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Deutsche Telekomwatch
This release
: #74
July 2018: 54pp
Releases/year: 10+
Click for more details of this release

Executive brief

GROUP

Strategy

Höttges doubles down with Trans-Atlantic vision [p.6]

  • TMUS still cousin rather than sibling
  • Onboarding completed; Höttges has new squad in place for new cycle
  • Tiger Tim
  • DT rejects big bang theory
  • Table 1: DT (ex-US) indirect cost reduction strategy composition
  • More FY14-FY18 hangovers
  • Table 2: DT Technology strategy review, FY14-FY18
  • Nemat lays out industrious 5G vision
  • Deals

Flames of Höttges' BT love still flicker [p.13]

  • DT has opening for BT collaboration reboot as Patterson exits

DT discussing new investment fund with other telcos [p.14]

  • Cash in the SoftBank
  • Langheim's rising ambition
  • Look at our track record, guys
  • Table 3: DTCP ventures forth: VC and private equity investments and exits at a glance (to June 2018)
  • Partnerships

DT in operator talks over Access 4.0 expansion [p.17]

  • Fibre cost mitigation a key focus for innovation and procurement

Toll Connect dispute reaches end of road [p.18]

  • Green light from Höttges
  • Table 4: Toll Collect overview
  • DT to exit Toll Collect, but might loop round through the back door

EAN targets business aviation market [p.19]

  • Reasons to be cheerful…
  • …but obstacles and 'kerfuffle' remain
  • Table 5: People movement highlights

GERMANY

  • Strategy

Wössner seeks to cement Germany's growth revival [p.25]

  • No new growth menu
  • Patchy FY14-FY17 record
  • Spend: DT seeks maximum flexibility for fibre strategy
  • Table 6: Germany segment strategic and financial objectives, FY17-FY21

EUROPE

  • Strategy

Gopalan seeks to revive Europe lustre [p.29]

  • 'All-for-one and one-for-all'
  • Dutch separation shows lost EU love
  • Leading from the front
  • Changing the 'why we won't miss this time' storyline
  • Gopalan stamps mark: revamps HQ and moves beyond PANNET
  • Table 7: Europe strategic and financial objectives, FY17-FY21
  • Austria

DT adds Austrian assets to regional TowerCo cache [p.35]

  • Langheim's ever-expanding reach
  • The quality flipside
  • Table 8: Deutsche Funkturm overview, FY17 (31 December 2017)

DT goes NB-IoT roaming with Vodafone [p.37]

  • The scale game
  • Ecosystem building
  • Slovakia

ST ups max LTE speed to 500Mbps [p.38]

  • Hello neighbour, can I borrow your expertise?

SYSTEMS SOLUTIONS

  • Strategy

Al-Saleh unveils the (latest) T-Sys Grand Plan [p.40]

  • Double-take on cost strategy
  • Al-Saleh turns product focus up to eleven
  • Table 9: T‑Sys' “re-defined” portfolio structure
  • Modest targets focus on earnings and cash

USA

  • Strategy

Langheim emerges from shadows as Sprint deal fixer [p.44]

  • Langheim lore
  • Sievert and Ray double-act

FURTHER READING

INDEX

Symbols

3rd Generation Partnership Project (3GPP) 47

A

Africa
- South Africa 37
Alphabet
 - Google 8, 16, 20
Amazon.com Inc. 8
Americas
 - Brazil 22
 - Canada 25
 --North America 15, 22
 - Paraguay 21
 -- United States of America (USA) 6, 8, 16, 20, 22, 29, 31, 33, 37, 43, 45, 46, 47
  -- Federal Communications Commission (FCC) 46, 47
  -- States
    -- Califormia 46
    -- New York 16
    -- Washington 47
Apple 8
AppNexus 14
Asia-Pacific 15, 21
 - Australia 37
 - China 47
 - India 29, 33, 40
Atlantia 19
AT&T 14, 45, 46

B

Baidu Inc. 16
Blackstone Group 44
BT Group 13, 22
 - BT Global Services 22
EE 13

C

Capgemini 22
Cellnex Telecom 16, 35
 - Swiss Towers 16, 35
Cisco Systems 33
Comcast Corp. 16
Comverse Technology 36
Cosmote Romanian Mobile Teleco. SA (see OTE/DT) 33

D

Daimler AG 18, 19
Dell 16
Deutsche Telekom 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 25, 26, 27, 29, 30, 31, 32, 33, 35, 36, 37, 38, 40, 41, 42, 44, 45, 46, 47
 - Corporate
  -- Headquarters 36
  -- Deutsche Telekom Capital Partners 14, 35, 45
  -- Deutsche Telekom Strategic Investments 14
    -- AppNexus (see separate) 14
    -- DocuSign (see separate) 16
    -- Fireglass (see separate) 16
    -- Morphisec (see separate) 16
    -- NSONE (see separate) 16
    -- Paxata (see separate) 16
    -- SafeBreach (see separate) 16
    -- Strato (see separate) 45
    -- Swiss Towers (see separate) 16, 35
 - Europe
  -- Austria 21, 32, 35, 37
  -- Croatia (Hrvatski Telekom) 14, 21, 30, 32
  -- Czech Republic 21, 30, 32, 33, 38
  -- Greece (see OTE) 8, 30, 32
  -- Hungary (see Magyar Telekom) 21, 30, 31, 32
  -- International Carrier Sales & Services (ICSS) 16, 32
  -- Montenegro (see Magyar Telekom) 21, 30, 32
  -- Netherlands 21, 29, 35, 36, 37
  -- Poland (Polska Telefonia Cyfrowa/PTC) 21, 32, 36
  -- Romania (see Cosmote Romania/OTE) 33
  -- Slovakia (Slovak Telekom/T-Mobile) 8, 21, 30, 32, 33, 38
  -- UK (EE) 13
 - European Aviation Network 19, 32
 - Executives
  -- Al Saleh, Adel 7, 29, 40
  -- Clemens, Reinhard 40
  -- Dannenfeldt, Thomas 7, 13
  -- Elsner, Andreas 21
  -- Gopalan, Srini 7, 21, 29
  -- Heusschen, Roger 22
  -- Höttges, Timotheus 6, 13, 14, 18, 25, 31, 45
  -- Illek, Christian 7
  -- Jacobfeuerborn, Bruno 35
  -- Korst, Jeremy 22
  -- Kremer, Thomas 18
  -- Langheim, Thorsten 7, 13, 15, 29, 35, 44
  -- Legere, John 7, 22, 29, 45
  -- Michalakis, Dimitris 21
  -- Nemat, Claudia 9, 10, 11, 17, 29, 31, 32, 33
  -- Ray, Neville 7, 46, 47
  -- Schmidt, Frank 21
  -- Sievert, Mike 7, 22, 45
  -- Toet, Leon 21
  -- van Damme, Niek Jan 25
  -- Vasina, Milan 21
  -- Wittig, Hannes 44
  -- Wössner, Dirk 7, 25
  -- Young, Jack 16
 - Germany 8, 9, 21, 25, 26, 27, 31, 36
 - Investments
  -- Magyar Telekom (see separate) 21, 30, 31, 32
  -- OTE (see separate) 21
 - Product and Innovation
  - hubraum 37
 - Products and services
  -- MagentaEINS 27
  -- QIVICON 8
  -- Scout24 45
 - Systems Solutions 7, 39
  -- Telekom IT 40
 -- T-Systems 9, 11, 16, 19, 21, 22, 29, 31, 36, 40, 42
    -- Satellic 19
    -- Telekom Security 36
    -- Toll4Europe 19
 - Toll Collect 18, 19
 - USA 6, 7, 11, 14, 20, 22, 29, 44, 45, 46, 47
Deutsche Telekom Capital Partners 14, 15, 16
Deutsche Telekom Strategic Investments 14
Dido 21
DocuSign 16

E

EchoStar Communications Corp. 20
Ericsson 38, 47
Europe
 - Austria 8, 19, 22, 33, 35, 37
 - Belgium 19, 20
 - Central & Eastern Europe (CEE) 22
 - Croatia 10, 21, 30, 32, 33, 37
 - Czech Republic 19, 21, 33, 37
 - France 18, 32
 - Germany 6, 7, 8, 9, 10, 13, 16, 17, 18, 19, 21, 24, 25, 26, 27, 29, 30, 31, 32, 35, 36, 37, 41, 42
  -- Government 19
 - Greece 10, 30, 32, 37
 - Hungary 10, 31, 32, 37
 - Ireland 37
 - Italy 8, 19
 - Netherlands 8, 22, 29, 33, 35, 37
 - Norway 8, 20
 - Poland 10, 21, 33, 36, 37
 - Romania 7, 10, 21, 32, 33
 - Russia 16
 - Slovakia 10, 21, 32, 33, 37, 38
 - Spain 16, 37
 - Switzerland 16, 20, 21, 35
 - United Kingdom (UK) 13, 20
European Union 20, 29
 - European Commission 20
 - European Court of Justice 20
EWE
 - EWE Tel 27
Expedia 22
Experian plc 45

F

Facebook
 - Telecom Infra Project 17
Fireglass 16
Flybridge Capital Partners 16
France Télécom
 - Orange 22
 - UK (see EE, DT) 13
Fraport AG 30

G

Gogo 20
Goldman Sachs 16
GSM Association (GSMA) 37
Mobile World Congress 41

H

Hewlett-Packard 16, 22
Hrvatski Telekom (see DT, Croatia) 14, 21, 30, 32
Huawei Technologies 29, 38, 47

I

Inmarsat 19, 20
Intel 16
 - Intel Capital 16
International Airlines Group SA
 - British Airways 19, 20
International Monetary Fund 14

K

KPN 8, 29

L

Liberty Global
 - UPC Austria 32
Liberty Global Inc.
UPC Broadband 32

M

Magyar Posta Pal Szabo 22
Magyar Telekom (see DT) 21, 30, 31, 32
 - Macedonia (Makedonski Telekom/T-Mobile) 21, 30, 32
 - Montenegro (Crnogorski Telekom) 21, 30, 32
 - T-Systems Hungary 22
Microsoft 16, 22, 33
Middle East 15
 - Israel 16
 - Saudi Arabia 14
Miele & Cie. KG 8
Millicom International Cellular
 - Tigo Ghana 21
Morphisec 16
Motorola Mobility Holdings Inc. 30

N

News Corp. 14
Nexmo 16
Nokia 20, 47
Norwest Venture Partners 16
NOVATOR 13
NSONE 16

O

OpenText 22
OTE (Hellenic Telecom. Org. SA, see DT) 21
 - Cosmote 8, 21, 30, 32, 33
  -- Albania (Telekom Albania) 32, 33
  -- Greece 8, 30, 32
  -- Romania 33
Romania (Romtelecom) 33

P

Paxata 16
Philips 8
PPF Group 19
PricewaterhouseCoopers 14

Q

Qatar Telecom (Qtel) 16
Qualcomm 38

R

Radware Ltd 36
Reliance-Anil Dhirubhai Ambani Group
 - Reliance Communications (RCom) 33
RWE AG 30

S

SafeBreach 16
Salesforce 22
Samsung 16
SAP 21, 33, 41
Saudi Telecom Company 21
Sequoia Capital 16
Sigma Prime Ventures 16
Singapore Telecom 16
Slovak Telekom (see DT, Slovakia) 8, 21, 30, 32, 33, 38
SOFTBANK CORP. 14, 47
Sonos 8
Splunk Inc. 36
Sprint Corporation 6, 8, 14, 22, 44, 45, 46, 47
Strato 45
Sunrise 16
Symantec 16
Syniverse Technologies 22

T

Target Corporation 41
Technology
 - 2.5G 45, 47
-
2G 45, 47
  -- GSM 37
 - 3G
  -- Evolved HSPA (HSPA+/I-HSPA)
  -- MIMO 38
 - 4G 11
  -- Long Term Evolution (LTE) 10, 20, 37, 38
 - 5G 11, 22, 38, 47
 - Billing 30
 - BSS 6, 9, 10
 - DSL 17
 - Fibre 17, 27, 32
 - Fixed-mobile convergence (FMC) 33
 - GPS 18
 - IP 10, 27, 30, 31, 42
 - Narrowband Internet of Things (NB-IoT) 37
 - OTA 47
 - R&D 17
 - SIM 37
 - Smartphone 47
 - Spectrum 38
 - WAN 16, 42
 - W-LAN 19, 20, 30, 32
Tele2 29
 - Netherlands 29
Telekom Austria 21
Telstra 16
Two Sigma Investments
Two Sigma Ventures 16

V

Vattenfall 8
Verizon Communications 46
Vertex 16
ViaSat 20
VINCI Group
 - Cofiroute, S.A. 18
Vodafone 25, 37
 - Europe Region
 - Germany 25
Spain 37

W

WPP 14

  • DT’s leadership has evidently not given up on thoughts of an Anglo-German incumbent alliance.

Group Chief Executive (CEO) Timotheus Höttges reasserted designs on tighter absorption of BT Group within the Deutsche Telekom (DT) family, as he defended the decision to take shares in the operator via the 2015-2016 sale of former joint venture EE (Deutsche Telekomwatch, #40).

The Group’s recent Capital Markets Day saw Höttges acknowledge shareholder qualms over the diminished value of the 12% BT stake, and regretfully remark that “we thought at one point in time that this could be part of DT, and would strengthen our position”.

Höttges conceded that shareholders were right to “question” the move, following the huge share price decline that BT has suffered since the buyout (Deutsche Telekomwatch, #40, #71, and passim). “Maybe it was not the right assessment, and I’m not happy with the development for us as Deutsche Telekom, as a shareholder”, he said. Group Corporate Development Head (and central M&A hand) Thorsten Langheim admitted that DT had “got it wrong on BT”.

There remains the possibility that DT’s designs on BT have not disappeared altogether, however.

Looking forward, Höttges played down the possibility of an exit from BT – no doubt conscious that DT would have to take a major hit in any sale.

At the same time, he was noticeably quiet on the contrary possibility of DT exploiting BT’s vulnerability and upping its stake when it escapes a standstill arrangement on its holding in early-2019. Höttges played down the near-term possibility of major, cross-country M&A in Europe, but noted (unprompted) that “we still have the BT asset”.

“It’s not the time to go out of that [the BT stake]… It’s now the time to see that all the measures, all the ideas, all the programmes – Novator [Project Novator, BT’s turnaround strategy] and the like – get implemented and secure the value of this asset and [grow] it over time, and then we will see what’s going on. It’s part of our pension fund. It’s working for us from a debt perspective here in the company. And it’s good where it is today, but [there is] nothing additional to say on M&A steps going forward.”  – Höttges.

DT has opening for BT collaboration reboot as Patterson exits

Höttges may hope recent ructions in BT’s leadership open up greater possibilities to bring the operator closer to DT, and fulfil unrealised ambitions for broad and deep ties with the UK operator, spanning procurement, enterprise services, innovation, and elsewhere (Deutsche Telekomwatch, passim). Shortly after the Capital Markets Day, BT made the abrupt announcement that CEO Gavin Patterson is to leave the operator and take the bullet for its share price slump (see BT: Patterson bites the bullet). A search is underway for a successor, and it is reasonable to expect that Höttges – who is portrayed as a particularly robust contributor on BT’s Board of Directors, as well as member of its Nominating & Governance Committee – to push for an appointment more amenable to DT and its plans for closer integration and collaboration between the two Groups. He will no doubt have some interesting ideas of executives that could provide a pair of safe hands for DT’s investment, and a fresh perspective on the trials and travails of modernising an incumbent operator (perhaps including departing DT Chief Financial Officer Thomas Dannenfeldt, or Olaf Swantee who was CEO of EE when it was a DT-Orange joint-venture). BT expects a replacement to be in place before the end of 2018.

Image: Ian Schneider / Unsplash

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