With AT&T’s aborted attempt to acquire T-Mobile USA for $39 billion still fresh on everyone’s minds, Deutsche Telekom CEO Rene Obermann told investors in a prepared statement that the future of its U.S.-based operations will likely not include an outright sale.
“Of course, we continue to look for a long-term solution to improve earnings in our U.S. business,” Obermann said. “However, a complete sale like the one to AT&T is considered unlikely.”
This statement could hint that a partnership of some sort is more likely for the carrier. There have already been a number of rumors circulating about a potential partnership with rivals, including MetroPCS and Sprint Nextel.
T-Mobile USA did manage to show some operational improvement during the first quarter or the year, posting substantially fewer customer losses than it reported during most of 2011. The carrier continued to show strong growth in its prepaid operations that were offset by losses in its postpaid business.
Obermann did add that the spectrum it received from AT&T as part of that deal’s collapse has put its U.S. operations in a stronger position to move forward with LTE network plans, though he hinted that financial support from Germany would be tightly controlled. The LTE rollout is expected to cost the carrier around $4 billion.
“We must find other ways to increase the return on our capital, or to reduce our capital investment,” Obermann said. “We are doing everything in our power to achieve this.”
One way the carrier looks to be reducing capital is through call center consolidation. The company will close 7 call centers, bringing its total number from 24 to 17. T-Mobile USA has made series of announcements about job cuts this spring. When all is said and done, it appears that the company will displace roughly 2,800 employees, but will add an even greater number of jobs in sales and at its remaining call centers. The company has said it hopes to rehire many of the workers from the calls centers that are closing.
As for DT’s broader operations, Obermann decried the increased pressure from government regulations that have squeezed telecom operators’ abilities to derive profits from their operations, specifically citing termination rates that have dropped more than 60% since 2007 and cost the industry more than $1 billion in 2011.
“The industry would be prepared to shoulder the main burden of broadband roll-out,” Obermann explained. “What we need is a turnaround in regulatory policy. It is vital to give top priority to market solutions and stable network charges, which can be used to finance the building of new networks. The price decline for network usage resulting from regulatory intervention must be halted; if it is not, there will be no new stimuli for broadband roll-out. In addition to this, regulation cannot carry on as it has, given the preferential treatment cable network operators are receiving on the broadband market.”
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