Report: Deutsche Telekom to spend €23.5B on networks over 5 years

Deutsche Telekom plans to spend €23.5 billion ($27 billion) on its networks in Germany over the next five years in order to boost its position in the face of stronger competition from rivals.

According to Bloomberg, CEO Timotheus Höttges said at the Digital Life Design (DLD) conference in Munich that the funds would be used for its fixed and mobile infrastructure as well as for small cells and the digitisation of its infrastructure.

"We can't start investing and then suddenly stop," Höttges told Bloomberg. "Building networks is what we know how to do best--we'll leave making apps and creating services to others."

Deutsche Telekom faces growing competition from local rivals Vodafone Germany and Telefónica Deutschland following recent acquisitions by both operators. Last October, Telefónica Deutschland completed the acquisition of E-Plus to form a new mobile giant in Germany, while Vodafone Germany previously acquired Kabel Deutschland to boost its fixed-mobile convergence (FMC) strategy.

Telefónica Deutschland also said in December that it intends to put itself on an equal footing with Deutsche Telekom and Vodafone Germany by offering the same network quality as its rivals no later than 2017. Furthermore, the European subsidiaries of the Vodafone Group have benefited from the Project Spring investment plan that earmarked £19 billion (€24.8 billion/$29 billion) for network upgrade measures.

For its part, Deutsche Telekom has recently placed an enhanced focus on FMC: in September last year it unveiled the "MagentaEINS" portfolio of fixed and mobile services, offering fixed, TV and mobile services within a single plan, with small, medium and large options available.

Meanwhile Höttges was also critical of the "inequality of arms" when competing with Internet companies in the field of Big Data analysis--an area he regards as critical for the future. According to reports from the DLD conference, the CEO said that while telecoms operators have to adhere to strict regulations including the requirement to guarantee confidentiality of communications, Internet giants are not subject to the same rules when it comes to the analysis of data even though they offer similar services to telecoms companies. "None of us can compete with these guys at the same level," Höttges was reported as saying.

"We need Big Data and regulation," he added.

For more:
- see this Bloomberg article
- see this dpa-AFX article (in German)

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