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T-Mobile Outlines LTE Strategy, Loses 802K Subs in Q4

Thu, 02/23/2012 - 7:21am
Andrew Berg

It appears T-Mobile USA will take the $4 billion in spectrum and cash it received from AT&T as a result of the failed merger and stick it right back into its own network.

T-Mobile CEO Philipp Humm today outlined the company's strategy in a call with press, announcing a $4 billion network modernization and 4G evolution effort, which the company hopes will improve existing voice and data coverage and pave the way for LTE service in 2013.

Humm said the plan, which covers the next two years, is about prioritizing and investing in initiatives designed to get the company "back to growth in the years ahead." 

Additional investment areas, which the company calls "core to the company's challenger strategy" include the B2B segment and expanding its sales force; ramping up advertising spending; and attracting new mobile virtual network operator (MVNO) partners with an efficient platform for getting to market.

But things at T-Mobile were not all optimism and better days ahead. The company on Thursday also reported its fourth-quarter earnings, saying it had lost a net 526,000 subscribers, which included a whopping 802,000 contract-based defectors.

The coming year will be a "rebuilding year" for T-Mobile. The company plans to spend $200 million in advertising to relaunch the brand around 4G services. Humm said revenues, which dropped 3.3 percent to $20.6 billion, were affected by the overhang of the merger with AT&T, which hindered such things as T-Mobile's ability to sign on new MVNO partners.

The company also attributed the exceptional customer losses to the fact that all three of T-Mobile's main competitors – AT&T, Verizon Wireless and Sprint – now carry Apple's iPhone.

T-Mobile Chief Technology Officer Neville Ray detailed the company's network strategy, which includes installing new equipment at 37,000 cell sites and refarming spectrum to launch LTE in 2013. Ray said the key catalyst of refarming is the additional spectrum T-Mobile will receive as a result of the termination of the AT&T transaction. Also, other enablers are faster adoption of 3G and 4G services and improved device performance.

The carrier expects to extend LTE service to its top 50 markets and 20 MHz service in 75 percent of its top 25 markets.

Fully 90 percent of T-Mobile device sales in the fourth quarter were 3G and 4G smartphones, which enables T-Mobile to reduce the amount of 1900 MHz PCS spectrum being used for GSM; deploy HSPA+ 4G services in the PCS band; and make room in the AWS band for LTE. In addition to creating capacity for LTE in AWS spectrum, deploying HSPA+ in the PCS band will harmonize T-Mobile's spectrum bands with the U.S. market and international carriers.

Ray said the network modernization would improve signal strength by 16 percent while also harmonizing the company's existing spectrum with other networks. The harmonization factor would allow more international data roamers to use T-Mobile's network when visiting the United States, while also increasing device compatibility. Ray said that would mean the iPhone would then be compatible with T-Mobile's HSPA+ network.

When asked whether T-Mobile was looking to spin off from its parent company Deutsche Telekom and offer an IPO, Humm said the company is always looking at options but couldn't comment further.

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