D.Telekom U.S. Unit Sees Growth in 2007

By Nikola Rotscheroth

T-Mobile USA, Deutsche Telekom's U.S. mobile arm, sees its growth of around 1 million new customers per quarter continuing at this pace in

2005 and is preparing new "third-generation" mobile services for 2007.

As there are many more Americans who have not used a mobile phone than there are Europeans or Japanese, T-Mobile USA, the country's smallest national operator, believes there is still plenty of room for it to expand, its head told journalists.

"I believe we can keep up this speed of growth," said T-Mobile USA Chief Executive Robert Dotson. T-Mobile USA won 957,000 new subscribers in the first quarter of 2005, to reach 18.3 million.

"We are a growth machine. We have to grow, grow, grow," Dotson said.

The main source of this growth, the operator believes, is people using their mobiles instead of the fixed-line network to make calls, or giving up their fixed-line phone entirely -- as 10 to 15 percent of T-Mobile USA's customers already have.

Since Deutsche Telekom bought the unit, then called VoiceStream Wireless and a small startup, for a breathtaking $40 billion in 2001, it has become its main growth engine -- and overtook the domestic German mobile arm in terms of revenues last year, with 9.3 billion euros ($11.7 billion).

According to a 10-year business plan it published this year, Deutsche Telekom expects T-Mobile USA to bring in 43 percent of its mobile revenue -- more than any other mobile unit including Germany, Britain, and other European countries.

T-Mobile International CEO Rene Obermann told reporters he was not worried by the mergers in the United States, which have reduced to four the number of national mobile operators, leaving T-Mobile USA the fourth rank by far.

"The fourth rank is a good position," Obermann said, adding that T-Mobile USA, as part of T-Mobile International with 75 million subscribers, had bigger purchasing power than any other U.S. operator.

Cingular, a joint venture of Baby Bells SBC and BellSouth, took over AT&T Wireless last year to become the largest operator, and Sprint bought Nextel to become the third largest.

No. 2 in the market is Verizon Wireless, a joint venture of Verizon and the world's biggest mobile operator, Vodafone.


T-Mobile USA is preparing the launch of new third-generation (3G) mobile phone services -- which allow video phone calls and music downloads over mobiles -- in 2007, even though it has yet to make a formal decision to bid for the necessary spectrum.

"We plan to begin the 3G rollout in the second half of next year and the first services shall launch in 2007," said Chief Development Officer Cole Brodman.

T-Mobile International's Obermann cautioned, however, that the supervisory boards of T-Mobile and Deutsche Telekom still had to approve the group's bidding for the service in an spectrum auction upcoming in the second quarter of 2006.

Obermann declined to say how much he was ready to spend for the spectrum -- all over Europe, operators spent around 100 billion euros for 3G spectrum -- but said license prices had come down in the United States since the number of national operators has dropped to four from six.

Dotson ruled out T-Mobile USA buying a regional U.S. mobile operator to expand into areas where it did not have its own presence yet.

The group, which has earmarked 2.2 billion euros to build its network in the United States this year, would rather spend on its own network assets in regions it had identified as interesting, he said.

Copyright 2005 Reuters Limited.

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