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 43 million+ T-Mobile and MetroPCS contract and prepaid consumer customers use its networks 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 2013 Deutsche Telekom acquired smaller rival MetroPCS via a reverse merger and combined it with T-Mobile.
In 2012 T-Mobile reported EUR 15.4 billion (about $20 billion) in revenue, up about 4% from 2011. It saw solid growth in prepaid service sales and for the first time in several years added customers, ending 2012 with 33.4 million. The company has been hurt in recent years by the loss of customers to competitors who offer Apple iPhone products.
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. It also began selling Apple iPhone products in 2013, which it feels puts it on a more even playing field with its three larger rivals.
Mergers and Acquisitions
Deutsche Telekom's purchase of MetroPCS in 2013 fits well with T-Mobile's network modernization strategy as MetroPCS had already upgraded much of its network to LTE. The two carriers also have relatively complementary networks. 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.
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