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Sun, Oct 08, 2006 - Page 11 News List

Deutsche Telekom plans US$2.7bn US high-speed network


Deutsche Telekom AG, Europe's biggest phone company, plans to spend 2.1 billion euros (US$2.7 billion) over three years to build a high-speed mobile network in the US.

By adding services such as video and game downloads, T-Mobile, the fourth-largest US cellular-phone company, plans to boost its customer count by least 50 percent to between 35 million and 40 million by 2015, Deutsche Telekom chief financial officer Karl-Gerhard Eick said in a conference call on Friday.

T-Mobile USA last month spent US$4.2 billion on wireless licenses. Deutsche Telekom bought T-Mobile USA, formerly called VoiceStream Wireless Corp, in 2001 for US$35 billion.

"Payback for the investments will take not months, not years, but tens of years," said Boris Boehm, a fund manager at Nordinvest in Hamburg, which oversees US$7.6 billion, including Deutsche Telekom shares. "T-Mobile needs the licenses and the network just to keep its market position, not even to grow it."

T-Mobile USA has been adding US wireless customers at a slower pace than bigger rivals Cingular Wireless LLC and Verizon Wireless, partly because of a lack of wireless spectrum. The US unit overtook the German mobile-phone division in 2004 as Deutsche Telekom's largest source of wireless revenue.

"I'm convinced this is money well spent," chief executive officer Kai-Uwe Ricke said at a news conference in New York on Friday.

Deutsche Telekom plans to "maximize revenue market share" in the US and make T-Mobile USA "the largest single company within the group," he said.

In the first half of this year, the US unit accounted for 22 percent of Deutsche Telekom's sales, up from 16 percent in all of 2004. Deutsche Telekom's merged broadband and fixed-line phone unit is the largest division, contributing 41 percent of the company's revenue in the first half.

Network construction in the US will begin this quarter, with most of the work scheduled to be completed next year and in 2008.

T-Mobile is the only major US carrier that doesn't have a third-generation mobile-phone network, which can transmit services such as video downloads.

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