Will T-Mobile Be the Last Big 3G Telecom Provider Standing?

Includes: DTEGY, S, T, VZ
by: Ari Zoldan

In a recent controversial press conference, Rene Obermann, CEO of Deutsche Telekom (OTCQX:DTEGY), said that T-Mobile does not plan on releasing any 4G service in the next two years. T-Mobile is a subsidiary of Deutsche Telekom, and before Obermann headed the entire telecommunications company, he was CEO of T-Mobile. The big question that everyone seems to be wondering is, why?

Being a step behind in the game isn’t usually considered a good strategy decision, but T-Mobile is standing firm. They believe that they can still be on top of the game with 3G. “‘With HSPA+ we are in a very good position. We still have plenty of capacity, so we are competitive,” said Obermann. They plan on upgrading their current version of HSPA+ in the upcoming year, which is renowned for its top 3G performance. They’re projecting top speeds of 42 mbps, still less than half of LTE’s projected 105 mbps capabilities.

T-Mobile’s competitors are already way ahead of them. Verizon (NYSE:VZ) is launching LTE test sites in 25 different locations by the end of this year, already projecting that their 4G map will somehow exceed their 3G span. AT&T (NYSE:T) plans on launching their 4G service sometime next year. Sprint (NYSE:S) remains the only phone carrier in the U.S. to have already tested and launched 4G technology (WiMAX) successfully.

Robert Dotson, CEO of T-Mobile USA, is singing a different tune than the one Obermann picked. He’s telling the media that the company can’t get access to a spectrum to provide the 4G service. T-Mobile is in talks with cable providers to get a hold of a necessary spectrum. He mentions Clearwire (CLWR) as one of the companies that they are having discussions with. Sprint is the majority shareholder of Clearwire, and this could make for an interesting partnership between two major phone carriers in America.

Disclosure: Author is long OTCQX:DTEGY, VZ, T, S and CWR