Deutsche Telekom

A Listening Phone Company

Deutsche Telekom_Oliver Berg-dpa
Timotheus Höttges, head of Deutsche Telekom addressing shareholders on Wednesday.
  • Why it matters

    Why it matters

    The U.S. subsidiary’s success is a key motor behind Deutsche Telekom’s revenues and the parent company is looking to import some of its winning tactics.

  • Facts

    Facts

    • T-Mobile US, based in Bellevue, Washington, made up more than 40 percent of almost €70 billion of revenues at its parent company, Deutsche Telekom.
    • In the future Deutsche Telekom will schedule more technician appointments on Saturdays, so customers don’t have to stay at home during the week.
    • Expanding the broadband service was on the minds of shareholders at the annual meeting. Regarding this point, Mr. Höttges came down hard on competitors.
  • Audio

    Audio

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At times the head of Deutsche Telekom can seem detached. In those situations, Timotheus Höttges is more of a controller and chief financial officer, a job he had for a long time. So the moments when the chief executive veers off script are particularly telling.

Such a moment cropped up while he was addressing shareholders at the company’s annual meeting on Wednesday on the topic of Deutsche Telekom’s successful subsidiary, T-Mobile US.

“In the United States,” Mr. Höttges said, “we reinvented the mobile telephone business. We could learn from that in other markets.”

“Our competitors criticize and complain non-stop. It would be better if others also invested vigorously and expanded the network.”

Timotheus Höttges,, Deutsche Telekom CEO

He praised the leadership style of the U.S. team, as well as its continuous contact with customers, whose suggestions have given rise to an innovative “eleventh wave of offers” — including discontinuation of roaming fees, quicker provision of new smartphones and transferring unused data to the next month.

Such measures helped increased revenues not only of the U.S. subsidiary, but also at the parent company. T-Mobile US contributed more than 40 percent of the almost €70 billion ($78 billion) in revenues at Deutsche Telekom.

Last year T-Mobile US’ currency-adjusted earnings before interest, taxes, depreciation and amortization rose by 55 percent to $6.7 billion ($7.5 billion).

But the Bonn-based parent company participates financially in that boon only through the increased optimism of its own shareholders. The U.S. subsidiary doesn’t pay out dividends. Nonetheless, the ideas behind their success are spilling over to Germany more and more.

For example, a little later in his speech this week Mr. Höttges announced he has consulted with customers and intends to change some of what bothers them.

In the future, customers will be assigned a personal contact, meaning they won’t have to explain their issue to a new employee each time they get in touch. Many questions will be answered directly through an app.

Moreover, Telekom will schedule more technician appointments on Saturdays, so customers don’t have to take a workday off waiting for technical support at home.

Profitable Abroad-01 Deutsche Telekom T-Mobile US United States USA

But the estimated 1,800 shareholders who gathered Wednesday in Lanxess Arena in Cologne didn’t share Mr. Höttges’ enthusiasm about the U.S. business and new customer service. Only when the head of Telekom spoke about expanded broadband service in Germany was he interrupted by applause.

“Germany needs broadband for everyone—today, not tomorrow,” Mr. Höttges announced.

He explained that last year Deutsche Telekom invested more than €4 billion ($4.5 billion) in Germany, some 18 percent of revenues. Most of it went into expanding infrastructure. “It would be better if others also invested vigorously,” he said.

Mr. Höttges then went off script again, discussing a highly controversial request by Telekom. Last year, the company asked for the right to exclude competitors from access to its cables in some regions, in order to offer quicker Internet service there. This ignited a dispute over the vectoring technology installed by Telekom, which uses copper cables that are already underground.

In Brussels, the European Commission is currently examining the application, which was approved by the Federal Network Agency.

“It’s incredible to me that Brussels hasn’t yet given its approval,” said the head of Telekom.

He added that he hopes “Europe will now make a quick decision in favor of customers.” In the end, he said it isn’t a matter of a good or bad technology, only of areas with sufficient or insufficient service.

He also sharply criticized competitors and said they were stirring up ill will against the application.

“Our competitors criticize and complain non-stop,” yet they use Telekom’s network for marketing products under their own name, Mr. Höttges said. “It would be better if others also invested vigorously and expanded the network.”

For that reason, he said, he has the highest respect for local providers who are doing just that, sparking another round of applause.

Later a shareholder representative asked what it would cost Telekom if the European Commission rejected the application. The representative observed that cable network operators were exerting more pressure with their fixed-network offers.

Mr. Höttges didn’t give a clear answer. Instead he remarked that if the application met with a positive response, Telekom could reach almost 90 percent of people in Germany over the long run. But of course, he added, the expansion would also have to make financial sense for the company.

And then he continued, in a way that suggested that he once again diverged from his planned speech.

“Dear shareholders, you see: We have answers for the digital future in every segment,” he began. Then the head of Telekom added: “And if we don’t have them, we assure you that we are working on them.”

 

009 Deutsche Telekom WTB 2015 March 16 2016

 

Ina Karabasz is an editor at Handelsblatt’s companies and markets team, covering telecommunications, IT and security issues. karabasz@handelsblatt.com

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