D.Telekom seeks new strategy for T-Mobile USA: source

FRANKFURT Mon Jan 9, 2012 4:45pm EST

A man checks his mobile phone as he walks past a T-Mobile store in downtown Los Angeles, California August 31, 2011. REUTERS/Fred Prouser

A man checks his mobile phone as he walks past a T-Mobile store in downtown Los Angeles, California August 31, 2011.

Credit: Reuters/Fred Prouser

FRANKFURT (Reuters) - Deutsche Telekom (DTEGn.DE) is overhauling its strategy for its U.S. wireless unit after AT&T (T.N) last month dropped its planned $39 billion takeover of the unit, a person familiar with the strategy planning said on Monday.

"Telekom is planning to work out a new strategy for T-Mobile USA in the coming weeks," the person told Reuters, adding that no date had been set to unveil the plan but it would certainly not be before 2011 results are published on February 23.

A Deutsche Telekom spokesman declined comment.

The Financial Times newspaper also reported that Telekom was working on a new strategy.

Telekom Chief Executive Rene Obermann said another buyer would not be easy to find after AT&T dropped its bid for the unit in the face of fierce opposition from U.S. regulators, and that the business first needed to be stabilized.

The company's Chief Financial Officer Tim Hoettges said one of the first steps could be to sell and lease-back the company's mobile phone masts.

Analysts estimate that the sale could garner $1-2 billion and identified infrastructure investors such as American Tower (AMT.N) or Crown Castle (CCI.N) as potential bidders.

This would not solve Telekom's problems in the United States, however, as the company needs to invest to upgrade its mobile network to the new LTE data standard, which allows high-definition videos to be viewed on mobile phones, for example.

The build-out of that system could cost as much as $9 billion, Jeffries analyst Ulrich Rathe said.

Large shareholders at Telekom have balked at the prospect of big investments in the past, but the company faces tough choices.

Bleeding money and losing customers, it ranks fourth among U.S. carriers behind AT&T, Verizon (VZ.N) and Sprint (S.N).

Analysts have said the Telekom may be forced into a tie-up of its sub-scale T-mobile business with Sprint.

(Reporting by Peter Maushagen, writing by Jonathan Gould)

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Comments (2)
sprint is the best option…

Jan 09, 2012 1:56pm EST  --  Report as abuse
Jeepgirl wrote:
T-Mobile does right by me, I will stay a loyal customer. Thank you!

Jan 09, 2012 2:52pm EST  --  Report as abuse
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