May 10, 2012

T-Mobile In Better Shape, Deutsche Telekom Looking For Buyers

Deutsche Telekom, Europe´s second-largest telecom company and parent company to America´s third largest carrier, T-Mobile, reported earnings today which beat their analysts estimates in a good way.

Despite this good news, however, DT continues to look for a suitor to take over T-Mobile and give it more of a fighting chance in America´s competitive telecom market.

According to Deutsche Telekom, T-Mobile´s operations helped boost profitability while their European offices are starting to lose less revenue than they had been previously.

Altogether, the Bonn-based company reported a profit of $5.8 billion, (or 4.48 billion euros) just higher than the 4.4 billion euro estimate 21 analysts had previously compiled, according to Bloomberg. Revenue had dropped by 1.1 percent, even less than analysts had expected.

T-Mobile was the golden child in these numbers, however, increasing profits by signing more prepaid customers. It´s a good thing they did, too, as T-Mo bile lost an estimated 510,000 contract customers in their last quarter.

They were, however, able to sign a net increase of 187,000 carriers, and any increase is a good increase when your parent company has tried to sell you off.

All told, T-Mobile reached a total of $5 billion in total revenue in the previous quarter, marking a 2.8% increase from Q4 2011 and a 2.5% drop from Q1 2011.

“The stabilization in the adjusted Ebitda is astounding,” said Wolfgang Specht, an analyst at WestLB AG in Dusseldorf, Germany. “It´s something special when a European operator doesn´t report a decline.”

Not feeling out of the water yet, DT is now discussing the possibility of a merger with America´s number 5 carrier, Metro PCS, according to “people familiar with the matter.”

The deal could either be a complete sale of T-Mobile to Metro PCS or a stock swap which would DT complete control over both carriers.

T-Mobile remains the only American carrier without the iPhone, and according to some in the industry, most notably Sprint CEO Dan Hesse, customers will leave if a carrier doesn´t carry Apple´s smartphone. Where T-mobile does show some love to the Apple fans is their willingness to allow unlocked iPhones to run on their network. In Fact, there are as many as 1 million iPhones running on T-Mo´s GSM network at any given time.

Some expect T-Mobile to strike up a deal with Apple for their next iPhone, as they have been beefing up their networks and preparing for a massive 4G LTE rollout to be completed by 2013.

Though T-Mobile was down and out for a while, their newly found cash and spectrum from their AT&T deal gone sour has given them some new spring in their step.

Earlier in the week, they signed on both Sony Ericsson and Nokia Siemens to a contract to complete the build out of their new 4G networks, Even better, T-Mo won´t have to foot the bill for the cost of supplies, as Sony and Nokia will do that for them.

While a merger with PCS would “bolster [T-Mobile's] ability to gain size and customers," according to Bloomberg, it wouldn´t alleviate any of the current pinch for spectrum that all carriers are feeling.


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