From its outspoken CEO with his unabashed Apple love, to the company’s insistence on trying unorthodox strategies to hook customers, there’s plenty to like about T-Mobile. Plenty to like, that is, unless you work on the business side of things.
In a new interview, Timotheus Höttges, CEO of T-Mobile’s parent company Deutsche Telekom, says that while he loves the carrier’s “super-maverick” approach to the mobile business, it’s just not sustainable in the long term.
As it is, the company requires investments of between $4 billion and $5 billion each year just to keep up with leading carriers AT&T and Verizon.
The only answer? T-Mobile being acquired by another company willing to stump up the money, apparently.
This almost happened last year, with Sprint making a play for T-Mobile — only for plans to be scuppered because U.S. regulators weren’t keen on shrinking the number of mobile carrier competitors from four down to three.
Höttges also notes that T-Mobile CEO John Legere isn’t … to everyone’s tastes.
“His management style will never be adaptable to Germany,” Höttges noted. “I like people being disruptive…. I like people who are brave. He is very much fitting to our DNA, how we want to be — even if he is very American in his approach.”
It’s a somewhat backhanded compliment and a bit of a sobering view of a carrier that seems to be getting more and more people on its side. As with many plucky upstarts, T-Mobile is certainly more willing to engage in innovation than a stuck-in-its-ways giant like AT&T.
It’s also a reminder of how unusual it is that Apple gets to play both the fearless outspoken innovator and the giant standard-bearer. Not every company is afforded that luxury!
Source: Re/code
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
12 responses to “Why T-Mobile’s maverick approach isn’t sustainable”
Curious? Unsustainable? Or if as you say a “…sobering view of a carrier that seems to be getting more and more people on its side…” – it seems some part of their business plan offerings are indeed working.
Maybe as more and more people sign up to their side – sustainable becomes possible?
not sustainable because you have to spend a bunch of money to keep up with data consumption. can’t do that when you are cutting into your profits.
Well, if T-Mobile is now actually gaining customers after years of losing them, the “investments of between $4 billion and $5 billion each year” may bring T-Mobile as stronger competitor and even profits. Or at least a more attractive takeover target. But the government would have to get their incompetent noses out that. Fat chance of that. They stopped ATT, Sprint and I think even Verizon from buying T-Moble over the years.
But T-Mobile seems to be doing a lot right for a year or so. Deutsche Telekom won’t be throwing in the towel anytime soon. Or making it seem it is so the government would have to approve a merger.
Who knows, but their competition to ATT has forced ATT to offer data rollover now too. Keep fighting T-Mobile. Customers win.
Dude you are not an accountant for T-Mobile. According to their CFO they would have posted a profit if they added slightly less customers. But who would sacrifice that when all those new customers will bring in more money down the road?
I think tmobile is just fine. They are like the Apple of the late 90’s.
no, not an accountant. but I read their current 10Q. says their loosing money. even their german owners say its not sustainable
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Ugggg I just hope the business men & women don’t ruin t-mobile or turn them into a greedy at&t like company. I pay $70 For unlimited everything, please leave me alone.
This thing of having limited data packages like 2.5 GB , 5 GB and still paying over $70 on at&t is just overpriced and stupid. IMHO.
My gf tried t-mobile as an alternative to shelling out big bucks monthly to verizon or at&t, but found her access to LTE, despite t-mobiles site claiming to have it on their map, was non existent. Sometimes she’d completely lose service from 4/5 bars to none just walking in a building. I know it varies by location, but my understanding is its only really viable in major metropolitan areas.
Unlimited data for $70/month is great, but if you’re limited to non LTE with mind numbingly slow speeds its useless.
I guess it depends on your area.
I would be embarrassed to work for a company whose CEO made suspect a stupid statement. First, I don’t believe it to be true. Wireless profits are astounding. People paid $20/month for unlimited text messages. If you sent 5,000 messages in a month, that’s only 1MB of data per *hour*. So, unlimited talk and text costs nearly nothing. And wireless data sells at about 1,000 times the cost of wired internet service. Even with the higher cost of cellular infrastructure, if that’s not sustainable, perhaps they should sell their business to a company that can make it work.
The other reason making that statement was stupid is because if it is true, you have just told your bigger competitors that they can drive you out of business with a price war, because they will be able to weather the competitive market until you are squeezed to death.
I hope T-Mobile can keep doing what it’s doing. I’m a heavy cell user and I switched to them and it’s been absolutely great. Also, surprisingly, my call quality is as good or better than my last provider.
Plus the noose-free, no contract thing equals freedom. I cannot, for the life of me see why anyone would want to get choked down on with a cell phone contract in this new world.
Way to go to support the guy who’s turning your business around. What an ass. I bet John is livid, I would be if my boos stabbed me in the back like that.