Deutsche Telekom is considering taking a page from its T-Mobile US (NYSE:TMUS) business to boost its foundering carrier in the Netherlands, according to a Bloomberg report.
T-Mobile Netherlands has lost more than 1 million subscribers in the last three years, Bloomberg reported, and a recent deal to sell the service provider to private equity firms fell through. So Deutsche Telekom may employ T-Mobile's disruptive strategy in an effort to breathe new life into its 16-year-old Dutch operator.
"Becoming a maverick that offers disruptive pricing and attractive handset subsidies is one of the few options you have as a mobile-only player in the Netherlands," Erhan Gurses, an analyst at Bloomberg Intelligence, told the news outlet. "Their chance of success is somewhat lower than in the U.S. as the market becomes convergent, but if they did manage to turn around the business, that would improve chances of selling it later."
There's no question that T-Mobile's bold moves have paid huge dividends in the U.S. market. "Uncarrier" strategies such as dumping two-year contracts, offering zero-rated data services and paying off the early termination fees of users who switch carriers have transformed the landscape of the industry, sometimes forcing its bigger competitors to follow suit.
T-Mobile US recently posted its sixth straight quarter of more than 1 million net postpaid subscriber adds, prompting CEO John Legere to crow that the operator "took 108 percent of the industry's postpaid phone growth last year." And that growth has boosted the bottom line: T-Mobile US posted net income of $297 million during the fourth quarter, more than doubling consensus estimates.
As Bloomberg notes, though, there are big differences between the U.S. carrier and its Dutch counterpart. T-Mobile US began to reinvent itself years ago when it was the smallest of the four tier-one carriers (it's now the third-largest), while T-Mobile Netherlands is a venerable player challenged by smaller rivals with aggressive pricing models.
And the competitive Dutch mobile market includes Royal KPN NV, the country's largest operator, as well as a joint venture between Liberty Global Plc and the mobile behemoth Vodafone Group. Deutsche Telekom is only considering adopting the strategies of T-Mobile US, though, and may opt not to.
- see this Bloomberg report
John Legere: T-Mobile 'took 108% of the industry's postpaid phone growth last year'
T-Mobile took $100M hit in Q1 for paying off ETFs of switching customers