Informa comments on T-Mobile plans

LONDON, UK: Mike Roberts, principal analyst (Americas) at Informa Telecoms & Media comments on T-Mobile's plans to modernise its mobile network and launch LTE in 2013.
Informa comments on T-Mobile plans
  • T-Mobile USA uses US $4 billion break-up fee from AT&T to move to LTE
  • AT&T's loss is T-Mobile's gain
  • T-Mobile's new challenger strategy is sound but faces major challenges
"T-Mobile USA has announced plans to invest US$4 billion - the same amount it should receive from AT&T due to its failed takeover of T-Mobile - to modernise its mobile network and launch LTE in 2013, in a bid to stay competitive in a US mobile market rapidly moving to LTE. It's the right move for T-Mobile USA and an embarrassment for AT&T, which set out to tighten its grip on the US mobile market by acquiring T-Mobile USA but ended up funding the potential revival of a competitor."

"Deutsche Telekom's negotiators are looking savvy in retrospect as the stiff break-up fee they negotiated with AT&T looks tailor-made to fund their LTE deployment, with some US$3 billion in cash and US$1 billion in spectrum rights. The spectrum is particularly vital since T-Mobile USA did not previously have enough spectrum to deploy LTE. However, a break-up fee of some sort was clearly justified since T-Mobile has been in limbo since the acquisition was announced in early 2011, with its strategy frozen and market share declining."

Major challenges

"T-Mobile USA's new network strategy is sound but faces major challenges. First, T-Mobile describes the new spectrum from AT&T as the "catalyst" for its move to LTE, which is accurate, but T-Mobile USA is still short on spectrum and will have to 'refarm' existing spectrum to use for LTE. This will not be easy and creates technical challenges and risks not faced by Verizon Wireless and AT&T, which are deploying LTE in new spectrum. Second, T-Mobile USA does not have the financial firepower to keep up with the LTE and other investments of its larger rivals Verizon Wireless and AT&T. Third, T-Mobile USA is playing catch-up with its rival Sprint, which is already well underway with its plans to launch LTE this year."

"Other aspects of T-Mobile USA's new-challenger strategy include pursuing the B2B segment, which is a typical aspiration for mobile operators but one that is very hard to execute. Similarly, T-Mobile's plan to attract new MVNO partners is sound but its major rival Sprint has been pursuing a similar strategy for several years."

"Overall T-Mobile USA's new strategy is sound but its execution will be the key to reviving the operator's fortunes in the US mobile market."


Informa Telecoms & Media
Informa Telecoms & Media aims to deliver strategic insight founded on global market data and primary research. The company works in partnership with its clients, informing their decision-making with practical services supported by analysts.

The company conducts primary and secondary research on the latest trends impacting the mobile communications, fixed communications and TV sectors, on a global basis. ITM's market intelligence services - World Cellular Information Service (WCIS), World Broadband Information Service (WBIS) and the Intelligence Centre - to give clients access to market forecasts and key performance indicators (KPIs), as well as detailed analysis and exploration of trends.
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