T-Mobile On Prowl for More Spectrum After Collapse of AT&T Deal
T-Mobile is reinvesting the $3 billion breakup fee it got from AT&T in its network, with an initial roll out of LTE next year, company officials said Thursday. Much of the discussion on a call with analysts was about what’s next for T-Mobile USA in the aftermath of AT&T’s failed buy of the German-owned challenger. In some recent dockets at the FCC, T-Mobile has been reasserting itself as a key challenger to AT&T and Verizon (CD Feb 22 p1).
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
"We believe it is time to reinvigorate the challenger strategy,” said T-Mobile USA CEO Philipp Humm. “The challenger strategy is the right strategy for T-Mobile. It now needs a refresh now that the deal overhang is gone.”
T-Mobile USA will “completely modernize” its 4G network and “refarm” spectrum prior to a launch of LTE next year, Humm said. T-Mobile will invest a total of $4 billion in network modernization and LTE deployment over the next three years, he said. Humm said that with the 10 MHz of AWS spectrum his company is also getting as part of the breakup fee, T-Mobile now has enough spectrum to launch LTE on 20 MHz of spectrum in about half its markets, representing 35 percent of the top 25 markets. In other markets, it will be launching in just 10 MHz of spectrum. “The key catalyst of this build out is the additional spectrum we are about to get from AT&T,” Humm said.
T-Mobile remains in the market for more spectrum, Humm said. “Refarming gives us LTE, however, we continue to need more AWS spectrum for deeper coverage in those areas where we are deploying on 10 MHz or less, as well as to ease refarming execution,” he said. T-Mobile also expects to spend $200 million to relaunch its brand in Q3, he said.
"Do not expect a structural solution or anything like the AT&T deal,” Deutsche Telekom CEO René Obermann said. The strategy is the same for T-Mobile USA as before the AT&T deal was announced last March, Obermann said. “Not a lot has changed since the investor day in early 2011”, he said. “Clearly, all of us had hoped for the transaction to go through, but as it unfortunately didn’t happen we have to face the same challenges as a year ago.” With the cash from AT&T, the AWS spectrum and a new 3G roaming deal with AT&T, “DT and T-Mobile USA are better off than a year ago,” he said.
T-Mobile USA is “doing its best” ahead of the LTE roll out to minimize subscriber churn, but doing so isn’t easy without the iPhone, Obermann said. “We'd love to have the iPhone, it just has to be affordable,” he said. The U.S. carrier remains interested in pursuing spectrum below 1 GHz, Humm said. “It would obviously improve the efficiency of our network,” he said. “We would look at whatever is on the market."
The U.S. network will be less robust than some other wireless broadband networks, that make use of so called fat channels. In Germany, DT announced last year the launch of a 20 x 20 MHz LTE network in Cologne.
T-Mobile’s plan to roll out LTE shows that T-Mobile remains viable as a stand-alone carrier, despite claims made by AT&T last year, said Matt Wood, Free Press policy director. “It’s welcome news and something we were glad to see in terms of increased choices for consumers,” Wood said. “It shouldn’t come as a surprise.”