Questions remain over the future of Deutsche Telekom’s road-charging joint venture Toll Collect as it approaches the next tender of its government contract.

  • BMVI looking at structure to protect a new partner from risks associated with Toll Collect’s historical legal disputes.
  • DT has been diversifying beyond challenged JV.

The future of Deutsche Telekom’s (DT) interest in Toll Collect, its challenged motorway charging joint venture (JV), appeared under threat from a government nationalisation plan.

Newspaper Handelsblatt reported that the German authorities are considering a “temporary” takeover of the business when its current toll management contract expires in August 2018, forcing DT and co-owners Daimler and Cofiroute to relinquish their stakes.

A BMVI spokesperson confirmed the nationalisation plan to Reuters, but stressed that “it is not intended that the government will hold the shares in the operating company permanently”.

Government clears way for a partner refresh

The move is seen as the latest bid by Germany’s Bundesministerium für Verkehr und digitale Infrastruktur (Federal Ministry of Transport and Digital Infrastructure/BMVI) to “draw a line” under the long-running legal conflict that has clouded the JV’s relationship with the government.

Ahead of the coming tender, the plan would create a “bad bank” equivalent to allow any new toll collection operator to be free of legal entanglements relating to the conflict.

The prolonged feud stems from a two-year delay that took place before the system was launched in 2005, which prompted the government to push for huge contractual penalties and damages from the JV (standing at EUR4.98bn plus interest, according to DT’s Annual Report for the year to 31 December 2016, but now likely to be higher). Toll Collect’s owners are in turn said to be pursuing around EUR2bn in fees that have been withheld by the BMVI as part of the dispute.

DT on or off the hook?

It is not yet clear, however, what any enaction of the ‘nationalisation’ plan would mean for DT and its co-parents, in terms of any future liabilities relating to the government’s claim. DT has previously indicated that Cofiroute is part-protected from the dispute, with its liability limited to EUR70m.

Troubles mounting up

The report adds to other recent signs that Toll Collect is facing a much tougher negotiation process ahead of the coming renewal deadline. It follows indications in 2017 that Daimler was looking to offload its 45% interest, and others that the JV was under investigation over billing fraud allegations (Deutsche Telekomwatch, #64 and #66).

DT did not comment on the Handelsblatt report, and seldom discusses the Toll Collect JV at all — but appears not to have fully anticipated the government’s ‘hardball‘ positioning. In its latest Annual Report, DT expressed confidence in its ability to secure another contract for Toll Collect. “As the existing technology and development partner, we are in a strong position in the new tender process to submit a competitive offer to continue operation of the system, thanks to our detailed knowledge and expertise”, the Group said.

Despite the arbitration proceedings, and competitor interest in usurping Toll Collect’s engagement with the BMVI, the JV has had a long unbroken spell in charge of the toll system since its inception, and managed numerous upgrades of the network’s reach and capabilities (Deutsche Telekomwatch, #59). DT has also been developing its toll collection business in Europe from the Toll Collect base, forming an equivalent JV (Satellic) in Belgium, and joining with Daimler (and DKV Europe Service) to create a newer venture, called Toll4Europe, that focuses on integration between national systems (Deutsche Telekomwatch, #62).

Image: Toll Collect.

Table of Contents

EXECUTIVE BRIEF

GROUP

Deals

DT and Orange linked again as Macron seeks EU revival [p6]

  • Figure 1: Deutsche Telekom and Orange fixed-line and mobile footprint comparison
  • An imbalanced friendship
  • Figure 2: Revenue split by geography, DT and Orange (FY16)
  • Table 2: European operator market capitalisation comparison, February 2018
  • An unrealistic mismatch, but no harm done for DT’s attempts to shape Europe
  • DT and Orange by numbers – they don’t add up, for now
  • Table 1: European operator financial and other metric comparison

Partnerships

Nationalisation plan puts Toll Collect JV future in doubt [p9]

  • Government clears way for a partner refresh
  • DT on or off the hook?
  • Troubles mounting up
  • Table 3: Toll Collect overview, 2018 unless stated

DT trumpets completion of ground network for EAN [p13]

  • EAN part of DT’s strategy to connect everyone everywhere
  • Legal challenges not expected to delay EAN launch
  • EAN timeline

People

Table 4: People movement highlights

Technology & Innovation

Höttges: Forget B2C – EU’s digital future is B2B [p18]

  • Höttges remains long on 5G ecosystems
  • Banking on 5G-based B2B revival is ambitious
  • More IoT/B2B tie-up activity; Hamburg and Munich testbeds
  • NB-IoT rollout on schedule, assures DT

GERMANY

Network

TDE extends testing of FTTH demand to Markkleeberg [p23]

  • Public subsidies and industrial zones

EUROPE

Czech Republic

TMCZ to expand FTTH network [p26]

  • Table 5: T-Mobile Czech Republic and Slovak Telekom, financials and KPIs, Q3 FY17
  • Table 6: Selected DT NatCo mobile-wireline broadband user base weighting, at 30 September 2017 (pre-latest M&A)
  • M&A follow-up?

Hungary

MT obliged to provide passive network access [p29]

SYSTEMS SOLUTIONS

Strategy

New T-Sys chief enters with intent [p32]

  • Shaking Systems: Clemens lieutenants and partnerships to be mixed up
  • Thyssenkrupp breakup illustrates the task Al-Saleh faces

T-Sys strengthens Brazil footing with IoT-led MVNO [p34]

  • Two BRICs laid
  • More power-hungry DT moving beyond stock partnership patterns

USA

Network

TMUS typically bullish over 600MHz progress [p37]

  • Taking the low road
  • AT&T 600MHz snub shrugged off
  • LTE coverage lag is old hat, says Ray
  • Macro facts on the ground
  • Add-on M&A action to continue

TMUS keeps up 5G banter [p40]

  • Ray gets claws out in race for 5G bragging rights
  • Mapping out TMUS’ 5G tilt for air supremacy
  • Table 7: National weighted average of spectrum depth, band class *

TMUS seeks allies for densification drive [p42]

  • Europe in network shade again

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 40

A

Africa 7, 17, 35
– Congo 7
Alcatel-Lucent 15, 35
Alibaba Group Holding Ltd 18
Alphabet
– Google 8, 18, 19
Amazon.com Inc. 18, 19
América Móvil 34
– Claro 34, 35
Americas
– Brazil 17, 34
– Colombia 42
– Latin America 35
– United States of America (USA) 6, 7, 8, 15, 18, 20, 36, 37, 40
– – Federal Communications Commission (FCC) 38, 39, 41
– – States
– – – Califormia 40
– – – Georgia 9
– – – Illinois 39
– – – Iowa 39
– – – Nebraska 39
– – – New York 38
– – – Washington 41
Apple 39
Asia-Pacific 15, 17, 35
– China 18, 34, 35
– Japan 42
– Singapore 42
– South Korea 17
Atos 33
AT&T 19, 38, 40, 41

B

Banco Santander, SA 17
Bango 27
Bloomberg L.P. 18
BMW 19
Boku 27
BOKU Inc. 27
BroadSoft 6
BT Group
– EE 7

C

CenturyLink Inc. 9
China Unicom 34, 35
Cisco Systems 9, 19
Cleverlance 26
Comarch SA 9
Comcast Corp. 41
Crown Castle International Corp. (CCI) 42

D

Daimler AG 9, 11
Deutsche Telekom 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18, 19, 20, 23, 24, 26, 27, 28, 29, 32, 33, 34, 35, 37, 38, 39, 40, 41, 42
– Corporate
– – Headquarters 20
– Deutsche Telekom Capital Partners 10
– – Deutsche Telekom Strategic Investments 6
– – – Swyx (see separate) 6
– – Mojio (see separate) 34
– – Next Generation Enterprise Network Alliance (ngena) 9, 35
– Europe
– – Austria 17, 20, 26, 27, 28, 34
– – Croatia (Hrvatski Telekom) 28
– – Czech Republic 16, 26, 27, 28, 34
– – Greece (see OTE) 28
– – Hungary (see Magyar Telekom) 16, 28, 29
– – Netherlands 27, 28
– – Poland (Polska Telefonia Cyfrowa/PTC) 27, 28
– – Slovakia (Slovak Telekom/T-Mobile) 16, 26, 27, 28
– – UK (EE) 7
– European Aviation Network 13
– Executives
– – Binder, Jeff 16, 37
– – Boni, Bill 16
– – Bush, Ken 16
– – Camuso, Stefano 17
– – Clemens, Reinhard 33
– – Fazakas, Andras 16
– – Fleutiaux, Francois 33
– – Gedrovics, Alexander 16
– – Höttges, Timotheus 18, 24
– – Katz, Mike 16
– – Kemal, Kosemehmetoglu 16
– – Kimberger, Michael 17
– – Klose, Fabian 17
– – Konya, Laszlo 17
– – Kralova, Ursula 16
– – Legere, John 40
– – Lenz, Peter 11
– – Ray, Neville 37, 40
– – Salm, Olaf 16
– – Schlaberg, Steffen 17
– – Sievert, Mike 16
– – Slooten, Erik 16
– – Thygesen, Dan 16
– – Vacek, Jiri 16
– – Vasina, Milan 26
– – Wittig, Hannes 42
– Ex-executives
– – Rubim, Camillo 17
– – Zamani, Phil 17
– Germany 6, 17, 20, 23, 24, 26, 27, 28, 34
– Investments
– – Magyar Telekom (see separate) 16, 28, 29
– – OTE (see separate) 15, 16, 20
– Product and Innovation
– – hubraum 20
– Products and services
– – T-Mobile TV 16, 37
– Systems Solutions 31
– – T-Systems 7, 9, 17, 18, 19, 32, 33, 34, 35, 37
– – – Satellic 11
– – – Telekom Security 32
– – – Toll4Europe 11
– Toll Collect 9, 10, 11
– USA 6, 7, 15, 16, 17, 19, 28, 34, 35, 37, 38, 39, 40, 41, 42
Deutsche Telekom Capital Partners 10
Dr. Ing. h.c. F. Porsche AG 17

E

EADS
– Airbus 15
eBay
– PayPal 27
EchoStar Communications Corp. 14
Ericsson 18, 41, 42
Europe
– Albania 7
– Austria 7, 8, 9, 14, 17, 26
– Belgium 7, 11, 33
– Croatia 7
– Czech Republic 7, 20, 26, 27, 28
– Estonia 27
– Finland 13
– France 6, 7, 8, 9, 13, 14, 15, 42
– Germany 6, 7, 8, 9, 10, 13, 14, 15, 17, 18, 19, 20, 22, 24, 26, 32, 33, 35, 42
– – Government 19
– Greece 7, 15, 20
– Hungary 7, 16, 19, 20, 29
– – Gazdasági Versenyhivatal (Hungarian Competition Authority/GVH) 29
– – National Media and Communications Authority (NMHH) 29
– Ireland 42
– Italy 9, 14
– Luxembourg 7
– Macedonia 7
– Montenegro 7
– Netherlands 6, 7, 8, 9, 20
– Norway 13
– Poland 7, 20
– Portugal 9, 13
– Romania 7, 17, 27, 28
– Russia 9
– Slovakia 7, 20, 27
– Spain 7, 9
– Switzerland 13, 17, 19, 33, 34
– Ukraine 9
– United Kingdom (UK) 6, 7, 9, 13, 15, 35, 42
– – Office of Communications (Ofcom) 14, 15
European Organisation for Nuclear Research 19
European Union 6, 13, 18, 20
– European Commission 14, 15
– European Court of Justice 14, 15
Eutelsat Communications 14

F

Facebook 18
Fortumo 27
France Télécom
– Orange 6, 7, 8, 28
– – Poland (see Telekomunikacja Polska) 28
– – UK (see EE, DT) 7
FreeMove Alliance (DT-FT-TeliaSonera-TI) 35

G

Global M2M Assocation (GMA) 35
Gogo 15
GSM Association
– Mobile World Congress 35
GTS Central Europe 16

H

Hamburg Port Authority 20
Hitachi 17
Hrvatski Telekom (see DT, Croatia) 28
Huawei Technologies 11, 26, 28, 32

I

IBM 17, 18, 19, 32
Inmarsat 9, 13, 14, 15
Intel 11, 19, 41
International Airlines Group SA
– British Airways 13, 15
– Vueling Airlines SA 15

K

Kohlberg Kravis Roberts 33
KPN 8, 9

L

Lebara Group 17
LG Electronics 39
Liberty Global
– UPC Austria 26, 28
Liberty Global Inc. 8
– UPC Broadband 26, 28
Lufthansa 13, 15

M

Magyar Telekom (see DT) 16, 28, 29
– Macedonia (Makedonski Telekom/T-Mobile) 16
Market segments
– Machine-to-machine (M2M) 34
– Mobile virtual network operator (MVNO) 34, 35
– Multinational corporations (MNCs) 34
– Value-added services (VAS) 34
MetroPCS Communications Inc.
– Carter, Braxton 42
Microsoft 6, 19
Middle East 7, 17
– Egypt 7
– Iraq 7
– Israel 42
Mojio 34
mopay 27

N

NFON 6
Nokia 13, 15, 20, 35, 38, 41, 42
Northgate Information Solutions Ltd 32

O

OTE (Hellenic Telecom. Org. SA, see DT) 15, 16, 20
– Cosmote 28
– – Albania (Telekom Albania) 28
– – Greece 28

P

PCCW 9
Portugal Telecom 9

R

Reliance-Anil Dhirubhai Ambani Group
– Reliance Communications (RCom) 9
Royal Dutch Shell plc 37

S

Samsung 39
SAP 17, 32
SES S.A. 14
– SES Astra S.A. 14
SK Telecom 9, 35
Slovak Telekom (see DT, Slovakia) 16, 26, 27, 28
Sprint Corporation 40, 41
Swisscom 17
Swyx 6

T

Technology
– 2.5G 40, 41
– 2G 39, 40, 41
– 3G 41
– – Evolved HSPA (HSPA+/I-HSPA)
– – – MIMO 11
– 4G 39
– – Long Term Evolution (LTE) 13, 15, 26, 27, 28, 37, 38, 39, 41
– 5G 11, 18, 19, 20, 37, 38, 40, 41, 42
– DSL 10, 26, 27
– Fibre 7, 10, 23, 24, 26, 27, 29, 42
– Fixed-mobile convergence (FMC) 14
– FTTH 7, 23, 24, 26
– IP 16, 26, 35
– IPTV 37
– M2M 34
– Narrowband Internet of Things (NB-IoT) 19, 20
– OpenStack 32
– R&D 7, 18
– RF 17
– SaaS 19, 33
– Smartphone 38, 40
– Spectrum 39, 41, 42
– – 700 MHz 38, 39, 41
– – 1000 MHz 38
– – 1900 MHz 41
– – 2300 MHz 41
– – 3500 MHz 41
– – Advanced Wireless Spectrum 41
– VDSL 28
– WAN 9
– W-LAN 13
Tele2 28
– Netherlands 28
Telecom Italia 35
– Telecom Italia Mobile 35
Telefonica Group 8
– Europe 26, 28
Telekom Austria 9, 28
– Austria
– – A1 9, 28
Telenor ASA 29
– Hungary 29
Telstra 9
Telus 9
Tencent Holdings Ltd 18
Thales Group 13, 14, 15
Twitter Inc. 40

U

United States Cellular Corp. (US Cellular) 41

V

Value-added services 37
Verizon Communications 38, 39, 40, 41
– Verizon Wireless 40, 41
ViaSat 14, 15
VINCI Group
– Cofiroute, S.A. 9, 10, 11
Vivendi
– SFR (Société Française de Radiotéléphone) 9
Vodafone 8, 26, 29, 35
– Europe Region
– – Czech Republic 26
– – Hungary 29

W

Walt Disney Company, The 19
Wells Fargo 38

About

About Deutsche Telekomwatch

Report: #70
Published: February 2018
Next report: March 2018
For more information visit: Deutsche Telekomwatch