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Cellular Phone Forum / Providers / T-Mobile / May 2004

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Deutsche Telekom to Acquire Cingular Network in Two States

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RWEmerson - 25 May 2004 08:51 GMT
Deal for $2.5 Billion Bolsters T-Mobile USA, Unwinds Telecom Firms' Joint
Venture

BERLIN -- Deutsche Telekom AG will buy a mobile-phone network serving
California and Nevada from Cingular Wireless in a $2.5 billion deal that
bolsters its fast-growing T-Mobile USA unit and unwinds the companies' joint
venture.

Deutsche Telekom, Europe's largest telecommunications company, said the deal
will boost its T-Mobile USA unit and strengthen its growth potential in the
U.S. The deal was made possible by Cingular's planned $41 billion purchase
of AT&T Wireless Services Inc.

Deutsche Telekom established a foothold in the U.S. by acquiring
VoiceStream, now T-Mobile USA, for ?39 billion ($46.9 billion) during the
technology boom. T-Mobile USA has exceeded many analysts' expectations,
becoming Deutsche Telekom's growth driver. T-Mobile USA added 1.2 million
subscribers in the first quarter, taking its tally to 14.3 million. Deutsche
Telekom said it expects the U.S. unit to have more than 16 million customers
by year end.

The deal will mean further expansion for T-Mobile in the U.S., where
mobile-phone penetration rates are about 55%, compared with 80% in Europe.

"We are confident that this investment will accelerate the long-term
profitable growth of our U.S. mobile operations," Deutsche Telekom Chief
Executive Kai-Uwe Ricke said Tuesday.

T-Mobile USA -- the fifth-largest operator in the U.S. -- has gained almost
1.7 million customers in California and Nevada within two years. T-Mobile
USA now expects to have 30 million to 35 million subscribers within 10
years, compared with previous estimates of 25 million.

Under terms of the deal, T-Mobile USA will pay $2.5 billion for the global
system for mobile communications, or GSM, network in California and Nevada,
and will also get $200 million for unwinding the venture in which the
companies used each other's networks. The deal is expected to close at the
beginning of 2005.

The transaction is subject to the approval of Cingular's acquisition of AT&T
Wireless by U.S. regulators.

T-Mobile USA reiterated it may buy more spectrum in the U.S. The unit's
ability to expand coverage and provide additional capacity is limited to
markets where it has or can obtain licenses with sufficient spectrum, or
where it can resell services or enter into roaming arrangements with other
carriers.
Mike S. - 26 May 2004 20:22 GMT
Not stated in this article, but in other postings on the subject, is that
part of the deal involves T-Mobile losing 10 MHz of spectrum in the NYC
area. Considering the amount of bandwidth overload in NY, how would this
affect service?
Andrew Shepherd - 28 May 2004 05:23 GMT
> Not stated in this article, but in other postings on the subject, is that
> part of the deal involves T-Mobile losing 10 MHz of spectrum in the NYC
> area. Considering the amount of bandwidth overload in NY, how would this
> affect service?

Technically, T-Mobile already relinquished control of that 10 MHz over
three years ago in March 2001.

The spectrum transaction component of the network sharing agreement
between T-Mobile nee VoiceStream & Cingular in NYC & California was
structured as follows:  T-Mobile received 10 MHz disaggregations from
the Cingular PacBell PCS B 30 MHz licenses for the LA & San Francisco
MTAs, while Cingular in return received a 10 MHz disaggregation from
the T-Mobile Omnipoint PCS A 30 MHz license in the NYC MTA plus
T-Mobile's full PCS F 10 MHz license in the Detroit BTA & full PCS E
10 MHz license in the St. Louis BTA.

However, as neither T-Mobile in California nor Cingular in NYC wished
to construct its own network, the disaggregated 10 MHz blocks, which
became fully separate licenses under new call signs issued to the
receiving parties, were still pooled in commune w/ the network sharing
arrangement, such that T-Mobile became essentially an MVNO in
California, while Cingular became an MVNO in NYC.

To address the recent contingency agreement for T-Mobile's Deutsche
Telekom parent to dissolve the network sharing arrangement by
acquiring Cingular's PacBell spectrum & network assets in California &
Nevada, T-Mobile will retain the 10 MHz disaggregations plus receive
additionally the remaining 20 MHz of each of the original PCS B
licenses from Cingular.  In NYC, as well, Cingular will retain the 10
MHz disaggregation, but no further transfer will take place.

As such, T-Mobile will have reaggregated the full PCS B 30 MHz
licenses throughout both the LA & San Francisco MTAs.  Cingular will
no longer control any PCS spectrum in California - though
Cingular-AT&TWS will potentially possess a relatively consistent 35
MHz combined Cellular & PCS spectrum from AT&TWS throughout most of
the Golden State.  Across the country in the Big Apple, T-Mobile will
continue to control 30 MHz of its original 40 MHz of PCS spectrum,
while Cingular will walk away w/ the 10 MHz disaggregation.

To alleviate your concerns over the loss of the 10 MHz disaggregation
from the pooled spectrum utilized in NYC, remember that dissolution of
the network sharing agreement will also entail Cingular sub migration
to the AT&TWS GSM 850/1900 network in NYC.  True, 10 MHz will be
siphoned from the pool by Cingular, but the mitigating factor will be
that T-Mobile will no longer have to also support Cingular subs in its
spectrum.  The AT&TWS network in NYC will potentially have to absorb
that Cingular load.  On the other hand, w/ the Cingular MVNO weight
removed, T-Mobile w/ its readily sufficient remaining spectrum can
then focus its efforts solely on its own native subs.

Along w/ links to the licenses' respective market summaries from the
FCC ULS, detailed below is the PCS spectrum profile in NYC w/ respect
to T-Mobile & Cingular:

T-Mobile:

KNLF202 - PCS A-A3 20 MHz - Omnipoint NY MTA License, LLC
<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?licKey=8880>

KNLF982 - PCS D 10 MHz - Omnipoint Facilities Spectrum 2, LLC
<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?licKey=9571>

Cingular:

WPSL626 - PCS A3 10 MHz - PACIFIC TELESIS MOBILE SERVICES, LLC
<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?licKey=2325824>

WPXG239 - PCS A3 10 MHz - Cingular New England License Sub LLC
<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?marketType=L&licK
ey=2498843&x=11&y=15
>

To clarify a potential source of confusion, the second Cingular PCS A3
license actually reflects only GSM Corridor rural highway corridor
partitions subtracted from the originally disaggregated PCS A3
license.

Andrew
--
Andrew Shepherd
cinema@ku.edu
cinema@sprintpcs.com
http://www.wirelesswavelength.com/
El Jefe - 28 May 2004 22:18 GMT
Please correct me if I am wrong.
From reading your explanation below I gather that the T-Mobile service in NYC
could possibly improve or at the least not become degraded based on the
Cingular/ATT deal.

> > Not stated in this article, but in other postings on the subject, is that
> > part of the deal involves T-Mobile losing 10 MHz of spectrum in the NYC
[quoted text clipped - 63 lines]
>
> WPSL626 - PCS A3 10 MHz - PACIFIC TELESIS MOBILE SERVICES, LLC

<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?licKey=2325824>

> WPXG239 - PCS A3 10 MHz - Cingular New England License Sub LLC

<http://wireless2.fcc.gov/UlsApp/UlsSearch/licenseMarketSum.jsp?marketType=L&lic
Key=2498843&x=11&y=15>

> To clarify a potential source of confusion, the second Cingular PCS A3
> license actually reflects only GSM Corridor rural highway corridor
[quoted text clipped - 7 lines]
> cinema@sprintpcs.com
> http://www.wirelesswavelength.com/
John S. - 29 May 2004 13:27 GMT
>I gather that the T-Mobile service in NYC
>could possibly improve or at the least not become degraded based on the
>Cingular/ATT deal.

Well, it would appear on the surface at least that service would improve for
the T-Mobile customers.

Because of the movement of the Cingular customers from the T-Mobile systen to
the AT&T system there would be fewer users on T-Mobile and thus fewer dropped
calls or blocked calls.

--
John S.
e-mail responses to - john at kiana dot net
 
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