Comeback Telco

Telekom's U.S. Turnaround

Vorstandsvorsitzender Timotheus Höttges bei der Telekom Bilanz PK in Bonn / 060314 ***Telekom Annual Press Conference in Bonn, Germany, March 6 2014***
How can Timotheus Höttges not smile with numbers like these.
  • Why it matters

    Why it matters

    Telekom is benefitting from the strong performance of its U.S. subsidiary and restructuring measureas in its core European operations.

  • Facts

    Facts

    • Timotheus Höttges intends to establish Telekom as Europe’s leading telecommunications firm.
    • Sales rose more than 15 percent to €17.4 billion and ebita was up 13.4 percent to €5 billion in the second quarter.
    • Mr. Höttges allowed flamboyant executive John Legere to turn around T-Mobile USA.
  • Audio

    Audio

  • Pdf

Deutsche Telekom chief executive Timotheus Höttges made no effort to hide his admiration for John Legere in February when he called the head of the company’s wireless unit, T-Mobile USA, a “f***ing legend“ in front of a group of equity analysts in Bonn.

Six months later, it appears Mr. Höttges wasn’t exaggerating: During that time, sales at T-Mobile USA rose in double digits, alone 14 percent in the second quarter,  and with 58.9 million customers, the mobile phone subsidiary overtook rival Sprint to become the third-largest wireless provider in the United States.

For the group, second-quarter sales rose more than 15 percent to €17.4 billion, or $19 billion, and adjusted net income soared by 70 percent to €1.1 billion.

“We’re on a good path,” Mr. Höttges said.

 

A Strong Q2 for Telekom-01

 

Many at Deutsche Telekom’s headquarters in Bonn had strong doubts whether. Mr. Legere could turn around the U.S. unit. But Mr. Höttges, ignoring the critics, gave the extroverted American space to live up to his good reputation in the telecommunications industry.

“He allowed Legere to just do it,” said Paul Marsch, a financial communications analyst with Berenberg Bank. “That was brave of him.”

Mr. Legere managed the turnaround with new contracts, infrastructure investments and aggressive marketing. He also ensured that T-Mobile USA carried Apple’s popular iPhone.

With similar measures, Mr. Höttges hopes to put Telekom on a growth track in its core European markets as well.

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