DT Plans M&A, IPTV Push

As expected, Deutsche Telekom AG (NYSE: DT) outlined its new strategy this morning, including potential asset sales and wireless acquisitions, as it announced 2006 full-year and fourth-quarter financials that largely met with analyst expectations. (See DT Outlines Strategy and DT Plans Strategy Revamp.)

The carrier's CEO, René Obermann, told investors today that DT is no longer ruling out international acquisitions for its T-Mobile International AG wireless division and that "there might be moves outside our existing footprint," though any acquisitions would be based on "strict financial criteria."

He added that there's also the possibility of consolidation in markets in which T-Mobile is already active, "where that makes sense...

"We shouldn't rule out opportunities abroad any longer, but we won't rush into it -- we are under no time pressure. We will pick the opportunities when they are right, so let's not get too excited about it. This is a long-term plan -- this is not all happening tomorrow."

T-Mobile currently has operations in Germany, the U.S., the U.K., Poland, Austria, the Netherlands, the Czech Republic, Hungary, Croatia, Slovakia, Macedonia, and Montenegro. Globally it has 106.4 million mobile customers -- 81.4 million in Europe, and 25 million at T-Mobile US Inc. (which grew by 3.3 million customers in 2006).

And while acquisitions are a possibility, so are divestments, which could bring in as much as €3 billion (US$4 billion). DT is examining the possible sales of its wireless towers in the U.S. and Germany, the media and broadcast unit of its T-Systems International GmbH services and integration business that serves broadcast and media companies, some real estate holdings, and its fixed broadband businesses in France and Spain.

The latter two are Club Internet , the French triple-play ISP that is one of the few service providers delivering commercial IPTV services based on the Microsoft Corp. (Nasdaq: MSFT) platform, and Spanish DSL player Ya.com . (See Club Internet Unveils IPTV and Ya.com Uses Alcatel for Triple Play.)

DT clearly feels that it can't make meaningful inroads in these markets. Competition in the French broadband market is particularly intense, where Orange (NYSE: FTE) and Iliad (Euronext: ILD) dominate the sector. Telefónica SA (NYSE: TEF) and cable operator ONO dominate the Spanish high-speed access market, though Jazztel plc has made some inroads. (See Iliad Plans €1B FTTH Build and FT Fleshes Out FTTH .)

But while international markets dominated the carrier's M&A strategy, Obermann said the main focus of the company would be on its domestic market. "Germany still accounts for 54 percent of our revenues -- there is a lot to lose. Increased competitiveness in Germany is central to our strategy," said Obermann, adding that price pressures, mobile substitution of fixed lines, and strong mobile competition all need to be tackled.

So the carrier is going to pour money into domestic marketing and consolidate its 20-plus existing retail brands down to just two, T-Home and T-Mobile. It's also continuing with its high-speed broadband rollout and will be pushing its IPTV service hard.

To Page 2

1 of 2
Next Page

Sign In