T-Mobile is to cut 900 more jobs

Deutsche Telecom’s US mobile operation, T-Mobile USA, is to cut a further 900 jobs, following the unit’s failed $39bn purchase by AT&T late last year. The latest cuts come on top of around 1,900 job losses announced earlier this year.

Last week T-Mobile USA said it has seen revenue and profit deteriorate over the past year, and is now stepping up its efforts in the market, bolstered by the rollout of an LTE network.

Revenue for the US operation during the first quarter of 2012 increased two per cent year-on-year to reach €3.8bn, while adjusted EBITDA grew 12.9 per cent to €1bn. However, this was in part due to exchange rate gains made by the US dollar. In local currency, revenue decreased by 2.3 per cent, although adjusted EBITDA increased by eight per cent.

“Relaunching the T-Mobile brand on the US market and significantly enlarging the sales network in the country are important steps in implementing the strategy,” the firm said in its statement. “In addition, initiatives for cutting costs and reducing churn are having a positive impact. There was a 0.1 percentage point improvement year-on-year in branded contract customer churn, representing a 0.5 per cent improvement on the fourth quarter.”

So it looks like the cost cutting initiatives are set to continue. Most of the recently announced job cuts are to come from the closure and consolidation of call centres.

“We are restructuring the organization and optimizing operations so that we can make critical decisions better and faster in response to market and customer demands. Further, by reducing our cost structure and streamlining operations, T-Mobile will be able to invest in areas where we anticipate the strongest return: modernizing our 4G network; aggressively pursuing the B2B segment; and re-launching our brand,” the company said.

T-Mobile

How does this article affect your perception of T-Mobile? What is this?

T-Mobile is 16.2% negative

Total votes: 43

33 18 43 d428c0318a 0

Everything Everywhere says that service revenues would have grown were it not for the impact of MTR cuts in the UK

Everything Everywhere, the company formed by the merger of Orange and T-Mobile in the UK, has posted a drop in service revenue of 2.5 per cent to fall to £1.5bn in its first quarter earnings statement.

The firm blamed the drop on the impact of regulated mobile termination rate (MTR) cuts. Last year, the UK’s Competition Commission decided to increase the speed at which mobile termination rates must fall, from 4 pence per minute to just 0.65 pence per minute by 1 April 2014. It said that, excluding the impact of these cuts, revenue would have grown by 2.9 per cent.

Nonetheless, CEO Olaf Swantee was buoyed by the performance, and described its current churn rate, which stands at 1.2 per cent as “industry-leading”.

“We are seeing improved underlying service revenues, driven by rapid data revenue growth, as we successfully upgrade customers to smartphones and higher value postpaid agreements,” he said.

He added that the firm expects to make “major strides” improving its network experience, such as better signal sharing and faster 3G data services, when it launches its LTE services, which it is hoping to bring to market by the end of this year by refarming its 1800MHz, pending approval from regulator Ofcom.

“We continue to make progress in reducing costs and simplifying the business.  In the first quarter we initiated our network optimisation programme to streamline the number of network masts.

During the quarter, Everything Everywhere also completed on a series of other business integration projects including restructuring its head offic, the consolidation of the Orange and T-Mobile warehouses and handset supply chain and improved product availability. The firm plans to reduce its head office space by 38 per cent and Swantree said the operator remains on track to achieve its targeted £3.5bn  net present value (NPV) in cost savings by 2014.

LTE services have now been launched in Hungary

T-Mobile’s Hungarian subsidiary and the wireless operation of Magyar Telekom has become the first operator to offer a 4G-LTE mobile broadband service in the country.

The service was launched across ten districts of Budapest after the operator carried out a three-month extended network testing phase, involving over a hundred personal and business users. T-Mobile said that it will continue to develop its network in 2012 to provide the service to more customers in Hungary.

The operator said that it has invested heavily in the technology, and the number of 4G-LTE stations roughly tripled over the course of 2011. As of January 1, the new broadband mobile technology is available to 40 per cent of Budapest citizens, including for indoor use. T-Mobile intends to expand coverage to the whole area of Budapest in 2012.

Customers in Budapest hoping to use the service require a Magyar Telekom Net&Roll 4G mobile internet package and also an LTE-enabled T-Mobile internet dongle.

Everything Everywhere is investing £1.5bn over three years

UK communications firm Everything Everywhere, which owns and operates the British Orange and T-Mobile brands, has announced that it is to invest £1.5bn ($2.4bn) in a three-year network evolution programme. The project will accelerate the integration of the Orange and T-Mobile networks and ready them for LTE through the “implementation of 4G-ready technology following successful trials,” the firm said.

The plan represents double digit growth in network investment from 2011 to 2012. T-Mobile’s 3G network has already been merged with that of UK competitor Three, as part of the two firms’ network management joint venture, MBNL.  Orange and T-Mobile have allowed each others’ users to roam across both 3G networks since October, with 2G roaming in place since 2010.

CEO Olaf Swantee said: “With mobile data increasing 250 per cent over the past two years, we are making these investments so we can deliver on our ambition to provide the UK’s most reliable, biggest and best mobile data network.  We believe that the UK requires a 21st century infrastructure and are committed to rolling out 4G as soon as possible to support growing data use, connect parts of the country with little or no mobile broadband, and drive economic growth.”

The firm said that sometime during the first half of 2012, customer devices will automatically select the strongest available signal from the two networks.

An LTE trial conducted in partnership with BT launched in September this year. Everything Everywhere said that the trial, which focused on the delivery of mobile broadband services to rural areas, has delivered “satisfaction rates of over 90 per cent.”

The UK is lagging comparable European markets in LTE deployment. While regulator Ofcom has said that it expects LTE availability before 2013, it is expected that nationwide coverage will not be available until 2017.

AT&T has been told it may have to undergo an administrative hearing before its T-Mobile USA merger could get the go-ahead

The US Federal Communications Commission (FCC) has said that AT&T must face an extra review next year, putting a significant hurdle in the way of its planned merger with T-Mobile USA.

FCC chairman Julius Genachowski told reporters in the US that letting AT&T acquire T-Mobile USA is “not in the public interest” and that if approved, “thousands of jobs will be lost in the aftermath”.

He has therefore proposed an administrative hearing take place, which would require AT&T to present its case before an administrative law judge. The FCC would also present its own findings at the hearing.

The call for an extra hearing is unusual – it is its first such move in nine years, and a review is still pending approval by other FCC commissioners. However, if the administrative hearing takes place, it could delay the proposed $39bn merger by months.

Larry Solomon, senior vice president of corporate communications at AT&T, responded to the FCC’s action today, saying that it is disappointing.

“It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both,” he said, adding: “At this time, we are reviewing all options.”

Verizon's CFO Fran Shammo has said the carrier has no objections against the propsed merger of AT&T and T-Mobile

Leading US Carrier Verizon Wireless has no concerns over the proposed merger of AT&T and T-Mobile USA, as long as it does not result in increased industry regulation. The company’s CFO Fran Shammo made the revelation to a Morgan Stanley conference in Spain last week, according to a report by Rethink-Wireless.

Shammo admitted that he did feel that the US wireless carrier industry did need consolidation, but not at the expense of increased interference from US regulator the FCC.

The FCC is currently debating the proposed $39bn merger, and has raised the ire of other players in the market such as number three US carrier Sprint Nextel, and also the US Department of Justice, which claimed that the deal would “substantially lessen competition”.

For its part AT&T has said that if the merger goes through it would create 5,000 jobs, though Sprint has countered with a report that claimed that this was unfounded.

AT&T wants to merge with the struggling T-Mobile USA, owned by Deutsche Telecom, in order to gain access to its wireless spectrum and improve its LTE spectrum coverage. The move would make it the largest player in the US market.

Verizon Wireless currently offers LTE in 179 cities markets, covering a population of 186 million, compared to just 15 markets for AT&T. It said it plans to cover 70 million people with LTE by the end of the year.

At the conference Shammo also said that Verizon wants to see changes in the device eco-system, no doubt as a response to the growing power of the device OS manufactures, namely Apple and Google. This would mean welcoming a third player in the market, most likely Nokia’s Windows Phone powered devices, with RIM’s Blackberry struggling to retain market share.

15 US politicians have sent a letter to Obama urging him to approve merger

US President Barack Obama has received a letter from 15 US politicians calling for his administration to approve the merger between AT&T and T-Mobile.

The letter, put forward by member of congress Heath Shuler and 14 other Democrats, said that the proposed merger of AT&T and T-Mobile USA would help solve America’s job crisis by reducing unemployment, encouraging private investment and promoting new and innovative technologies that will drive job creation.

“AT&T has announced plans to repatriate 5,000 jobs that are currently being performed overseas.  In addition, a recent SITE study has shown that the merger will create somewhere between 55,000 and 96,000 new jobs to integrate the two networks and upgrade facilities,” the letter read.

It added that the merger will encourage new private investment to deploy wireless high speed internet access services to 97 per cent of the US population. Coverage of this magnitude will necessitate an additional $8bn investment from AT&T over and above its current industry leading capital investments, the politicians argued.

“Finally, the deployment of next generation, wireless broadband is the type of investment in new and innovative technology that will drive job creation for years to come,” the letter continued, adding: ”A recent study by Deloitte predicts that next generation wireless broadband buildout by the wireless industry will create 371,000 to 771,000 jobs and GDP growth between $73bn and $151bn by 2016.  AT&T’s proposed merger commitment to make available this new technology to 98 per cent of the nation’s population will be a key component of the industry buildout.”

However, Public Knowledge, a Washington-based public interest advocacy organisation, said that the deal would be bad for the US economy, consumers and technological innovation.

“We thought the issues of job creation and investment had long been settled.  It is perfectly clear that AT&T’s history has been to destroy jobs, not to create them.  The company has shed 10,000 jobs a year for the past ten years.  There is no reason to believe that the takeover of T-Mobile will do anything to change that dynamic,” said Gigi B. Sohn, president and co-founder of the organisation.

“To the contrary, T-Mobile has created jobs at the same time AT&T has cut them.  And by removing T-Mobile’s investment, the amount of money spent on improving the wireless networks will be less, not more.”

The Dutch MVNO market remains dynamic

Almost one third of mobile subscribers in the Netherlands are customers of virtual operators, according to a report published this week by Dutch analyst house Telecom Paper. The total number of MVNO subs in the market has now hit 6.6 million, or 32.8 per cent of the total subscriber base, the analyst said.

More than half of the virtual brand customers—56.4 per cent—are on MVNOs owned by the market’s mobile operators, which are gaining share. Telecom Paper said that 13.7 per cent of the total Dutch mobile market are customers of independent MVNOs, down 1.3 per cent on Q3 2010.

At the end of the first quarter of 2011 there were 56 MVNOs operating in the Netherlands, although 11 of these control the majority of the market. This number has remained the same since Q3 last year, although there remains movement in the market, with several players exiting and others taking their place since that point.

“Hi and Telfort are the leaders of the operator-owned brands and Lebara and Lycamobile of the independent MVNO brands,” the analyst firm said in a statement. “In terms of network operator usage, KPN continues to lead, although it has lost some share. Both Vodafone and T-Mobile increased market share, with T-Mobile growing the most due to its acquisition of Simpel and growth at Ben.”

Telecom Paper said that new entrants will need to innovate on service proposition and by finding niche markets, such as immigrant populations. “New players will have to differentiate themselves by offering real value-added services, and not just plain voice and SMS services, in order to survive,’’ said Alejandra van de Roer, senior analyst at Telecompaper and co-author of the report.

The deconsolidation of T-Mobile UK and plans to get rid of the US operation affected DT's results

German carrier Deutsche Telekom reported a significant drop in net profit for the first half of 2011, from €1.2bn a year ago to €828m this year. Revenues were on the slide as well from €31bn in H1 2010 to €29bn in H1 2011.

Adjusted net profit came in at €1.6bn, versus €1.7bn in the first half of 2010, prompting CEO Rene Obermann to comment on a “persistently difficult environment,” and the company also “seeing light at the end of the tunnel in Southeastern Europe,“ with particular reference to Greece.

Mobile internet continues to be a growth driver, with revenues in this area increasing by 13 per cent year on year to €1.2bn, boosted by growth in the use of smartphones, which now account for 46 per cent of all devices sold by the European national companies compared with 21 per cent one year before. There was also a significant increase in the number of smartphones on the T-Mobile USA network, up by over 50 per cent to almost 10 million within a year.

There were two major events during the first half of 2011 to affect DT’s financials, namely the deconsolidation of T-Mobile UK, which now falls under the Everything Everywhere umbrella, as well as the reporting of T-Mobile USA as a ‘discontinued operation’ due to its proposed merger with AT&T. However, the deal is presently having a tough time of it with the competition authorities.

Ovum analyst Charlie Davies commented: “These numbers and Rene Obermann’s reference to a ‘persistently difficult environment’ underline the challenge facing Deutsche Telekom and many of its peers in combating declining revenues in their core income streams. Deutsche Telekom is betting on sustained longer-term growth in South Eastern Europe to help boost flagging revenue numbers.

“Growth in markets like Poland will be even more important in light of Greece’s ongoing economic woes and the overall shaky economic climate makes this a more risky bet. This means Deutsche Telekom must also maintain progress in reducing opex in order to achieve its targets.”

Deutsche Telekom

How does this article affect your perception of Deutsche Telekom? What is this?

Deutsche Telekom is 100% positive

Total votes: 2

25 2 2 734e668c72 0