Germany’s Deutsche Telekom (DT) reported a strong second quarter, raising its guidance yet again for the remainder of 2021, but the majority owner of T-Mobile in the U.S. isn’t too worked up about Dish’s new 10-year network services agreement with AT&T.
DT’s second-quarter net revenue rose 6.8% year-on-year, and every area of the DT group produced an increase in results in the first half of the year, continuing the company’s growth story, according to Höttges.
During the company’s earnings call on Thursday, Höttges was asked to speak directly about the U.S. wireless market, where Dish recently announced a new wholesale agreement with AT&T that looks like a big improvement for Dish compared with the government-inspired deal constructed with T-Mobile.
So, Höttges was asked, what will that do to Dish’s competitive capability in the U.S.? One presumption is it will make Dish a more competitive force for T-Mobile to reckon with in the U.S.
First of all, Höttges said, the U.S. management team, led by CEO Mike Sievert, has already commented in-depth on this in their second-quarter results. (Sievert’s message was along the same lines as Höttges: The deal with Dish was a government-led agreement and they’re not too sad to see Dish go as a wholesale partner.)
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Dish’s move off T-Mobile’s network faster than originally planned will open up opportunities, Höttges said, echoing the sentiment that Sievert said earlier this week about using that capacity for new services like home broadband or freeing it up for new wholesale partners.
Looking at the situation in the U.S., Höttges said he listened to the Dish quarterly call, which occurred on Monday. However, his response seemed to indicate that a lot of questions are yet to be answered. T-Mobile already had factored Dish’s eventual departure as an MVNO partner into its financial expectations.
“The question is, you know, do we lose wholesale revenues, and how much of that are we losing over this timeframe?,” Höttges said. “We anyhow assume that the wholesale revenues would be gone at the end of the fifth year. So, is that now coming a bit earlier? Is it reduced entirely? Or is it only partially considered? This is something we are working on. We have to understand better this strategy in this regard. This is a discussion which is going on. The good thing with this is we were not – it was not some kind of marriage in heaven. This was something which was forced by the regulator.”
At the end of the day, “if you question me about the Dish business, I think they're fantastic dealmakers,” Höttges said. “And always, you know, finding new ways on constructing relationships or ... motivating the regulator to do things. But on the other side, I haven't seen them executing very well. So, Boost to my knowledge has lost 10% of their customer base, until now, in one year. They have lost 1 million of their base.”
Ironically (or not), Dish has raised anti-competitive concerns and blamed T-Mobile’s shutdown of its CDMA network for hardship posed to Boost Mobile customers. Last month, the U.S. Department of Justice (DoJ) said it had “grave concerns” related to the CMDA shutdown.
Dish reported a loss of 201,000 wireless customers during the second quarter, which was higher than the 161,000 losses in the first quarter.
Höttges noted that T-Mobile had to “give up our Boost” brand as part of the merger with Sprint. Boost was a prepaid business unit of Sprint. “That said … having a wholesale deal is nice. But on the other side, you have to build a proposition behind that. You have to convince the customer that this is the right network to take.”