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T-Mobile (Europe/US)

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T-Mobile is the wireless arm of German giant Deutsche Telekom. It established a broad international presence from 1999 onwards, acquiring several other significant wireless businesses, including One2One in the UK and Voicestream and PowerTel in the US. Steady growth had made T-Mobile the biggest revenue centre within Deutsche Telekom by the end of 2005. More recently though it has begun to reduce its exposure in further flung countries - where it had remained one of the smaller players - in order to concentrate on more profitable continental European markets closer to home. The first such step was an agreement to merge T-Mobile's operations in the UK with those of rival Orange to create EE, now the local market leader by customers. Still more dramatic was a plan to exit the US in 2011, with the outright sale of the local T-Mobile to AT&T. However that deal was blocked by the US Justice Department and FCC on competition grounds. Instead T-Mobile USA merged in 2013 with smaller rival MetroPCS, creating a locally quoted business now only part-owned by Deutsche Telekom. It has been one of the US wireless industry's strongest performers overtaking Sprint to become the local #3 by customers, though it still trails leaders AT&T and Verizon. Merger talks have continued on and off with Sprint since 2013 to create a stronger competitor to the two US leaders. These finally reached fruition in 2018 with an agreement for T-Mobile to acquire Sprint for around $26bn in stock. That arrangement faced a rough ride from regulators, but was finally approved in summer 2019.


Click here for agency account assignments for T-Mobile from Adbrands.net. T-Mobile USA declared advertising expenses of $1.7bn in 2016. In the US, Kantar (in Advertising Age) reported measured expenditure of $1.1bn for 2016.


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Brands & Activities

T-Mobile is now the dominant wireless operator in Central and Eastern Europe. Its operations in some other markets remain more problematic. By the end of 2016, the T-Mobile brand served around 165m subscribers globally, up almost 6% on the year before. - 95m in Europe and 55m in the US. It prides itself on customer service, and in 2004 it received the World Communications Award as Best Global Mobile Operator for overall quality of service. In the US, it has been named by independent researcher JD Power as the wireless carrier with best customer service virtually every year since 2002. Like other rivals in Europe, T-Mobile (like its parent Deutsche Telekom) has established a strong brand identity through the uniform use of a single colour, in this case magenta. (That counters the orange and red of its two main regional rivals Orange and Vodafone). The group now presents its best connectivity deals under the banner of MagentaOne (or MagentaEins in German-speaking markets), offering converged mobile and fixed line services (if available - the offer varies from country to country). General mobile call plans are branded as MagentaMobil. In the US, a similar offer is branded as T-Mobile ONE.

In Germany, T-Mobile was until 2014 the #1 wireless operator by customers. That summer it was overtaken in users by newly merged O2/E-Plus. (It remains the #1 by mobile revenues). The group has pushed hard to increase its range of mobile internet services - initially as what it called web'n'walk - and launched a reduced in-home mobile call-rate in 2006, and more recently the MagentaEins converged data service. However competition (including from free messaging services like WhatsApp) has continued to drive down mobile revenues in Germany, to around €18.2bn for 2016, down 0.5% year-on-year. Customer numbers at the end of 2016 were 41.8m, up slightly on the year before, with around 60% on post-paid contract. (O2 has a much lower percentage of post-paids). The group also offers mobile services in Germany under separate brands Telekom and congstar.

In 2007, the group secured an exclusive right to market Apple's iPhone in Germany, along similar lines to the single-operator policy arranged by Apple in other countries. Within two weeks of its launch however, T-Mobile was forced by a German court to make the iPhone accessible on other networks after a lawsuit from local rival Vodafone which claimed that this sort of commercial exclusivity contravened German national law. (Such a law also prevails in other markets, such as France). T-Mobile launched an appeal against that verdict, and Vodafone's case was subsequently over-ruled, allowing T-Mobile to return to its exclusive arrangement. Barred from offering the iPhone in other markets, T-Mobile was the first telecoms company in the world to introduce a Google Android-powered handset in 2008. That product launched initially in the US and UK, and then other markets from 2009. T-Mobile USA didn't get access to iPhone supplies until 2013.

Europe remains the bedrock for T-Mobile's international presence. In Austria, the group operates the former max.mobil wireless service, now T-Mobile Austria. It is #2 in the market, having significantly increased its profile in 2005 with the acquisition of Telering, the former #3. The business had a total of 4.6m customers by the end of 2016 and approximately 35% share, just behind behind Mobilkom A1's 39%.

Other important subsidiaries include T-Mobile Czech Republic (previously RadioMobil), now the local #1 with 6.0m customers and 41% share, just ahead of Telefonica O2; and T-Mobile Netherlands. The latter was formed by the merger of the group's original business in Holland with the Dutch subsidiary of Orange, the #4 operator, acquired in 2007 for €1.3bn. The combined business is a stronger #3 behind KPN and Vodafone with around 3.7m customers. In 2016, it acquired Vodafone's fixed-line operations in the Netherlands following the rival's merger with cable operator Ziggo.

Hungary's leading mobile operator Westel adopted the brand in 2004, becoming T-Mobile Hungary. It has around 5.3m customers. Deutsche Telekom has a minority stake in the company's owner, fixed line operator Matav. There is a similar arrangement in Croatia, where T-Mobile Croatia is a wholly owned subsidiary of T-Hvratski Telekom; and in Slovakia where EuroTel adopted the name of T-Mobile Slovensko in 2005. T-Mobile Romania has 5.7m customers.

Another key market in Central & Eastern Europe is Poland where Deutsche Telekom was involved for several years in a complex legal battle to take full control of local operator PTC Era. It already held a 49% stake in PTC, one of the biggest mobile operators in all of Central Europe. Of the remaining shares, a 48% stake was nominally owned by local power company Elektrim, while France's Vivendi held the remaining 3%. Deutsche Telekom claimed to have rights over Elektrim's shares under a call option which it exercised in September 2006. However Vivendi denied the legality of that option and contested Telekom's claim. Yet the German group refused to surrender its claim and both sides continued to battle on. Elektrim was itself sued for billions by both Vivendi and Deutsche Telekom and eventually filed for bankruptcy. The squabble contributed to PTC's loss of leadership of the Polish market to Orange during the course of 2007. The long-running row was eventually resolved at the end of 2010 when Vivendi agreed to surrender its claim in exchange for a payment of €1.25bn. This allowed Deutsche Telekom to take full formal control of the business during 2011 and rebrand it as T-Mobile Polska. A large number of inactive SIM-only accounts were cancelled in 2015, causing a sharp fall in customer numbers to 10.6m for 2016. DT sold its minority stake in leading Russian operator MTS in 2005.

Virtually all of the group's mobile subsidiaries operate under the T-Mobile banner, with the exception of its Greek 40%-owned subsidiary. Cosmote, a division of local telecoms group OTE, is the country's #1 mobile service with 7.7m customers. It is also the group's most lucrative market in Europe after Germany, contributing revenues of €2.9bn in 2016. Hungary was the next biggest at €1.7bn, followed by Poland (€1.5bn) and the Netherlands (€1.2bn). Combined customer numbers for Europe excluding Germany were 51.7m, down 2% as a result of the elimination of unprofitable or inactive prepaid customers.

In two other major, but more distant markets, Deutsche Telekom has sought to reduce its exposure by forming partnerships with other companies. T-Mobile's UK presence was originally formed from the acquisition of local operator One2One in 1999. However, that business remained for many years one of the smallest operators in a fiercely competitive market, despite a boost from Virgin Mobile to whom it supplied bandwidth. In 2010, T-Mobile UK was folded into a joint venture with France Telecom, originally under the name Everything Everywhere. Now EE, it continues to manage what remains of the UK operations of the Orange and T-Mobile brands, as well as the EE 4G service, making it the country's biggest mobile operator by total customers. Following the acquisition of EE by UK telecoms group BT in 2015, Telekom became the largest individual shareholder in the merged business with 12%.

T-Mobile USA is now the third largest of America's big four national mobile operators by total customers. Predictions that it would overtake Sprint by the end of 2014 turned out to be incorrect (as a result of an unexpected surge from the struggling rival), but it finally took the lead during 2015. It is the #3 by total customers, but still #4 by more lucrative post-paid subscribers, and also by total revenues. It claimed total customer numbers of 71.5m at the end of 2016, of whom 34.4m were post-paid, 19.8m were pre-paid, with another 19.8m through wholesale or MVNO partnerships. It continues to serve some customers under the MetroPCS brand acquired in 2012. It is the single biggest business within Deutsche Telekom, accounting for 46% of total group revenues, half as big again as the group's domestic market in Germany. EBITDA from the US, however, was slightly lower than from Germany.

The company has positioned itself since 2013 as "the Un-carrier" or challenger brand among US mobile providers: "Un-satisfied with the status quo. Un-afraid to innovate." In honour of that branding it has launched a series of aggressive marketing propositions, including easier upgrades, no charges for international data roaming, free iPhone trials, free music streaming and so on. In 2018 it will launch mobile streaming of selected cable channels following a deal to acquire specialist supplier Layer3.

The recent history of T-Mobile USA has been turbulent. The core of the business was formed from the former VoiceStream cellular business, acquired by Deutsche Telekom in 2001. The company boosted its presence towards the end of 2007 with the acquisition of regional operator SunCom, covering the South East US, for around $2.4bn in cash and debt. For several years, the group had also operated a network-sharing agreement with Cingular (now AT&T), under which T-Mobile served the states of California and Nevada via the Cingular network, and gave the latter access to its own network in New York. The partners agreed to dissolve that arrangement in 2004, with T-Mobile acquiring the California and Nevada network for around $2.5bn. In 2006, Deutsche Telekom pledged to spend $2.7bn on an upgrade of T-Mobile's US network to allow for the introduction of 3G service. In 2009, it established a partnership with RadioShack to offer its services via that company's retail network, almost doubling its distribution estate. Nevertheless, performance remained lacklustre compared to market leaders Verizon and AT&T, or even third-placed Sprint.

This made the business a slightly uncomfortable fit within the group, located in a part of the world where Deutsche Telekom has no other significant interests. More important, it has required considerable amounts of increased investment in order to keep up with the technological developments being rolled out by other US operators. That made T-Mobile USA look increasingly like a takeover target in the consolidation of the US market in the later 2000s. Under pressure from shareholders, Deutsche Telekom was said to be considering a partial IPO or even full spin-off of the business in 2010. Instead, in March 2011, it announced a deal to sell the business outright to AT&T for $39bn. However, that deal was met with considerable opposition from consumer groups and regulators. AT&T and T-Mobile eventually withdrew their proposed deal. Under pre-agreed penalty clauses, AT&T was obliged to pay its smaller rival a $3bn break-fee, and also provide it with the same value in additional bandwidth.

A new potential escape route was forged in 2012, in an arrangement to merge T-Mobile into smaller rival MetroPCS. That company previously offered mainly prepaid services in major urban markets on the West Coast, North East and selected Southeastern and central states. The deal was completed in May 2013, with T-Mobile USA adding another 9m customers to its portfolio, as well as MetroPCS's LTE broadband service. The merger was structured as a reverse takeover by the target company, with T-Mobile USA being injected into the MetroPCS corporate entity, giving the resulting business - still called T-Mobile - a public listing in the US. That arrangement allowed Deutsche Telekom to sell down further tranches of its shareholding at a later date. By the end of 2014, it retained 66% of equity. MetroPCS is now marketed as Metro by T-Mobile.

Several times over the next few years, the group engaged in talks to merge with main rival Sprint to create a stronger challenger to market leaders AT&T and Verizon. So far, those talks have each time failed; however the increasing weakness of Sprint makes some sort of deal ever more likely. Finally, in April 2018 a deal was reached. Under the proposed arrangement, T-Mobile USA will acquire Sprint for around $26bn in stock. The combined business would be called T-Mobile USA and would continue to be led by its admired CEO John Legere. T-Mobile's controlling shareholder Deutsche Telekom would end up with a 42% stake in the business, while Softbank would have 27%. The remaining shares would be publicly held. The merged entity would manage around 100m direct customers on a proforma basis (excluding MVNO or wholesale users), around the same level as Verizon (currently 116m) and AT&T (93m). But - and it's a big but - regulatory approval is by no means certain.


The group doesn't break out financial results for its combined mobile operations. However, revenues for T-Mobile USA have effectively doubled in five years. They jumped by 16% in 2016 alone to $37.2bn. The MetroPCS merger generated a substantial loss in 2012, but the business was back in the black (just) in 2013. Net income has soared since then, doubling in 2016 to $1.46bn.


Since 2009, Deutsche Telekom has consolidated its operations in each international market, combining local mobile and fixed line services, where they co-exist, under a single local management team. In the US, Robert Dotson, CEO of T-Mobile USA, retired in early 2011 and was replaced by Phillip Humm, previously managing director, Germany. However Humm too resigned just over a year later, and was replaced by John Legere, who became CEO of the merged T-Mobile/MetroPCS. Legere is owed considerable credit for the strong continuing growth of T-Mobile USA since then. An ebullient and often outspoken champion of the corporate brand, who appears regularly in the media as well as in the company's own ads, he has developed a considerable personal following in social media, not least with his own live cookery show on Facebook. He announced plans to step down in 2020 and will be replaced by current deputy Mike Sievert.

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Deutsche Telekom was a comparatively late starter in Germany's cellular communications market, which was initially dominated by industrial engineering giant Mannesman (later acquired by Vodafone). DT launched its mobile network in 1992 and spent the next few years aggressively marketing this service in its home territory, later adopting the T-Mobil brand name. The business took its first significant steps into the international sector in 1999, acquiring UK mobile service One2One. Then the smallest of the British wireless operators, One2One was just beginning to turn a profit after years of struggling. The service had been launched in 1993 by Mercury Personal Communications, a joint venture between Cable & Wireless and American cable company US West. However, the initial offering was modest to say the least, limited to the Greater London area, and One2One was quickly overtaken by the launch of new network Orange. However, joint owners Cable & Wireless and US West were committed to their new baby and ploughed almost £2.5bn on investment into the business, expanding the network nationally, and through international roaming agreements.

A key step in the company's growth was its commitment to digital service, as well as rock bottom call rates. Although free off-peak and weekend calls did nothing to build revenue, they did encourage expansion of the user base. However, the business was also being overtaken by the pace of consolidation in the international telecoms industry. US West spun off all of its international operations, including the stake in One2One, in 1998 as Media One. One2One was put on the market by Cable & Wireless early the following year. Extra value was added to the sell-off when One2One announced a £100m tie-up with Richard Branson's Virgin Group to launch Virgin Mobile as a 50:50 joint venture. Deutsche Telekom sealed the deal to acquire One2One in July for £8.4bn, and separately bought up Media One's various other mobile interests in Eastern Europe.

Not much happened to DT's new purchases in the months following that deal. Instead the group turned its attention to the US market. After several unsuccessful attempts to acquire a fixed line operator, it agreed in 2000 to buy US mobile operator VoiceStream for $48bn. Within days of the deal, VoiceStream in turn acquired southern US carrier PowerTel for $5.9bn in stock. At the same time, DT consolidated its majority-owned mobile businesses into as new division, and began working on plans to roll out a single mobile brand worldwide. That process was finally put into action during 2002. The first step was to change the name of its German business from T-Mobil to the more international T-Mobile in February 2002. One2One adopted the T-Mobile brand in April, as did max.Mobil of Austria and RadioMobil of the Czech Republic. US businesses VoiceStream and PowerTel joined the fold towards the end of the year. During 2003, the group extended the name to Ben in the Netherlands.

Also during 2003, reports began to surface of a falling out between T-Mobile UK and Virgin Group over Virgin Mobile. Virgin began legal action to buy out T-Mobile's shareholding in 2003. The row was finally settled out of court in early 2004. Virgin Mobile agreed to maintain T-Mobile as its exclusive supplier of call volumes until at least 2014.

Last full revision 27th November 2017

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