May 4, 2010 3:00 am
Deutsche Telekom is considering boosting its faltering competitive position in the US by forming a partnership with a New York hedge fund that is planning a new mobile phone network offering fast web browsing speeds.
Deutsche Telekom's US mobile business is in preliminary discussions with Harbinger Capital, the hedge fund founded by Philip Falcone that owns radio spectrum suitable for a network based on fourth generation wireless technology. In March Harbinger unveiled plans to build a 4G network next year, and the infrastructure may cover the entire US population because it involves satellite technology.
Harbinger is not planning to provide services to consumers, but instead wants to strike wholesale deals with established mobile operators and potential new entrants in the telecoms industry.
T-Mobile USA, Deutsche Telekom's US subsidiary, has held early stage talks with Harbinger about the possibility of becoming a wholesale customer on the hedge fund's 4G network, according to people familiar with the situation. No decisions have been taken, they added. T-Mobile USA was Deutsche Telekom's growth motor, but started reporting falling revenue and profit last year partly because of its inability to capitalise on the growing consumer appetite to surf the internet on a mobile.
The fourth-largest US mobile operator was two years behind its rivals with the roll-out of a network based on 3G technology that is capable of supporting web browsing on smartphones.
After buying radio spectrum, T-Mobile USA finally built a 3G network that covered 205m people by last December, and this year began offering industry-leading download speeds.
But T-Mobile USA's speed advantage will be temporary because Verizon Wireless, the largest US mobile operator, is rolling out a 4G network this year. AT&T is also planning a 4G network.
T-Mobile USA is starting to evaluate how it should offer 4G mobile services, although it hopes its 3G network will suffice for the next two years or more.
Robert Dotson, head of T-Mobile USA, said in March the operator was eyeing options that could give it access to additional spectrum for 4G services.
Please don't cut articles from FT.com and redistribute by email or post to the web.