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Deutsche Telekomwatch
This release
: #83
May 2019: 54pp
Releases/year: 10+
Click for more details of this release

EXECUTIVE BRIEF

MANAGEMENT UPDATE

Q1 FY19: Tim maintains Zen despite tension in airwaves [p.6]

Management Update: Headline data: a team effort but TMUS still talismanic [p.7]

  • Segments getting on the same page
  • Table: Deutsche Telekom, financial summary, Q1 FY19
  • User retention call-to-action
  • Table: Deutsche Telekom, customer summary, Q1 FY19
  • US powers on; flux in Germany; T‑Sys yet to prove execution

GROUP

Deals: DT creates new central unit to oversee tower reset [p.12]

  • DT playing long game on asset sale

Partnerships: MobiledgeX expands to Canada [p.15]

Edge of tomorrow

People [p.16]

  • Table: People movement highlights

Technology & Innovation: Long-range drone JV comes on radar [p.18]

  • DT ditches solo missions for formation flying

DT highlights further mmWave tests with Ericsson [p.20]

  • Microwave fare for time/cost-constrained DT

GERMANY

Legal & Regulatory: DT bites the bullet in German 5G auction [p.23]

  • 5G business model up in air
  • Huawei still on the 5G dance floor

Last‑mile fee hike proposed [p.25]

  • Rivals are not impressed
  • Playing the fibre game

EUROPE

Bosnia & Herzegovina: Ericsson Nikola Tesla lands another core and RAN win [p.31]

Greece: OTE set to meld sales and services functions [p.33]

  • Europe: earnings growth still on default

SYSTEMS SOLUTIONS

Strategy: T‑Sys hangs up on user support [p.37]

Partnerships: Part of the plan [p.38]

  • Table: T‑Sys's “re‑defined” portfolio structure
  • Mainframe and WAN refreshes still in pipeline

USA

Deals: TMUS-Sprint deal on knife edge; mixed signals from DoJ [p.41]

  • WSJ whiplash
  • Question marks lead to Sprint spin-out suggestions
  • Political football
  • Legere spits at “haters”

Products & Services: TVision Home flickers into life; bundling bigger picture [p.46]

  • Un‑Carrier pay-TV
  • The price is right?
  • Fuzzy picture without New T-Mobile tuning
  • Broadband broadside

FURTHER READING

INDEX

A

Africa 17

Alphabet

 - Google 17

Android 47

 - YouTube 47

Amazon.com Inc. 48, 51

Americas

 - Canada 15, 49

 - North America 7

 - United States of America (USA) 6, 7, 8, 14, 16, 19, 32, 40, 51

  --  Department of Justice (DoJ) 41, 42, 43, 51

  --  Federal Communications Commission (FCC) 41, 43, 45

  --  government 45

  --  Securities & Exchange Commission (SEC) 14, 41

  --  States

   ---   Califormia 15

   ---   Kansas 44

   ---   New York 47

   ---   Philadelphia 47

   ---   Washington 41, 44, 47

Apple 45

 - iOS 47

Aryaka 14

Asia-Pacific 21

 - China 21, 24, 43

 - India

  --  Licence Circles

   ---   Himachal Pradesh 19

 - Singapore 21

AT&T 35, 43, 45, 46

Axiata Group Bhd (TM International)

 - Cambodia (TM International (Cambodia) Co. Ltd./hello) 51

B

British Standards Institute (BSI) 24

BT Group 14

 - EE 14

C

Capgemini 37

China Unicom 21

Comcast Corp. 45, 46

 - NBCUniversal, LLC

CNBC 42

Commerzbank AG 16

Cyfrowy Polsat SA 35

D

Deutsche Post 19, 37

Deutsche Telekom 6, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23, 24, 26, 27, 28, 31, 32, 33, 34, 35, 37, 38, 39, 42, 43, 44, 45, 46, 47, 48, 49, 50

 - Corporate

  --  Headquarters 43

 - Deutsche Funkturm 12, 28, 34

 - Deutsche Telekom Capital Partners 14, 16

  --  Deutsche Telekom Strategic Investments 19

  --  Fastly (see separate) 14

  --  Next Generation Enterprise

  --  Network Alliance (ngena) 21, 39

  --  Spearhead 19

  --  Telekom Innovation Pool 15

   ---   Comfortcharge 19, 34

   ---   MobiledgeX 15, 19, 49

   ---   tooz technologies 19

 - Digital Business Unit 19

 - Europe

  --  Austria 9, 13, 32

  --  Bulgaria (see OTE) 33

  --  Croatia (Hrvatski Telekom) 17, 31, 34, 50

  --  Czech Republic 16, 17, 34

  --  Greece (see OTE) 10, 34

  --  Hungary (see Magyar Telekom) 10, 16, 34

  --  Montenegro (see Magyar Telekom) 31, 34

  --  Netherlands 9, 12

  --  Poland (Polska Telefonia Cyfrowa/ PTC) 35

  --  Slovakia (Slovak Telekom/T-Mobile) 16, 34

  --  UK (EE) 14

 - Executives

  --  Al Saleh, Adel 37, 38

  --  Blankenburg, Dido 28

  --  Clauberg, Axel 39, 50

  --  Drake, Nicholas 16, 17

  --  Frause, Max 17

  --  Freier, Jon 17

  --  Gary, Robert 17

  --  Hottges, Timotheus 6, 13, 24, 38

  --  Illek, Christian 38

  --  Legere, John 41, 46, 51

  --  Obaidi, Arash 17

  --  Ray, Neville 47

  --  Seaton, Sean 16

  --  Sievert, Mike 47

  --  Staneff, Matt 17

  --  Wossner, Dirk 27

 - Ex-executives

  --  Binder, Jeff 17

  --  Obermann, Rene 17

  --  Rathgeber, Rainer 17

 - Germany 8, 9, 10, 15, 25, 26, 27, 28, 32, 33, 49

  - Investments

  --  Magyar Telekom (see separate) 10, 16, 34

  --  OTE (see separate) 33, 34, 50

 - Products and services

  --  T-Mobile TV 51

 - Systems Solutions 8, 17, 36, 50

  --  T-Systems 8, 14, 17, 37, 50

   ---   Slovakia 17

 - Technology

  --  TeraStream 21

 - T-Mobile Infra 12

 - T-Mobile International 17

 - USA 6, 7, 8, 10, 16, 17, 35, 41, 42, 43, 44, 45, 46, 47, 48, 51

Deutsche Telekom Capital Partners 14, 16

DHL Worldwide Express 19

Dido 28

Drillisch AG 23, 24

E

EADS

 - Airbus 17

EchoStar Communications Corp.

 - Dish Network 43, 46

Enio 19

Ericsson 17, 20, 24, 31, 49, 50

 - Croatia (see Ericsson Nikola Tesla) 31, 50

Ericsson Nikola Tesla d.d. (see Ericsson) 31

Ernst & Young 14

Europe

 - Albania 10, 33, 34

 - Austria 18, 32, 34, 50

 - Bulgaria 34

 - Croatia 31

 - Czech Republic 16, 17, 32

 - Germany 6, 8, 9, 10, 12, 13, 16, 17, 18, 19, 22, 23, 24, 25, 26, 27, 28, 34, 37, 39, 43, 49

  --  Bundeskartellamt (Federal Cartel Office) 18, 39

  --  Bundesnetzagentur (BNetzA, or German Federal Network Agency) 24, 25, 49

  --  Bundesnetzagentur fur Elektrizitat, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 24, 25, 49

 - Greece 18, 33, 34, 50

 - Montenegro 31, 34, 50

 - Netherlands 12, 18, 32

 - Poland 32, 35, 50

 - Romania 10, 33, 34

 - Spain 17

 - Switzerland 15, 17, 37

 - United Kingdom (UK) 14

  --  British Standards Institute (BSI) 24

European Union 25

 - European Commission 25, 41

EWE

 - EWE Tel 27, 28

F

Facebook 15

 - Telecom Infra Project 15, 39

Fastly 14

France Telecom

 - Orange 14, 16, 24, 35

 - Poland (see Telekomunikacja Polska) 35

 - UK (see EE, DT) 14

G

Goldman Sachs 14

GSM Association

 - Mobile World Congress 19

H

Hewlett-Packard 19

Hrvatski Telekom (see DT, Croatia) 31, 34, 50

Huawei Technologies 23, 24, 35, 43, 49

I

IBM 39

Intel 15

K

KPMG International 14

L

LG Electronics 45

Liberty Global

 - UPC Austria 9, 10, 32

Liberty Global Inc.

 - Unitymedia GmbH 27

 - UPC Broadband 9, 10, 32

  --  Germany (Unitymedia) 27

M

Magyar Telekom (see DT) 10, 16, 34

 - Montenegro (Crnogorski Telekom) 31, 34

Market segments

 - Mobile virtual network operator (MVNO) 42

MetroPCS Communications Inc. 44, 51

Microsoft 17

Midas

 - Aero2 35

Middle East 17

N

Netflix 47

Niantic 15

O

oneM2M 32

Open Handset Alliance (OHA)

 - Android 47

OTE (Hellenic Telecom. Org. SA, see DT) 33, 34, 50

 - Bulgaria (Globul) 33

 - Cosmote 10, 34

  --  Albania (Telekom Albania) 34

 - Greece 10, 34

  --  Germanos 33

  --  Hellas Sat 33

P

P4 sp. z o.o. (Play) 35

PCCW 21

Philippine Long Distance Telephone Co. (PLDT) 21

Phones4U 14

Polkomtel 35

 - Plus GSM 35

Polsat 35

PricewaterhouseCoopers 14

R

Reliance-Anil Dhirubhai Ambani Group

 - Reliance Communications (RCom) 21

Robin Radar Systems 19

Roche 17

Rohde & Schwarz 19

RWTH Aachen University 19

S

Samsung 15, 45

SAP 17, 38

Sferia SA 35

SK Telecom 15

Slovak Telekom (see DT, Slovakia) 16, 34

SOFTBANK CORP. 43

Spearhead 19

Sprint Corporation 6, 8, 17, 35, 41, 42, 43, 44, 46, 48, 51

Squarehead Technology 19

T

Target Corporation 38

Technology

 - 2G

  --  CDMA 35

  --  GSM 35

 - 4G 15, 43, 46, 48

  --  Long Term Evolution (LTE) 35, 48

 - 5G 6, 10, 15, 17, 20, 23, 24, 25, 35, 42, 43, 44, 46, 48, 49

 - DVR 47

 - Ethernet 27, 28

 - Fibre 20, 25, 26, 27, 28, 46

 - IMS 31

 - IP 9, 21, 31

 - IPTV 46

 - LAN 27, 28

 - Linux 21

 - MPLS 39

 - Narrowband Internet of Things (NBIoT) 32

 - .Net 28

 - RAN 21, 31

 - Smartphone 37, 45

 - Spectrum 23

  --  800 MHz 35

 - WAN 14, 21, 39

Tele2 12

 - Netherlands 12

Telecom Italia 24

Telefonica Group 7, 14, 23, 27

 - Europe

  --  UK 14

Telekom Austria 32

 - Austria

  --  A1 32

Telenor ASA 16

 - Hungary 16

Telus Corporation 15, 49

Tesla 50

tooz technologies 19

Twitter Inc. 41

U

USA

 - Communications Workers of America (CWA) 43

V

Value-added services 35

Verizon Communications 43, 45

Viacom Inc. 48, 51

 - MTV Networks 48

Vodacom Group

 - Gateway Communications 32

Vodafone 7, 10, 14, 23, 24, 25, 26, 27

 - Europe Region

Germany 10, 23, 26

W

Warburg Pincus LLC 17

  • Business tidy-up still getting into “full swing”, more than 18 months after T-Sys Chief Executive Adel Al-Saleh’s appointment.

T-Systems’ (T-Sys) IT user support business emerged as the latest area where it is terminating activity, as part of the division’s ongoing business overhaul.

A spokesperson for T-Sys told Deutsche Telekomwatch that its End User Services unit, covering areas such as computer supply and helpdesk support, was being wound down. “T-Systems itself will stop providing these services; however, partners for fulfilment are being on-boarded in case a customer wants that within the framework of a contract”, he said.

Customers previously flagged as T-Sys helpdesk clients include Deutsche Post and Swiss retailer Valora, although it is not clear if these engagements are current.

Part of the plan

The move is another signal of the cultural, organisational, and strategic change taking place at T-Sys, which has long suffered from reluctance to jettison less profitable parts of its business (whether client contracts, partnerships, or product segments).

It has been migrating to a revamped product and services architecture, encompassing eleven new ‘portfolio units‘ and a realigned sales department, as part of a business overhaul aimed at regaining earnings growth in the current fiscal year, and positive cash flow in the coming twelve months to 31 December 2020.

In early-May 2019, in the Group’s latest quarterly results presentation, Deutsche Telekom (DT) Chief Executive Timotheus Höttges sought to underline the “very radical” and “ongoing” reorganisation taking place at T-Sys, and the Group’s willingness to turn its back on areas that are dragging on the division’s financials. DT is “not excluding M&A in this regard” and doing “everything in order to deliver on the improvements”, he added.

Chief Financial Officer Christian Illek added to the sense that more changes are coming to the T-Sys structure, saying the division’s turnaround programme was “not in full swing yet”. This is despite T-Sys Chief Executive Adel Al-Saleh, the architect of the programme, having now been in position for more than sixteen months, and being not too far away from the two-year anniversary of his hiring by DT, in September 2017 (Deutsche Telekomwatch, #67).

Mainframe and WAN refreshes still in pipeline

Beyond desktop support, other so-called “inefficient” areas being cut from T-Sys’ services portfolio, as part of the refresh, include mainframe services and support. This exit is being navigated via an agreement to transfer operations to IBM, which is currently being studied by Germany’s Bundeskartellamt (Federal Cartel Office). The deal is “still in progress with the authorities”, said the T-Sys spokesperson.

Elsewhere, digital services functions were consolidated in 2018, and the division has flagged a coming refresh of its enterprise connectivity product line-up, with evident influence from Axel Clauberg, T-Sys’ recent hire from Group level as Vice-President of Strategic Portfolio Management and Chief Technology Officer of Telecommunication Services (Deutsche Telekomwatch, #81 and #82).

This is seeing closure of a relationship with the Deutsche Telekom-backed Next Generation Enterprise Networks Alliance (ngena) on software-defined wide area networking (SD-WAN), and may well see culmination of a long-mooted revamp of two-decade-old MPLS-based enterprise networking platform IntraSelect, with emphasis on SD-WAN-style flexibility, programmability, and efficiency (Deutsche Telekomwatch, #67, #71, #74, #79, and #82).

T-Sys is expected to reveal more information on the changes in summer 2019, but, in a recent interview with Fierce Wireless, Clauberg implied they will involve creation of a more hands-on, heavier duty proposition to chaperone enterprise clients that are seeking to migrate to Network Cloud platforms.

Subscribers can read the full story story, including a table outlining T Sys’s “re defined” portfolio structure, in the May release of Deutsche Telekomwatch.

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