Deutsche Telekom

The Group hopes American Adel Al-Saleh, fresh from a multi-year stint rationalising and restructuring UK IT service provider Northgate Information Solutions, can push through another major refit job on T-Systems.

  • Switchover to formally take place at start of next financial year.
  • Partnerships — whether on go-to-market, technology, or M&A — could see a revamp.

Deutsche Telekom (DT) named former IBM executive Adel Al-Saleh as its choice to take on the challenge of improving profitability at T-Systems (T-Sys), emphasising recent willingness to look outside DT, and beyond Europe, for fresh management thinking.

The 53-year-old American will formally join DT on 1 January 2018 — taking over as T-Sys Chief Executive from Reinhard Clemens, whose resignation was announced in September 2017 (Deutsche Telekomwatch, #66). As with Clemens, Al-Saleh will have a seat on DT’s Board of Management.

Sea change could disrupt T-Sys partner roster

The impression remains that the switchover in T-Sys’s leadership is the hors d’oeuvres to a broader and more dramatic reorganisation of the division, which has increasingly been seen as in line for a major overhaul after less-than-spectacular results from the more gradual, Clemens-led TSI 2015+ recalibration programme.

The change gives Al-Saleh and Group leadership some time to gestate these plans ahead of DT’s May 2018 Capital Markets Day, when T-Sys’s weak cash generation is sure, like the last event in February 2015, to require a mea culpa and evidence of a fresh plan (Deutsche Telekomwatch, #42).

A demolition man with connections

An external appointment — i.e. someone from outside both T-Sys’s ‘classic’ telecoms/outsourced service and ‘new’ digital/cloud camps, and a non-European — clearly indicates desire for a dispassionately-formulated plan for the division, with no danger of pollution by vested interest, Group Think, or sentimentality. It also suggests desire for real separation from certain long-held — but unproductive — client and partner relationships, which dogged the Clemens-led T-Sys, despite claims of intent to be more selective and address contract risk (Deutsche Telekomwatch, passim).

DT was notably keen to highlight Al-Saleh’s turnaround credentials by pointing to his most recent job, as Chief Executive of UK outsourced service provider Northgate Information Solutions (NIS). Al-Saleh was appointed to lead NIS in 2011, by private equity owners Kohlberg Kravis Roberts & Co., and subsequently delivered a strategic, financial, and organisational overhaul of the business. DT stressed a “streamlined portfolio, new strategy, and efficient and competitive operations” came out of those changes.

Perhaps significant — although not highlighted by DT — was that Al-Saleh’s stint at NIS witnessed the sale of two of its main business divisions: mid-market provider Northgate Managed Services, to Capita in 2013; and government-focused Northgate Public Services, to Cinven in 2014. This left NIS focused on its one remaining subsidiary, NGA Human Resources, which Al-Saleh himself led from 2013 onwards.

T-Sys has been repeatedly been mooted for M&A-led downsizing in recent years, and DT has not been afraid of tieing with private equity players to reposition assets, such as via 2013’s majority sale of Scout24 to Hellman & Friedman, or subsequent rumours of a joint move for Host Europe Group alongside the same investment group (Deutsche Telekomwatch, #26 and #58). No doubt involved behind the scenes is DT’s own private equity-type division, Deutsche Telekom Capital Partners, which is leading restructuring of other Group assets such as Deutsche Funkturm and T-Mobile Netherlands, as well as leading external M&A.

  • T-Sys’s last financials, for the three months to 30 June 2017 (Q2 2017), saw a fifth successive quarter of revenue contraction (-1.8%, to EUR1.7bn), raising further doubt over its ability to meet an (already delayed) target of top-line stabilisation during FY17, and to deliver on an expectation of above 1% compound annual growth across FY15-FY18 (Deutsche Telekomwatch, #66). Core earnings margin for Q2 was just 8.1% (against 31.5% Group-wide), despite a long period of rationalisation and revenue base restructuring under TSI 2015+.

Image: © Deutsche Telekom.

Table of Contents

EXECUTIVE BRIEF

GROUP

Strategy

DT exec vents frustration at lack of NFV progress [p6]

  • Lifecycle lessons learned
  • NFV orchestration
  • People, processes, procurement
  • Table: People movement highlights

Technology & Innovation

Group on hand as TIP seeks to power European startups [p12]

  • Network AI is DT’s next focus
  • Eyes wide open

Deutsche Telekom UK looks to AI future [p13]

  • Table: hub:raum investment portfolio, to 2017
  • Table: DT’s search for intelligent conversation: combining AI with chatbots
  • Bits and bots
  • Outrider DTUK hanging on in there

Supply chain

DT cost drive brings change in facilities partner [p17]

  • Big deals, big consequences
  • Table: Partner/supplier people movement highlights
  • More work for less money

GERMANY

Products and services

TDE adds 4K and original content to EntertainTV [p20]

  • Three-million mark reached, but TV uptake still off target
  • TDE adds new exclusive content, including its first-in-house series
  • Other recent TV content moves

EUROPE

Croatia

HT pins TV platform flag to Zenterio mast [p24]

  • Tapped into XPan-Net

Poland

TMPL bumps up LTE max to ‘395Mbps’ [p25]

  • Network pointers

1800MHz spectrum up in air as 2007 auction annulled [p26]

  • Annulled in August…
  • …reopened in September

Slovakia

ST makes 3.7GHz breakthrough in Bratislava [p28]

  • Long and binding road to 3.7GHz
  • Stepping up to the 3.4GHz-3.8GHz plate

SYSTEMS SOLUTIONS

People

DT reaches beyond borders for Clemens successor [p31]

  • Sea change could disrupt T-Sys partner roster
  • A demolition man with connections
  • Figure: DT Board of Management responsibility split, pre-2016 and post-2018 changes

Products and services

T-Sys dips toe in ngena’s shared network pool [p35]

  • Equinix comes on board to expand reach

USA

Deals

TMUS takes full ownership of regional venture iWireless [p38]Network

TMUS pushes on 3.5GHz testing with Ericsson, Nokia [p39]

  • Regulatory tide turning on 3.5GHz?

TMUS gets 600MHz boost from Fox and Qualcomm [p42]

  • Tenant eviction remains a headache
  • NAB concerns
  • Qualcomm chips in
  • Beyond 600MHz

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 29

A

Africa 11, 31
Nigeria 11
Akamai Technologies 9
Alphabet
Google 7, 12
YouTube 20
Amazon.com Inc. 12
Americas
United States of America (USA) 31, 36, 37, 39, 40, 42
Federal Communications Commission (FCC) 39, 40, 42, 43
– – States
Florida 31
– – – Illinois 38
– – – Iowa 38
– – – Nebraska 38
– – – New York 42
– – – Washington 39
Apple 12, 15
iPhone 15
Asia-Pacific 36, 40
Australia 38
– – China 7, 8
AT&T 8, 39

B

Blinkist 13
BT Group 11, 12, 15
BT Global Services 11
– – EE 11, 13, 15, 31
Bundesliga 20

C

CenturyLink Inc. 35
Český Telekomunikační Úřad (ČTÚ) 28
China Mobile 8
Ciena Corp. 8
Cinven 32
Cisco Systems 25, 36
Coca-Cola 26
Comarch SA 36
Contiamo 13
CTIA 40
Cyfrowy Polsat SA 26

D

DanubiaTel
SWAN 29
Dell 12
Deutsche Bank 38
Deutsche Telekom 6, 7, 8, 9, 11, 12, 13, 14, 15, 17, 18, 20, 21, 24, 25, 26, 28, 29, 31, 32, 33, 35, 38, 39, 40, 42, 43
Corporate
Headquarters 12
Deutsche Telekom Capital Parrtners
Deutsche Telekom Strategic Investments
Skorpios Technologies (see separate) 9
Deutsche Telekom Capital Partners 9, 32
Deutsche Telekom Strategic Investments 9
Cuculus (see separate) 9
– – – Nominum (see separate) 9
Next Generation Enterprise Network Alliance (ngena) 35, 36
Europe
Austria 11, 14
– – Croatia (Hrvatski Telekom) 11, 24, 25
– – Czech Republic 13, 28, 29
– – Greece (see OTE) 11
– – Hungary (see Magyar Telekom) 15, 24, 25
– – International Carrier Sales & Services (ICSS) 14
– – Montenegro (see Magyar Telekom) 11
– – Netherlands 11, 32
– – Poland (Polska Telefonia Cyfrowa/PTC) 11, 15, 25, 26, 29
NetWorkS! 25
Slovakia (Slovak Telekom/T-Mobile) 11, 28, 29
– – UK (EE) 11, 13, 15, 31
Executives
Ashouriha, Arash 6
– – Clauberg, Axel 12
– – Clemens, Reinhard 11, 31
– – Dannenfeldt, Thomas 18
– – Daub, Daniel 11
– – Fiegl, Matthias 11
– – Grohs, Franz 11
– – Hagspihl, Michael 21
– – Höttges, Timotheus 20, 33
– – Knauer, Martin 11
– – Lenz, Peter 11
– – Lukaschik, Dirk 11
– – Nemat, Claudia 15
– – Nemeth, Christian 11
– – Radszuweit, Jens 11
– – Ray, Neville 39, 42
– – Saletovic, Danjin 11
– – Snoep, Marieke 11
– – Stettler, Roland 11
– – Tsokanis, Timos 11
– – van Damme, Niek Jan 21
– – Zesch, Maria 11
Ex-executives
Kral, Otakar 11
– – Rook, Ivo 11
Germany 14, 15, 20, 21, 24, 25, 29
Congstar 14
Investments
Magyar Telekom (see separate) 15, 24, 25
– – OTE (see separate) 26
Management Board 17
– – Product and Innovation
hubraum 13, 14
Blinkist (see separate) 13
– – – Contiamo (see separate) 13
– – – Devicehub.net (see separate) 13
– – – Ecoisme (see separate) 13
– – – Excalibur (see separate) 13
– – – Flexperto (see separate) 13
– – – Frestyl (see separate) 13
– – – Koala Metrics (see separate) 13
– – – M2MGO (see separate) 13
– – – Omnipaste (see separate) 13
– – – Reputami (see separate) 13
– – – Salonmeister (see separate) 13
– – – Stylemarks (see separate) 13
– – – Thapir (see separate) 13
Telekom Innovation Laboratories (T-Labs) 14
Products and services
MagentaZuhause 20
– – Scout24 32
Systems Solutions 30
T-Systems 9, 11, 13, 14, 17, 26, 31, 32, 35, 36, 38
Satellic 17
Technology
BNG (Broadband Network Gateway) 6
– – TeraStream 6
USA 29, 38, 39, 40, 42, 43
Deutsche Telekom Capital Partners 9
Devicehub.net 13

E

Ecoisme 13
Emblaze Group
European Telecom 6
EMC 12
VMware 12, 36
E.ON AG 9
Ericsson 8, 9, 12, 25, 39
Croatia (see Ericsson Nikola Tesla) 25
Europe
Austria 11, 17
– – Belgium 15, 17
– – Croatia 11, 13, 15, 24, 25
– – Czech Republic 8, 13, 28
Czech Telecommunications Office (CTU) 28
Denmark 17
– – Finland 32
– – France 15, 21
– – Germany 8, 9, 13, 15, 17, 18, 19, 20, 21, 24, 32, 35, 36
– – Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 21
Greece 24, 26
– – Hungary 15, 24
– – Netherlands 6, 8, 11, 13
– – Poland 11, 13, 15, 25, 26, 29
Urząd Komunikacji Elektronicznej (UKE) 25, 26
Portugal 11, 13, 35
– – Romania 8, 11, 13, 24
– – Slovakia 8, 11, 13, 24, 28, 29
– – Spain 11, 35
– – Sweden 24
– – Switzerland 11, 21
– – United Kingdom (UK) 11, 13, 15, 31, 32, 40
European Telecommunications Standards Institute 6, 8
European Union 28, 29, 40
European Commission 29
Excalibur 13

F

Facebook 7, 12, 14
Telecom Infra Project 12
Flexperto 13
France Télécom
Orange 12, 15, 25, 26
Poland (see Telekomunikacja Polska) 25, 26
– – UK (see EE, DT) 13, 15, 31
Frestyl 13

G

Giga Information Group 20
GSM Association
Mobile World Congress 6, 20, 35
GSM Association (GSMA) 15, 39

H

Hellman & Friedman 32
Hewlett-Packard 8
Host Europe Group 32
Hrvatski Telekom (see DT, Croatia) 11, 24, 25
MAXtv 24
Huawei Technologies 7, 8, 12, 20, 24, 29, 32

I

IBM 8, 11, 31
IDEMIA 15
Inmarsat 35
Intel 8, 11
International Telecommunications Union 43
iPass Inc. 14
ISS Group 17

K

Koala Metrics 13
Kohlberg Kravis Roberts 32
KONE Corporation 32

L

LG Electronics 43

M

M2MGO 13
Magyar Telekom (see DT) 15, 24, 25
Montenegro (Crnogorski Telekom) 11
– – T-Systems Hungary 14, 26
Market segments
Mobile virtual network operator (MVNO) 7
MD7 18
Midas
Aero2 26
– – Centernet 26
– – Mobyland 26
Middle East 11, 31
Israel 13

N

National Association of Broadcasters 42
NEC 8
Netflix 20
Nokia 8, 9, 24, 25, 39
Nominum 9
Northgate Information Solutions Ltd 31, 32
NTT 8

O

Omnipaste 13
OTE (Hellenic Telecom. Org. SA, see DT) 26
Cosmote 11
Greece 11

P

P4 sp. z o.o. (Play) 26
Palo Alto Networks Inc. 11
PCCW 35
Portugal Telecom 35
Public Broadcasting Service 42

Q

Qualcomm 12, 42, 43
Quantum Corp. 12

R

Ranovus 9
Reliance-Anil Dhirubhai Ambani Group
Reliance Communications (RCom) 35
Reputami 13
RTL Group 21

S

Salonmeister 13
Samsung 15
SAP 26, 32
ServiceNow 32
Skorpios Technologies 9
SK Telecom 12, 35
Sky
Sky Deutschland 20
Slovak Telekom (see DT, Slovakia) 11, 28, 29
Sony Corp. 29
Spotify Ltd 21
Sprint Corporation 11, 39
STRABAG SE
STRABAG Property and Facility Services (formerly DeTe Immobilien) 17
Stylemarks 13

T

Technology
2G 38
GSM 15, 39
3G 28, 29, 39, 40
Evolved HSPA (HSPA+/I-HSPA)
MIMO 25, 29
4G 15, 38, 43
Long Term Evolution (LTE) 25, 26, 29, 42
5G 28, 29, 39, 40, 43
– – FM 42
– – HD Voice 15
– – IMS 31
– – IP 6, 12, 35
– – IPTV 20, 24
– – Linux 7, 8
– – NFV 6, 7, 8
– – OpenStack 7
– – R&D 12, 13
– – RF 43
– – SDN 6, 7, 8
– – Smartphone 15, 29, 43
– – SMS 39
– – Spectrum 25, 26, 28, 29, 39, 40, 42, 43
450 MHz 26
– – 700 MHz 43
– – 800 MHz 25
– – 1800 MHz 25, 26
– – 2100 MHz 25
– – 2600 MHz 25
– – 3500 MHz 28, 29, 39, 40
WAN 35
– – W-LAN 14, 15, 29
Telefónica Group 8, 12, 15, 17, 28
Europe 28, 29
Slovakia 28
Telstra 35
Thapir 13

V

VERITAS Software Corp. 36
Verizon Communications 38, 39
Verizon Wireless 39
Viber Media 14
Vivendi
SFR (Société Française de Radiotéléphone) 35
Vodafone 6, 9, 11, 12, 17
Europe Region
Germany 17

Z

Zenterio 21, 24

About

About Deutsche Telekomwatch

Report: #67
Published: October 2017
Next report: November 2017
For more information visit: Deutsche Telekomwatch