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March 12, 2006 10:46 pm

T-Mobile bullish on US prospects

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Deutsche Telekom is confident it can upgrade its mobile phone network in the US in response to the mergers that have left its wireless unit T-Mobile a distant fourth in the world’s biggest market.

The German company and its three bigger rivals are gearing up for the auction of extra transmission frequencies the US government plans to hold in June.

René Obermann, chief executive of T-Mobile, told the FT that failing to secure additional spectrum “doesn’t seem a very likely scenario”, in spite of competition from recently-merged giants.

“We have a realistic conception of the way business will develop in the US and I think that will make us successful,” he said, refusing to detail a bid that analysts expect to hit the low billions.

The opportunity to buy more bandwidth is vital for T-Mobile as rivals Cingular, Verizon and Sprint Nextel have started to offer high-speed “third generation” services it cannot yet handle.

“We now want to offer real high-speed mobile internet services,” Mr Obermann said. “The US market is very big and offers significant growth potential. It’s big enough for four players.”

With 21.7m US customers at the end of last year, T-Mobile was less than half the size of its regional rivals, which have grown to more than 50m customers apiece, mainly through mergers.

But Mr Obermann said he was undaunted even by last week’s acquisition of BellSouth by AT&T, turning market leader Cingular into a subsidiary of AT&T.

“We’ve emerged from all the mergers around us in the US as a successful, independent service-provider,” he said. “I don’t think the latest transaction will have any adverse effect on us.”

Mr Obermann said the relatively low penetration of mobile phones in the US – only 72 per cent of potential users have one – meant organic growth was an alternative to buying market share.

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