T-Mobile USA, a subsidiary of Germany-based Deutsche Telekom, is one of the largest providers of wireless voice and data communications services in the US. The company's 33 million+ contract and prepaid consumer customers use its network domestically and are able to connect to the compatible network of its parent company when in Europe. It also provides wireless Internet access and other data services in airports and retail businesses, among other locations, through its T-Mobile HotSpot brand. T-Mobile resells phones, PDAs, and accessories from such vendors as Nokia and Samsung. In 2012 Deutsche Telekom agreed to acquire smaller rival MetroPCS via a reverse merger and combine it with T-Mobile.
Change in Company Type
MetroPCS will acquire T-Mobile while at the same time issuing 74% of its common stock to Deutsche Telekom. The combined entity, which will retain the T-Mobile name, will serve more than 42 million subscribers. The carriers have relatively complementary networks and MetroPCS has upgraded much of its network to LTE (long-term evolution) technology, which is one of T-Mobile's strategic goals.
The T-Mobile/MetroPCS transaction follows an attempt in 2011 by Deutsche Telekom to sell T-Mobile to AT&T for about $39 billion in cash and stock. The deal ultimately failed under pressure from regulators.
T-Mobile sells its products through about 2,000 company-owned retail outlets and some 1,000 franchised T-Mobile Premium Retailer (TPR) locations. It plans to open some 350 new stores, both company-owned and TPR units, in 2012.
In 2011 T-Mobile reported $20.6 billion in revenues, which is down 3% year-over-year (on top of drops of 1% and 2% in 2010 and 2009, respectively). The company has been hurt in recent years by the loss of customers to competitors who offer Apple iPhone products (T-Mobile is the only major US carrier to not carry the iPhone). It lost more than half a million customers in 2011 (a 1.7 million contract customer loss was partially offset by prepaid customer growth).
Although T-Mobile is a key source of revenue for Deutsche Telekom (providing the largest wireless subscriber base and revenue stream outside of Germany), it faces stiff competition from much larger US-based rivals: AT&T Mobility, Cellco Partnership (dba Verizon Wireless), and Sprint Nextel.
The company has crafted a "challenger" strategy to compete with the big boys and return its business to growth. Among the key initiatives of T-Mobile's strategy is heavy investment in network modernization to prepare for deployment of LTE (long-term evolution) technology in 2013. It plans to spend some $4 billion in this effort.
Other components include expanding into the B2B market, partnering with new mobile virtual network operators (which resell voice and data services), and growing its sales force and retail store network. – less