T-Mobile USA is looking at the possibility of selling nonstrategic assets such as its broadcast cellular towers in order to raise additional funds for capital spending, according to the head of its parent company Deutsche Telekom AG.
Deutsche Telecom Chief Executive Rene Obermann said on Thursday that a sale could generate significant funding to improve the financial self-sufficiency of the No. 4 U.S. mobile service, which has been a drag on DT results.
However, he said the company would only sell T-Mobile USA's 7,000 cellular towers if it were able to fetch a good price. Obermann said the proceeds would be used for any T-Mobile USA investment requirements beyond its typical capital needs.
We're definitely not in a rush, he told reporters ahead of the company's financial analyst meeting in New York, adding that a sale would depend on whether the financials work out.
T-Mobile USA already looked into selling its towers in 2007 but decided against it, saying that the timing and the potential returns were not right.
The trend in recent years has been for big U.S. operators to sell their wireless towers and rent back space from tower operators to house their network equipment.
Shares of Deutsche Telekom closed up 1.22 percent at 9.72 euros on the Frankfurt Stock Exchange after the news. Deutsche Telekom investors have complained for years about weakness at the company's U.S. unit.
But at the New York event, T-Mobile USA CEO Philipp Humm committed to return his company to customer and revenue growth in 2011 with the help of competitive service pricing and wireless data services.
T-Mobile USA has lost customers to bigger rivals like AT&T Inc
Customer losses had dragged T-Mobile USA's revenue down in 2009. Humm did not give a specific growth target for 2011 but promised revenue growth of $3 billion by 2014.
In the third quarter T-Mobile USA posted total revenue of $5.36 billion, down from $5.36 billion in the same quarter the year before. It reports fourth-quarter results in February.
The company has been working to narrow its loses of valuable contract customers to both bigger and smaller rivals. In the third quarter it lost 60,000 contract customers compared with a loss of 106,000 in the second quarter of 2010.
The company also committed to cutting costs and promised gross savings of $1 billion by 2013 from such efforts.
Obermann said T-Mobile USA was keeping its long-term target for 35 percent operating profit margins but said the company, which posted a 28 percent operating profit in the third quarter, might take longer than expected to reach this target.
The most important priority for is for us returning to growth, Obermann told reporters.
While T-Mobile USA says it has enough airwaves to support its services in the next few years it is looking at gaining access to additional spectrum beyond that time via potential deals with companies such as Clearwire
The company did not provide any more details about its discussions with specific companies but said it would look at different options for network sharing to help save money, particularly in rural areas where it would be less economical to build out its own network.
(Reporting by Sinead Carew and Nicola Leske; editing by Gerald E. McCormick and Matthew Lewis)