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Deutsche Telekom Names Humm as Chief of T-Mobile USA

Deutsche Telekom AG, Europe’s biggest phone company, named Philipp Humm as the new chief executive officer of T-Mobile USA Inc. to replace Robert Dotson.

Humm is currently responsible for sales and service in Europe as chief regional officer for the region, the Bonn-based company said in a statement today. Humm will take over in February, while Dotson will remain on as a T-Mobile USA non-executive board member until May 2011.

T-Mobile USA is the fourth-largest mobile U.S. operator behind Verizon Wireless, AT&T Inc., and Sprint Nextel Corp. It fell behind its rivals as it was late in starting the build-out of a high-speed third-generation network that could handle increased data traffic, and because of a lack of attractive handsets. Deutsche Telekom CEO Rene Obermann said this month he will keep T-Mobile USA as the division is a “cash cow.”

“Dotson was the right man to grow T-Mobile USA and having got the company to its inflection point will now pass over to Philipp Humm who is a very strong replacement,” Saeed Baradar, Societe Generale SA’s telecommunications sales specialist, said today. Humm has a “track record in cost cutting and improving margins -- exactly what T-Mobile USA needs,” he said. Societe Generale reiterated its “buy” rating on the stock.

Deutsche Telekom shares rose 1.7 percent to 8.94 euros in Frankfurt trading today.

Humm, 50, worked for 10 years for a number of U.S.-based companies including McKinsey & Co and Procter & Gamble Co., in senior positions before joining Deutsche Telekom, the company said. Humm was CEO of T-Mobile’s German unit from 2005 to 2008.

Losing Clients

Analysts including Execution Noble’s Will Draper have said that Deutsche Telekom’s U.S. business needs to be fixed as average revenue per user is declining and the unit is losing customers.

In the first quarter, T-Mobile USA’s operating income before depreciation and amortization rose 0.8 percent to $1.39 billion while sales fell 2.2 percent to $5.28 billion, the company said May 12.

The company is increasing the speed of its third-generation network in the U.S. to get more than half the customers of its T-Mobile USA unit to use smartphones.

In the first quarter, the number of U.S. customers using such phones increased by 33 percent to 5.2 million, compared with the previous three months. By year end, the unit is aiming for 8 million smartphone users. In total, T-Mobile USA had 33.7 million customers at the end of the first quarter, down from 33.8 million at the end of the fourth quarter.

“The challenge is to find a way to expand our coverage not our speed,” Deutsche Telekom Chief Technology Officer Olivier Baujard said in an interview in London today. “That’s what Philipp will need to find a solution for.”

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