T-Mobile USA and Deutsche Telekom, its German parent, confirmed plans to roll out 3G wireless services using the spectrum T-Mobile won in the recent federal Communications Commission auction.

Kai-Uwe Ricke, Deutsche Telekom’s chief executive said T-Mobile USA will spend $2.7bn over the next two-and-a-half years to upgrade its nationwide GSM network to offer 3G services.

T-Mobile USA, which had been constrained by spectrum shortages, emerged as the top bidden in the FCC spectrum auction last month paying a total of $4.2bn for 120 licences. As a result T-Mobile has more than doubled its spectrum capacity in the top 100 US markets enabling the carrier to significantly boost its wireless offerings.

“The auction and the resulting acquisition of additional spectrum her in the US is an important step forward for us, and not just for T-Mobile USA but for the Deutsche Telekom group as a whole which benefits from the growth of its US business,” said the D-Telekom chief executive.

Mr Ricke and senior T-Mobile USA executives in New York said the 3G rollout was part of their strategy to boost T-Mobile’s US subscriber base by more than 50 per cent from about 23.1m today.

“We are aiming to maximize revenue market share in the US and make T-Mobile USA the largest single company within the group,” said Mr Ricke underscoring D-Telekom’s commitment to the US mobile telecommunications market which he noted, has significantly more growth potential than the more mature markets of Western Europe.

The US unit overtook the German mobile-phone division in 2004 as Deutsche Telekom’s biggest source of wireless revenue. In the first half of this year T-Mobile USA accounted for 22 percent of Deutsche Telekom’s total sales, up from 16 percent in 2004.

T-Mobile executives said the rollout of the upgraded 3G network – which will enable the carrier to offer a much broader range of wireless services including high speed mobile data – will begin in the fourth quarter with most of the work scheduled to be completed in 2007 and 2008.

T-Mobile USA has lagged behind its bigger rivals in the deployment of 3G services in the US however Robert Dotson, T-Mobile USA’s chief executive, said the company would ultimately benefit by waiting.

In particular he noted that the cost of 3G handsets and network infrastructure have dropped sharply and suggested that as a result, T-Mobile USA would have significantly lower deployment and operating costs than most of its rivals.

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