T-Mobile Looks to Lag in Offering 4G Service

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T-Mobile USA started building out its 3G networks in 2008, trailing far behind Verizon Wireless and AT&T, whose networks had started rolling out in 2004 and 2005, respectively. In the meantime, many T-Mobile customers fled to operators that were quicker to move to the faster-speed third-generation networks. The German company still has yet to reach a deal with Apple to sell iPhones, CEO Obermann confirmed.

T-Mobile USA has unveiled no strategy for acquiring the wireless spectrum it would need to deploy LTE, said Greg Widroe, managing director of Media Venture Partners, a mergers and acquisitions boutique in San Francisco that specializes in telecommunications transactions. "They may have a very good spectrum strategy that they haven't told people about," Widroe said.

Robert Dotson, the head of T-Mobile USA—who will be replaced in February by former European sales and service chief Philipp Humm—said at the group's investor day on March 18 that the company is looking to buy spectrum in the secondary market.

Clearwire deal to buy T-Mobile time?

"You can't ever buy spectrum when you need it," he said. "We've had ongoing discussions, whether it's with cable providers or whether that's with Clearwire," Dotson said. Clearwire, a unit of Sprint Nextel (S), has started rolling out WiMAX, a rival technology to LTE, and is also starting LTE trials in its networks.

For Deutsche Telekom, "a commercial deal with Clearwire, or some re-farming could buy them time to bring newer spectrum into service that they could buy from the U.S. government," said Citigroup's Weeden.

It might be a long time before the Federal Communications Commission auctions fresh spectrum. "It could be massively late," Roberts said. "Spectrum is so political. They just can't count on that."

T-Mobile USA could also link up with billionaire Philip Falcone's Harbinger Capital Partners—which plans a terrestrial network relying on satellite spectrum—to lease frequencies or enter a partnership. Sanjiv Ahuja, chief executive officer of Falcone's LightSquared wireless venture, has said the group is talking to most of the wireless players.

Whichever options it selects, Deutsche Telekom needs to be making progress, said Citigroup's Weeden.

"LTE isn't going to be available on handsets until at the earliest, 2011—and I think competitively, 2012," he said. "I'm not sure they need to start right now, but they probably do need to make progress soon."

Ragnhild Kjetland is a reporter for Bloomberg News.

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