T-Mobile’s Uncertain Future
T-Mobile CEO Philipp Humm resigned, a quick departure that leaves the struggling company without a stable future.
What Happened
Humm’s official reasons for resignation are to “face new professional challenges outside of Deutsche Telekom and be closer to his family,” which stayed back in Europe while he worked in the U.S. Deutsche Telekom is the parent company of T-Mobile, which COO Jim Alling will run in the interim.
Although T-Mobile USA said on Wednesday that Humm was leaving for personal reasons, Deutsche Telekom Chief executive Rene Obermann said in a letter to employees that Humm was leaving to join a competitor.
What Really Happened: Late yesterday, Humm announced he would become chief executive of northern and central Europe for Vodafone, a Deutsch Telekom competitor. Humm’s apparent “jumping ship” to join a rival adds insult to the injury his departure will cause the struggling fourth placed U.S. carrier.
During Humm’s two-year stint at T-Mobile, the wireless company failed to keep pace with rivals in spectrum acquisition and wasn’t able to offer premium handsets like the iPhone. Humm did, however, attempt to save his floundering company by planning a $39 billion merger with AT&T in March 2011, a deal that would have kept a failing T-Mobile in the black.
But opponents like Sprint and Google warned the merger would give AT&T too much control in the U.S. market. Their lobbying efforts may have influenced the Department of Justice to litigate against the merger in August 2011, which ultimately killed the entire deal.
What’s Next
Despite its $4 billion breakup package from AT&T, T-Mobile remains far behind competitors in terms of spectrum holdings, premium devices and consumer trust.
T-Mobile lost hundreds of thousands of customers and dollars during the pending AT&T deal, leaving it high and dry after the merger’s disintegration. As a result, the company, now in fourth place behind Verizon, AT&T and Sprint, attempted a series of unsuccessful strategies to keep its business going despite looming financial disaster.
The company explored merging with MetroPCS, a small carrier that would add spectrum and customers to T-Mobile’s portfolio if the two join hands, and swapped spectrum with regional carrier Leap, hoping to boost its fledgling LTE network against the likes of Verizon and AT&T.
Also, T-Mobile sought to reignite consumer interest by offering a cheap deal on data plans, but its inability to stick with unlimited offerings, like Sprint, or make strides in offering a faster network like Verizon and to a lesser extent AT&T, kept the carrier adrift in a challenging sea.
The Takeaway
T-Mobile is still fighting but may not have much time left if it continues to bleed customers and dollars. The company may get a temporary financial boost by selling its spectrum holdings, but this will slowly diminish its power as a wireless carrier.
Unless rival Sprint or Verizon manage to skirt federal regulations and acquire T-Mobile, the wireless company appears doomed to sink with time. In the months after the failed AT&T deal, the company could have rebounded with a series of competitive measures, but six months later it is clear T-Mobile needs drastic changes to stay afloat.
T-Mobile might still recover, but it will take a tremendous effort — or the possibility of another strong partner — to keep the company going after its successive disasters over the last two years, and Humm, who oversaw much of this tumult, will not be present to lead the company out of the mess.