Where is Deutsche Telekom Heading?

Readers of the Real T-Mobile know that the financial community has serious doubts about the direction taken by leadership at both Deutsche Telekom and T-Mobile USA. The performance of the American subsidiary is a subject of concern.

Now comes an interesting thought piece in the German financial newspaper Handelsblatt that takes a long view of the Deutsche Telekom investment in the U.S.

The article criticizes former DT CEO Ron Sommer for having bought VoiceStream in the first place – largely because of the debt legacy and the current drag on DT’s share price. It recognizes that DT was able to use T-Mobile USA as a cash cow for the first few years after the 2001 acquisition. Now, however, decisions need to be made because of weakening profit margins and the saturation of the American cell phone market.

The article reviews the network problems afflicting T-Mobile USA. T-Mobile needs considerable financial support to build its network to compete effectively with AT&T Mobility and Verizon Wireless.

Apparently, CEO Rene Obermann was willing to sell off part of DT to gain partnership in the U.S. In any case, DT is looking for a partner. Will it be Harbinger, Clearwire, or cable companies like Comcast or Time Warner?

Click here for the full German article.