T-Mobile Considers Tower Selloff for LTE Funds

by Matt Klassen on March 30, 2012

In an effort to find the necessary revenue to fund its ambitious, and slightly confusing, proposed foray into LTE, T-Mobile’s parent company Deutsche Telekom is apparently prepared to leverage the farm, developing a plan to sell off key T-Mobile assets to generate more income. In fact, Bloomberg recently reported that T-Mobile has hired a strategic advisory group to assist in selling off one of T-Mobile’s only real assets, its wireless towers…they didn’t really need them anyways.

While I’m sure a selloff of the company’s wireless infrastructure will generate much needed revenue for both Deutsche Telekom and T-Mobile, two companies who have see their fortunes flag over recent years, the timing certainly strikes me as odd, given that it was just over a month ago that T-Mobile announced its plan to invest in a “network modernization” strategy that included a network upgrade to 4G.

That said, there are rumours that such a selloff is part of an overall strategy to make T-Mobile self-sufficient, alleviating the current financial burden on Deutsche Telekom (DT) and allowing the American wireless carrier to hopefully find its wings in an increasingly competitive market.

To be fair, though, T-Mobile isn’t the first company to consider selling off its wireless infrastructure to third party tower operators, and there is some upside to such a deal as well. First the obvious one, with the sale of its towers analysts anticipate that T-Mobile will be able to generate upwards of $3 billion, how much of that is earmarked for network upgrades and how much will line DT’s pockets, however, remains to be seen.

Second, selling off one’s wireless towers may actually benefit the wireless market as a whole, as specialized tower operators like American Tower Corp., Crown Castle International Corp. and SBA Communications Corp, all of whom are potential suitors in this deal, may be able to better utilize and manage the infrastructure by allowing multiple companies to access said towers. Of course T-Mobile itself will be one of the companies paying to access that infrastructure, but perhaps in the end that’s just easier than managing the towers on its own.

That said, while I can certainly understand that desire to generate more revenue to help assuage DT’s financial burden and help fund T-Mobile’s ambitious LTE network upgrade, this entire story seems to be laden with confusing missteps and contradictions. First, T-Mobile is looking to update and upgrade its network infrastructure, but its first move to that end is to attempt to selloff its infrastructure, only to have to buy access back to it later on down the road.

Second, one of the stated goals of this proposed selloff is to make T-Mobile increasingly self-sufficient, but the selloff may in fact hamstring T-Mobile in the market, as it relinquishes one of the only in-house assets it still has. While I’m sure that money is tight, and more money is always needed for network improvements, the timing and direction of this selloff nevertheless boggles my mind.

Unfortunately though, T-Mobile’s plans for generating revenue and cutting costs doesn’t stop there, as the company has also announced its intention to close seven call centres and cut a net total of 1,900 jobs, truly the most unfortunate part of T-Mobile’s aggressive, and not to mention confusing, modernization strategy.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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T-Mobile Leverages Infrastructure Assets to Bolster LTE Development — TheTelecomBlog.com
October 2, 2012 at 8:30 am

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