T-Mobile Said to Weigh Dutch Strategy Shift Mimicking U.S.

  • German carrier trying to revive Dutch unit after losing users
  • T-Mobile US won customers with aggressive prices, promotions

Deutsche Telekom AG is considering restyling its struggling Dutch business along the lines of its T-Mobile US Inc. unit that has lured customers away from rivals with aggressive pricing and unique promotions, according to people familiar with the matter.

Deutsche Telekom is weighing the more disruptive strategy as it seeks to revive T-Mobile Netherlands after a planned sale failed, said the people, who asked not to be identified because the talks are private. The option is one of several and the German carrier may decide against it, one of the people said.

John Legere

Photographer: Scott Eells/Bloomberg

While Deutsche Telekom has said it prefers a combination of mobile and fixed services, T-Mobile US, led by self-styled rebel and Chief Executive Officer John Legere, has had success with a focus on wireless only, gaining more than a million subscribers for six straight quarters. The U.S. unit has cut prices and ran offers such as free video streaming at a time when the wireless market has become saturated, helping to boost profit at its parent.

Deutsche Telekom lost more than 1 million mobile subscribers in the Netherlands in the past three years. A re-invention of the Dutch business would be challenging given the company has already been present in the market for 16 years, giving customers plenty of time to form an opinion about it. Meanwhile, smaller rival Tele2 AB has established a reputation as an aggressive price competitor in the Dutch market.

“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,” said Erhan Gurses, an analyst at Bloomberg Intelligence. “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.”

Deutsche Telekom is also fighting former Dutch monopoly and market leader Royal KPN NV as well as wireless giant Vodafone Group Plc and cable-TV provider Liberty Global Plc, which in February agreed to combine their operations in the Netherlands.

Shares of Deutsche Telekom advanced 0.7 percent to 15.20 euros at 1:49 p.m. in Frankfurt, while KPN fell as much as 3.1 percent in Amsterdam, reversing earlier gains.

A Deutsche Telekom representative declined to comment.

"We have a great network in the Netherlands," CEO Tim Hoettges told Bloomberg TV in February. "We could offer something like we have offered in the U.S., being quite aggressive on that one."

Given a sale of Deutsche Telekom’s Dutch business failed mainly because of price, rather than lack of interest, suitors may return down the road and the carrier may revive a process to dispose of the unit, one of the people said.

Deutsche Telekom halted a plan to sell the unit after bids from private-equity firms fell short of the asking price, people familiar with the matter said in February.

Deutsche Telekom entered the Dutch mobile-phone market in 2000, acquiring a stake in a venture with Belgacom SA and Tele Danmark. The business was renamed T-Mobile Netherlands in 2003 after the German carrier bought the remainder.

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