T-Mobile USA laid out the plan Friday for the $4.2 billion (euro3.3 billion) in wireless spectrum it won in a recent federal auction, saying it expects to spend nearly $2.7 billion (euro2.1 billion) on a network upgrade that can deliver mobile multimedia capabilities it has not been able to offer like its rivals.
The rollout of next-generation network equipment began in advance of the auction's conclusion, with 50 percent of the deployment in New York City already complete, though "most of the work" will be complete by 2008, T-Mobile and corporate parent Deutsche Telekom AG of Germany said in a statement.
Customers in some markets will be offered new services enabled by the network upgrade starting in mid-2007. The company did not detail the services it will be deploying, or where they'll be available first. The network is to be upgraded with the same "UMTS" technology for broadband wireless data used by Cingular Wireless and most foreign cell carriers, including T-Mobile's networks in five other countries.
The combined cost for the new airwave licenses and the network upgrade will be at the lower end of analyst expectations voiced before the spectrum auction, and do not lead to any change in the Deutsche Telekom's announced revenue and profit guidance for 2006 and 2007, the company said. The cost of the upgrade is expected to be offset in part by reduced investment in T-Mobile's existing network as the deployment of the new systems progress.
T-Mobile was the top spender in a Federal Communications Commission auction of new licenses to use the public airwaves for wireless services, accounting for nearly a third of the $13.9 billion (euro11 billion) raised when the bidding closed last month.
Other big bidders included Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group PLC, and a partnership between Sprint Nextel Corp. and major cable TV companies including Comcast Corp.
There was little surprise that T-Mobile emerged as the most aggressive bidder, as the company has been starved for the sort of spectrum capacity needed to deliver bandwidth-heavy services such as mobile Internet access and video downloads. That has put it at a competitive disadvantage against Verizon and other rivals that already offer more robust multimedia capabilities to consumer and business users.
The company said Friday the new licenses from the auction doubled its average capacity in the top 100 U.S. markets.
"The auction and the resulting acquisition of additional spectrum here in the USA is an important step forward for us. And not just for T-Mobile USA but for the Deutsche Telekom Group as a whole, which benefits from the growth of its U.S. business," Kai-Uwe Ricke, chief executive of Deutsche Telekom, said in the statement. "We are aiming to maximize revenue market share in the U.S. and make T-Mobile USA the largest single company within the Group."
T-Mobile USA, with 23.3 million subscribers, is the fourth largest cell carrier in the United States.