Deutsche Telekom Capital Partners broadened its venture fund activity, but remained focused on the Group’s strategic areas rather than a fully freestyle approach to investment.

  • Stakes taken in startups LeanIX and Dynamic Yield.
  • Additional funding for NS1.

The venture capital (VC) fund of Deutsche Telekom Capital Partners (DTCP), DT’s investment management arm, broadened its portfolio with investments in LeanIX and Dynamic Yield. Respectively, they are specialists in enterprise IT and big data analytics. DTCP also shored up existing investment in NS1, a network traffic management player based in New York. All three providers overlap at least one of the “core” investment areas recently identified by DTCP Partner Thomas Preuss (Deutsche Telekomwatch, #63). These include artificial intelligence (AI), big data, cloud computing, cyber-security, enterprise software and middleware, and the Internet of Things. DT is active in each of these areas through its own operations.

  • DTCP continues to stress that it is not bound by traditional corporate venturing approaches. With the apparent goal of prioritising financial returns above all else, and styling itself like other prudent VC tech funds, Preuss flagged “martech”, “traveltech”, “fintech”, and “insurtech” – which lie outside the scope of traditional DT operations – as promising areas in which to branch out. However, with the exception of Fornova, an Israel-based traveltech startup the unit linked up with earlier in 2017, DTCP’s VC fund has yet to forage far beyond familiar Group tech areas in search of investment returns (see table). DTCP’s latest investments are very much on ‘home‘ territory.
  • LeanIX excitement: the recent flurry of publicly announced VC activity was kick-started by investment in startup LeanIX. A specialist in enterprise IT architecture, Bonn-based LeanIX drummed up $7.5m (EUR6.3m) in a Series-B funding round led by DTCP. Existing investors Capnamic Ventures and Iris Capital, also participated, but a breakdown of funding was not disclosed. Using a software-as-a-service model, LeanIX claimed it is helping more than 80 “big-name customers”, including Vodafone, to modernise their IT architectures. The startup estimated the global size of its target market to be worth more than $2bn. LeanIX plans to use the fresh injection of capital to expand operations in the USA, where it has a subsidiary (and opened offices in Boston in March 2017), and for product development.
  • In search of dynamic yield: DTCP and La Maison, a club of entrepreneurs, joined existing investors in Dynamic Yield to inject $31m into the provider, via a Series-C funding round. Headquartered in the USA, Dynamic Yield helps businesses offer personalised marketing services through AI and machine learning. The extra funds will be used to invest further in AI and machine learning algorithms, expand to new industries, and to “improve market share in an $800bn industry”. Existing Dynamic Yield investors participating in the Series-C funding round were Baidu, Bessemer Venture Partners, Claltech, and Vertex.
  • Another push for NS1: A new venture round, led by GGV Capital, raised $20m for NS1. Existing investors, including DTCP, also participated. No specific information was given on DTCP’s capital outlay. NS1’s goal is to build a “smarter internet” by keeping websites operational. Kris Beevers, NS1 Chief Executive, said the extra capital will “solidify” the startup’s position as “clear market leader in DNS [domain name systems]. DTCP has been an NS1 investor since September 2016.

Early days

DTCP’s VC fund is still relatively young, becoming officially operational in April 2015. As such, it remains difficult to gauge its success. DTCP nonetheless claimed to have made profitable exits from startups Nexmo and Replay Technologies (see table). Fireglass, an Israel-based cyber-security specialist in which DTCP holds shares, recently agreed to be taken over by larger rival Symantec (Deutsche Telekomwatch, #65). In DT’s FY16 Annual Report, the Group stated its plans to invest a total of EUR450m via DTCP over the unit’s first five years of operation. Although a EUR500m investment figure was previously flagged at the time of DTCP’s launch, a DTCP spokesperson told Deutsche Telekomwatch that the investment pot had not been diluted. The EUR500m sum apparently included EUR50m set aside for Telekom Innovation Pool (TIP), rather than specifically VC-based activity. Concentrated on external startups that are “identified as being of major strategic relevance”, as well as in-house ventures such as immmr and the Next Generation Enterprise Networks Alliance, TIP is part of Deutsche Telekom Strategic Investments (DTSI). DTSI, in turn, forms part of DTCP, which plays an advisory role on DTSI activities. Image: © leanIX.

Table of Contents

EXECUTIVE BRIEF

MANAGEMENT UPDATE

Q2 FY17

Eyes turn to next phase in Höttges Grand Plan [p6] Table 1 Deutsche Telekom, financial summary, Q2 FY17
Top-level numbers: USA driving, Europe reviving
Table 2 Deutsche Telekom, customer summary, Q2 FY17 (‘000)
DT expands organisational changes in Europe, in push for uplift
Table 3 Deutsche Telekom, Group Development financial summary (adjusted), Q2 FY17
Table 4 Deutsche Telekom, financial development picture, FY12-FY18
Guidance: expectations uprated but imbalances remain a concern

GROUP

Deals

Group expands VC portfolio but keeps to familiar ground [p13] Table 5 DTCP ventures forth: investments and exits at a glance (to September 2017)
Early days

People

Stalwarts Clemens and van Damme to exit [p16] Wössner back into the Group fold
Figure 1 DT Board of Management responsibility split, pre- and post-2016-2017 changes
Two moves with similar under-currents, but differing levels of urgency
Part of the plan, to an extent
Table 7 People movement highlights

Group Development

TMNL boosts network with TD-LTE and 256-QAM [p21] Table 8 Spectrum holdings of Dutch mobile network operators, February 2017
All 256-QAM on the 4G front
Lone TD-LTE wolf

Technology & Innovation

DT concedes All-IP drag; 2018 deadline to “slip” [p24] Figure 2 Deutsche Telekom, European IP migration progress, FY14-FY17 (% of lines)
Need for speed
The complications of DT’s gammy IP

DT pushes on towards 2018 5G trials [p26] 5G Czech list
Making mmWaves
Group 5G tsar appointed
Thinking small: mobile densification still on Group backburner
Lending an innovation hand to the smaller guys
DT becomes a Monarchist

Inmarsat claims success in EAN satellite tests [p29] All smiles
Legal loose ends
DT in gung-ho mood

DT exec talks up newer RCS use-cases [p31] RCS reasons to be cheerful…
… include new use-cases
On message with SMS A2P, chatbots

GERMANY

Table 9 Deutsche Telekom, Germany area financial summary (as reported), Q2 FY17

Q2 FY17

TDE steps on IT cost savings pedal as trends waver [p35] Table 10 Deutsche Telekom, Germany area revenue split (as reported), Q2 FY17
Broadband blockages
TDE dialling up on efficiency for next mid-term strategic cycle

Network

TDE hints at FTTH capex boost but vectoring still priority [p38] Hold your FTTH horses
Vectoring penetration target may slip
We’re doing fine on fibre, thank you very much
A different reality, though
Gee, fast and flexible

Partnerships

Group brings Mojio tie-up to Germany [p41]

Fleeting expansion
Further NatCo tie-ups likely

EUROPE

Table 11 Deutsche Telekom, Europe area financial summary (as reported), Q2 FY17

Q2 FY17

Uptick filtering through in European top-line [p45] Table 12 Deutsche Telekom, Europe area revenue by territory (adjusted), Q2 FY17
Less need for the scalpel
Poland reviving; Romania harder work

Region

DT’s Czech-Slovak integration plan to see vendor refresh [p47]

Management – 80 staff now bridging across both NatCos
Commercial – joint, mid-term go-to-market plan being drawn up
Table 13 Slovak Telekom and T-Mobile Czech Republic, financials and KPIs, FY16
Buying – tech vendors and marketing agencies face squeeze
Technology and infrastructure — wide-reaching overhaul in offing
One ingredient in a broader internal M&A mix being concocted by DT

Austria

TMAT gets M2M boost from ‘international hub’ role [p51] NB-IoT on TMAT radar
Table 14 TMAT goes down the M2M partner route: selected players

TMAT turns to Huawei on backbone overhaul [p53]

Hungary

MT calls time on dedicated SMB business [p54] A better blend
Ironing out the bumps
Wedded to meddling

SYSTEMS SOLUTIONS

Q2 FY17

DT hand forced as T-Sys continues to drag earnings [p58] Table 15 Deutsche Telekom, Systems Solutions financial summary (adjusted), Q2 FY17
Crunch time

Legal and regulatory

British national sentenced for Mirai cyber-attack [p60] Financial costs as-yet-unclear

Operations

TSI 2015+ clear-out continues with Polish exit [p61] A fit for both sides
Table 16 T-Systems Stop programme, business unit impact, FY13-FY17 (where details available)

Partnerships

Check Point link-up extends to consumer devices [p62] Table 17 Magenta Security portfolio and partner ecosystem, early-2017

USA

Table 18 Deutsche Telekom, US area operational indicators, Q2 FY17

Q2 FY17

TMUS continues to provide muscle for Group M&A talks [p66] Counting DIGITS
Figure 3 Deutsche Telekom, US versus European quarterly net revenue comparison, FY16-FY17 (EURm)
Table 19 Deutsche Telekom, US area financial summary (as reported), Q2 FY17
TMUS near to making up half of Group revenue
Sprint talks reportedly kick off – but will Group make such a big bet?
A huge call for DT, which will be highly wary of stymying US momentum

Strategy

TMUS gets into bed with Netflix [p70] Table 20 TMUS on the Un-Carrier trail: 2013-2017
Who needs Time Warner?

Network

TMUS starts 600MHz ball rolling but loose ends remain [p72] Ecosystem building
Dual-band antennas prop rollout
Beware Sinclair
Gaming the system
Safety valves

TMUS propels LTE-Advanced into gigabit territory [p75] Table 21 Different Cats in the IoT alley

TMUS preps “nationwide” NB-IoT by mid-2018 [p76]

FURTHER READING

INDEX

Index

SYMBOLS

3rd Generation Partnership Project (3GPP) 26, 52

A

Accenture 20
adidas 20
Adtran 38, 40
Africa 60
Allianz 24
Alphabet
Google 14, 15, 16
Android 37, 69
Americas
Brazil 20
– Canada 16, 19, 42
– United States of America (USA) 6, 10, 13, 14, 22, 27, 41, 65, 66, 68, 69, 73, 76
Federal Communications Commission (FCC) 69, 72, 73, 74
– – States
Kansas 72
– – – Maine 72
– – – New York 13, 14
– – – North Carolina 72
– – – Pennsylvania 72
– – – Virginia 72
– – – Washington 72
Apple 71
iPhone 71
Asia-Pacific 22, 54, 63
China 21, 25, 39, 49
– Hong Kong 54
– India 51
– Japan 61
– Singapore 61, 63
– South Korea 20
AT&T 25, 67, 68, 69, 70, 71, 76
Avaya 58
Axel Springer AG 24
Axiata Group Bhd (TM International)
Singapore (Mobile One, see separate listing) 76

B

Baidu Inc. 13, 14
Barclays plc 27
Blue Coat Systems 63
BMW 51
BT Group 28, 62
EE 16, 62, 68

C

Cellnex Telecom 14
Swiss Towers 14
Check Point Software Technologies Ltd. 62, 63
China Unicom 25
Choice (Australia) 71
CipherCloud 63
Cisco Systems 63
Comcast Corp. 14, 25, 69
Computacenter 20
Comverse Technology 63

D

Daimler AG 15, 20, 24
Dell 14
Deutsche Bank 24, 66
Deutsche Telekom 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 35, 36, 37, 38, 39, 40, 41, 42, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 58, 59, 60, 61, 62, 63, 66, 67, 68, 69, 71, 72, 73, 76
Corporate
Headquarters 13, 27, 59
Deutsche Telekom Capital Partners 13, 19
DocuSign (see separate) 14, 15
– – Fireglass (see separate) 14, 15
– – Mojio (see separate) 41, 42
– – Morphisec (see separate) 14
– – NSONE (see separate) 13, 14
– – Paxata (see separate) 14
– – SafeBreach (see separate) 14
– – Swiss Towers (see separate) 14
Europe 45, 46
Austria 51, 52, 53
– – Croatia (Hrvatski Telekom) 19, 46, 47, 50, 55
– – Czech Republic 26, 41, 46, 47, 48, 49, 50, 61
– – Greece (see OTE) 22, 52
– – Hungary (see Magyar Telekom) 19, 50, 53, 54, 55, 58, 61
– – International Carrier Sales & Services (ICSS) 14, 32, 54, 55, 61
– – Montenegro (see Magyar Telekom) 19, 46, 50, 55
– – Netherlands 7, 9, 21, 22, 35, 36, 45, 46, 50, 52
– – Poland (Polska Telefonia Cyfrowa/PTC) 20, 45, 46, 61
– – Slovakia (Slovak Telekom/T-Mobile) 46, 47, 48, 49, 50
– – UK (EE) 16, 62, 68
European Aviation Network 29, 30
– Executives
Abolhassan, Ferri 37
– – Arnold, Heinrich 19
– – Backofen, Dirk 62
– – Bierwirth, Andreas 51
– – Christopoulos, Christos 19
– – Clauberg, Axel 19, 28
– – Clemens, Reinhard 6, 16, 19, 58
– – Dannenfeldt, Thomas 6, 24, 35, 38, 45, 49, 68
– – de Haas, Stephan 20
– – Drake, Nicholas 20
– – Dworschak, Mirka 20
– – Goldenits, Walter 25
– – Gopalan, Srini 18, 55
– – Höttges, Timotheus 6, 15, 17, 18, 24, 46, 60, 69
– – Jacobfeuerborn, Bruno 26
– – Janssen, Uwe 28
– – Kicker, Thomas 15, 42
– – Lautz, Alexander 19, 27
– – Legere, John 68, 69, 71
– – Ljusev, Nikola 19, 55
– – Marić, Branimir 48
– – Marijs, Richard 21
– – Nemat, Claudia 18
– – Ostrowski, Artur 61
– – Pruchnow, Johannes 18, 38
– – Ray, Neville 68, 70, 75, 76
– – Tomaskovic, Davor 19, 55
– – Tschersich, Thomas 60
– – van Damme, Niek Jan 8, 16, 19
– – Vasina, Milan 48
– – Wittig, Hannes 6, 27
– – Wössner, Dirk 16, 17, 19
– – Young, Jack 14
Ex-executives
Da Matta, Ronaldo 20
– – Koszolko, Slawomir 20
– – Lakatos, Peter 19, 54
– – Mulder, Rene 20
– – Obermann, Rene 18, 35
– – Urbanski, Jurgen 20
Germany 8, 16, 17, 18, 19, 24, 25, 26, 27, 35, 36, 37, 38, 39, 40, 41, 52, 60
– Investments
Magyar Telekom (see separate) 19, 50, 53, 54, 55, 58, 61
Management Board 48
– Products and services
Binge On 71
– – immmr 15, 22
– – MagentaEINS 37, 40
– – MagentaZuhause 37, 38, 39
Strategy
Growth Areas 58
– – One Company 50
Systems Solutions 7, 10, 35, 36, 45, 57, 59, 67
Telekom IT 7, 18, 35, 36, 45, 59
– – T-Systems 6, 8, 14, 16, 19, 20, 27, 37, 41, 51, 52, 54, 55, 58, 59, 60, 61, 62, 63
Detecon 19
– – – Satellic 20
– – – South Africa 63
– – – Telekom Security 15, 62, 63
– – – Toll4Europe 15, 20
Technology
5G
haus 26
Toll Collect 15
– USA 7, 8, 10, 15, 16, 20, 27, 41, 42, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76
Deutsche Telekom Capital Partners 13, 14, 15, 19
Deutsche Telekom Strategic Investments 15, 19
DocuSign 14, 15

E

EADS
Airbus 20, 29
EchoStar Communications Corp.
Dish Network 74
EMC 14
VMware 63
Ericsson 28, 47, 49, 72, 76
Croatia (see Ericsson Nikola Tesla) 47
Europe
Austria 19, 41, 46, 51, 52, 53
– Belgium 20, 61
– Croatia 19, 46, 47, 49, 50, 52
– Czech Republic 26, 46, 47, 48, 61
– France 15, 19, 29, 30, 61
Autorite de Regulation des Communications Electroniques et des Postes (ARCEP) 30
Germany 6, 7, 8, 9, 10, 14, 16, 18, 24, 25, 26, 27, 29, 30, 34, 35, 36, 37, 38, 39, 40, 41, 42, 45, 51, 58, 59, 60, 61, 63, 67, 76
Bundesnetzagentur für Elektrizitat, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 30
– – Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 30
Greece 30, 46, 52
– Hungary 8, 46, 49, 52, 53, 54, 55, 61
National Media and Communications Authority (NMHH) 53
Ireland 22
– Italy 61
– Latvia 40
– Montenegro 19, 50, 55
– Netherlands 6, 8, 9, 20, 22, 76
Agentschap Telecom 22
Norway 30
– Poland 6, 20, 46, 52, 61
– Portugal 30
– Romania 20, 30, 46, 49
– Russia 14
– Slovakia 22, 46, 49, 52
– Spain 14, 61
– Sweden 30, 40, 49, 53, 72
– Switzerland 14, 20, 30, 41, 76
– United Kingdom (UK) 30, 60, 62, 68
European Union 24, 28, 30, 40, 55
European Commission 28, 30, 40
– European Court of Justice 29, 30
Eutelsat Communications 30
EWE
EWE Tel 38

F

F5 Networks Inc. 63
Facebook 16, 27, 28, 32
Telecom Infra Project 19, 25, 26, 27
FireEye 63
Fireglass 14, 15
Flybridge Capital Partners 14
France Télécom
Orange 16, 19, 68
Slovakia 19
– – UK (see EE, DT) 16, 62, 68

G

Global mobile Suppliers Association (GSA) 22
Goldman Sachs 14
GSM Association
Mobile World Congress 27, 31, 42, 52, 76
GSM Association (GSMA) 31, 32
GTS Central Europe 20, 55

H

Hewlett-Packard 14, 63
Hrvatski Telekom (see DT, Croatia) 19, 46, 47, 50, 55
Combis d.o.o. 19
Huawei Technologies 21, 26, 28, 39, 47, 49, 52, 53

I

IBM 63
Inexio 35
Infinera Corporation 53
Inmarsat 29, 30
Intel 14, 15, 28, 30, 63
Intel Capital 14
International Airlines Group SA
British Airways 29
– Vueling Airlines SA 29

J

Juniper Networks 63

K

Kabel Baden-Württemberg GmbH (Kabel BW) 40
Kaspersky Lab 63
Konica Minolta 51
KPN 22
Kraft 20

L

LG Electronics 72
Lookout, Inc. 62, 63
Lufthansa 29

M

Magyar Telekom (see DT) 19, 50, 53, 54, 55, 58, 61
Executives
Mattheisen, Christopher 55
Macedonia (Makedonski Telekom/T-Mobile) 19
– Montenegro (Crnogorski Telekom) 19, 46, 50, 55
– T-Systems Hungary 8, 54, 58, 61
Market segments
Machine-to-machine (M2M) 19, 27, 51, 52, 76
– Multinational corporations (MNCs) 58
Mavenir Systems 32
MetroPCS Communications Inc. 69
Microsoft 14
Middle East
Israel 13, 14, 15
Mobile One (Singapore) 76
Mojio 41, 42
Morphisec 14

N

Netflix 37, 70, 71
Nexmo 14, 15
Nokia 22, 28, 29, 72, 75
Norwest Venture Partners 14
NSONE 13, 14
NTT 25

O

Omnicom 16
Open Handset Alliance (OHA)
Android 37, 69
Organisation for Economic Co-operation and Development (OECD) 40
OTE (Hellenic Telecom. Org. SA, see DT)
Cosmote 22, 52
Greece 22, 52

P

Palo Alto Networks Inc. 63
Panasonic 30
Paxata 14
Public Broadcasting Service 74
Publicis Groupe 16

Q

Qatar Telecom (Qtel) 14
Qualcomm 72, 75, 76
Qualys 63
Quantum Corp. 61

R

Reliance-Anil Dhirubhai Ambani Group
Reliance Communications (RCom) 51
Riverbed Technology 63
RSA Security 63
RWE AG 38

S

SafeBreach 14
Salesforce 20, 41
Samsung 14, 28, 37, 72
Sequoia Capital 14
Sierra Wireless 76
Sigma Prime Ventures 14
Singapore Telecom 14
SK Telecom 19, 28
Slovak Telekom (see DT, Slovakia) 46, 47, 48, 49, 50
SOFTBANK CORP. 68
Sophos 63
Splunk Inc. 63
Sprint Corporation 8, 66, 68, 69, 71
Sunrise 14
Symantec 14, 15, 63

T

TCL Communication 69
Technology
2G 49
GPRS 52
– – GSM 31, 52
3G 21, 22, 49
Evolved HSPA (HSPA+/I-HSPA)
MIMO 26, 75
UMTS-TDD 21, 22
4G 21, 22, 49, 68, 71, 72
Long Term Evolution (LTE) 21, 22, 26, 29, 32, 40, 47, 49, 68, 70, 71, 72, 73, 75, 76
– – Long Term Evolution Time Division Duplex (TD-LTE) 21, 22
5G 19, 21, 26, 27, 28, 72, 75
– ATSC 73, 74
– DSL 35, 37
– Ethernet 52
– Fibre 27, 35, 38, 39, 40
– FTTH 38, 39, 40
– GPRS 52
– IP 8, 19, 24, 25, 27, 28, 32, 35, 36, 39
– IPTV 35
– M2M 19, 27, 51, 52, 76
– Narrowband Internet of Things (NB-IoT) 51, 52, 59, 76
– OpenStack 25, 63
– R&D 26, 27, 50
– SaaS 13
– SIM 31, 51
– Smartphone 19, 21, 37, 52, 62, 69
– SMS 31, 32
– Spectrum 21, 22, 26, 73, 75
700 MHz 73
– – 800 MHz 22, 26
– – 900 MHz 21, 22
– – 1000 MHz 21
– – 1800 MHz 21, 22
– – 1900 MHz 22
– – 2100 MHz 21, 22
– – 2600 MHz 21, 22
– – 3500 MHz 22
Vectoring 39
– WAN 14
– W-LAN 52, 53, 71
Tele2 22
Tele Columbus 40
Telecom Italia 28
Telekom Austria 19
Telekom Slovenije
ONE 68, 71
Telstra 14
Tesla 47
Thales Group 29
Time Warner 71
Transmode Systems AB 53
Twitter Inc. 68
Two Sigma Investments
Two Sigma Ventures 14

V

Value-added services 37
VeriFone Systems 52
Verizon Communications 25, 67, 68, 69, 70, 71, 76
Verizon Wireless 67, 68, 70, 76
Vertex 13, 14
ViaSat 30
VINCI Group
Cofiroute, S.A. 15
Vodafone 8, 13, 40, 54, 67
Europe Region
Germany 40
– – Hungary 54

W

Warburg Pincus LLC 35
Wells Fargo 69
WPP 16

Z

Zscaler 15, 63
ZTE Corp. 53

About

About Deutsche Telekomwatch

Report: #66
Covering: September 2017
Published: September 2017
Next report: October 2017
For more information visit: Deutsche Telekomwatch