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Deutsche Telekomwatch
This release
: #74
July 2018: 54pp
Releases/year: 10+
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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

  • Local towers added to the Group Development M&A toybox.
  • DT considering creation of “full-service TowerCo” by 2021.
  • Network control concerns continue to nag, however.

Deutsche Telekom (DT) revealed that T-Mobile Austria’s (TMAT) towers are set to be spun out of the NatCo in the next step of the Group’s emerging European infrastructure play.

Thorsten Langheim, Head of Group Corporate Development at DT, said TMAT’s towers were one of the assets he was “sitting on”, as he considers whether to create a “full-service TowerCo” covering multiple European markets.

Langheim indicated he was in “studying mode” regarding a plan that would build on digitisation and expansion efforts taking place at the Group’s German infrastructure arm Deutsche Funkturm (DFMG), and is thought to envisage establishment of a regional tower player by end-2021 (Deutsche Telekomwatch, #63 and #71; see Deutsche Telekom quietly prepping Dutch and German tower revamps).

Langheim’s ever-expanding reach

Langheim’s comment represented the first indication from DT that the Austrian towers are being put under the wing of Langheim’s increasingly-powerful Group Development division.

As well as DFMG, Group Development oversees infrastructure assets in the Netherlands, through T-Mobile Netherlands (TMNL), whose towers are being spun out of the NatCo as part of an ongoing turnaround programme; and Switzerland, through Deutsche Telekom Capital Partners’ minority stake in Swiss Towers (Deutsche Telekomwatch, #64). There have been indications that additional NatCo assets may be brought under Group Development control in the coming years – or “insourced”, as DT puts it.

DT has long mooted interest in more closely integrating Group Development’s growing tower businesses – possibly alongside specialist infrastructure player Cellnex Telecom, its senior partner in the Swiss Towers venture (Deutsche Telekomwatch, #73 and passim). Langheim said he was studying whether to “put this all together”. “The question is, do we want to create a European TowerCo or not?”, he added.

On the plus side, Langheim noted the tower space as having lower regulatory overhang than DT’s core business and having “significant optimisation potential and growth upside”.

He also flagged an opportunity to press home competitive differentiation in the tower space, based on experience from the “DFMG 2.0” modernisation programme being undertaken by DFMG Chief Executive Bruno Jacobfeuerborn. Under this initiative, DFMG has accelerated the rate of expansion of its network to 2,000 towers per year, as well as refreshing management and IT systems in a bid to create a “best-in-class” operation. Currently, DFMG has around 28,000 sites (3,000 of which are third-party-provided), and is looking to add 9,000 macro sites to this network by 2021, as well as rolling out small-cells and provide platforms for Internet of Things, electric car-charging, and other new services.

The quality flipside

The NatCos, such as Telekom Deutschland and TMNL that have had towers extracted to Group Development will have benefited from a reduced capital expenditure burden, but at the same time, Langheim did hint at concern over risks for those businesses, in terms of network control.

“The only thing that I can say today is what we don’t want to do at DT is sacrifice our long-term network leadership capabilities in Germany for some kind of short-term value arbitrage. That’s certainly not going to happen on our side.” — Langheim.

Image: trombone65 / Flicr CC BY-NC-ND 2.0

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