Deutsche Telekom: Mobile data will provide future revenue growth

In an effort to reassure the investment community, Deutsche Telekom's CEO, René Obermann, has outlined the company's strategic direction that essentially builds upon the ‘focus, fix and grow' approach the operator introduced in 2007.

The "new" vision--labelled "fix, transform and innovate," will see the company look to expand its footprint in the TV business in Europe and become the pay-TV market leader in Germany, but with mobile data traffic providing the richest opportunities for revenue growth.

According to Obermann (known by some insiders as doberman for his aggressive style) he has set Deutsche Telekom (DT) the target to nearly double sales to almost €30 billion by 2015. This would include a likely 500 per cent increase in fixed data traffic and an astonishing 6,000 per cent increase in mobile data traffic during the next five years.

These growth estimates for mobile data are higher than those of market research firm Analysys Mason for the European market as a whole. According to the company's research director, Matt Hatton, the implications of this mobile growth were that bottlenecks would be inevitable and networks would struggle in places as traffic volumes grew. "As a result, there will be competition for scarce network resources. In that situation, the only way to control the user experience is to control the network."

Commenting on further emerging themes, Hatton said that DT had accepted that it had a strong role to play as the enabler of access to diverse services, rather than necessarily the provider of each service. "Its My Community initiative exemplifies this. It allows mobile subscribers to first select the person they want to communicate with and then choose the communication method--for example, SMS, email or the messaging functionality of a social network."

However, Hatton indicated some concern that DT's announcement did little to address legacy services, such as voice, individually. "There was no mention of strategies for managing the decline in these services, other than plans to reduce costs and promote double- and triple-play packages. Other telcos have made recent announcements about HD voice, for example, while T-Mobile has been silent on the subject."

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Analysys Mason

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