson. [pp.34, 35, 42.]
- Restructuring at UK joint venture Everything Everywhere continued, with a cull of senior management by new Chief Executive Olaf Swantee, in the name of “simplicity”. With Chief Financial Officer Richard Moat departing, it was widely noted that the move leaves the OpCo with no top executives from the T-Mobile side of the joint-venture. [p.10.]
- The UK’s already long-delayed digital dividend spectrum auction timetable again appeared under threat, amid ongoing wrangling between Everything Everywhere and rivals. Reports raising doubts over the roadmap came after postponement of publication of the sell-off’s terms and conditions. [pp.44, 45.]
- USA: T-Mobile USA’s relationship with electronics retailer RadioShack came to an end, providing another challenge to the churn-afflicted OpCo. [pp.54, 55.]
- SYSTEMS SOLUTIONS: Group activity around cloud computing continued to bubble away, with operating division Systems Solutions again flagging the area as a growth opportunity in its Q2 FY11 financial statement, and Chief Executive Reinhard Clemens revealing work on ‘trust-marques’ that will differentiate German ot European cloud service providers from the more obtrusive data regulations that face their American rivals. [pp.56-59.]
- Deutsche Telekom signed a part-cloud-focused “strategic cooperation memorandum” with Huawei Technologies, targeting China, adding to signs of simmering Group ambitions in Asia. Similarly, reports suggested Everything Everywhere could tie with Chinese carrier China Telecom, as the latter seeks to expand into the UK. [pp.47, 59.]
About Deutsche Telekomwatch
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Covering: August-September 2011
Published: September 2011
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