Deutsche Telekom CEO Says T-Mobile’s Aggressive Strategy Is Expensive, Unsustainable
T-Mobile has been on a winning streak for the past year. Lead by the brash CEO John Legere, the “Uncarrier” added 8.3 million customers during 2014 and has launched a number of initiatives — including Data Stash and cut-rate unlimited LTE data plans — to battle larger competitors like Verizon Wireless and AT&T. Legere even made it a point to specifically target Sprint, saying that T-Mobile would overtake its bitter rival to grab third place among wireless carriers. Unfortunately for T-Mobile, Sprint retained its third place position, and Legere will have to try again during 2015.
T-Mobile US’s parent company, Deutsche Telekom, had hoped that there wouldn’t need to be a bitter fight between Sprint and T-Mobile. A merger was proposed that would have combined third-place Sprint with fourth-place T-Mobile to create an even stronger competitor for AT&T and Verizon Wireless, the first- and second-place wireless carrier in the U.S. However, U.S. regulator swatted down the possibility of a merger, which has Deutsche Telekom CEO Tim Hoettges looking for ways to make T-Mobile a more viable competitor in the wireless arena.
On the positive side, T-Mobile has made inroads under the leadership of Legere to recoup the millions of customers that it lost over the years. “We have done what we had to do,” said Hoettges in an interview with Re/code’s Ina Fried. “We had built an infrastructure and this infrastructure had to get utilized and we did that with very aggressive promotions.”
But T-Mobile’s aggressive promotions and expansion efforts have forced Deutsche Telekom to pour $4 to $5 billion a year into the company just to keep it in the running. “The question is always the economics in the long term and earning appropriate money,” Hoettges continued. “You have to earn your money back at one point in time.”
As for the foul-mouthed Legere, who isn’t afraid of aiming f-bombs and other expletives at his competitors, Hoettges acknowledges that he gets the job, despite the fact that his antics would fly in Deutsche Telekom’s home market of Germany.
“I like people being disruptive… I like people who are brave. He is very much fitting to our DNA… even if he is very American in his approach.”