Deutsche Telekom AG Wall Street Analyst Forum Transcript

| About: Deutsche Telekom (DTEGY)

Deutsche Telekom AG (DT) Wall Street Analyst Forum March 27, 2008 11:10 AM ET


Nils Paellmann - Vice President of Investor Relations

Helen Baud - Wall Street Analyst Forum

Helen Baud

Good morning everyone, my name is [Helen Baud] from the Wall Street Analyst Forum, and I'm the host in this room for the conference today. Just so you know, couple of things, we do like to keep to the schedule, so after the 40 minutes anyone who wishes to have further discussions, we do have a breakout room, that we will escort you to, so don't get lost in (inaudible).

The company that we have presenting right now is Deutsche Telekom. Deutsche Telekom, parent company of T-Mobile, is Europe's largest integrated telecommunications carriers in terms of revenues. As one of the world's leading telecommunication providers, Deutsche Telekom is setting international standards. The company has three strategic business units; Mobile, Broadband/Fixed Network and Business Customers. Deutsche Telekom's management is committed to delivering shareholder value, including an attractive dividend for shareholders. For 2006, Deutsche Telekom paid a dividend of $0.97 per ADR. For 2007, Deutsche Telekom intends to increase the dividend from EUR0.72 to EUR0.78 per share.

Presenting this morning is Nils Paellmann, Vice President of Investor Relations.

Nils Paellmann

Okay. Thank you very much for the nice introduction. I hope you can all hear me well, but I think the acoustics are reasonable in this room. So, what I would like to do is like to give you a little bit of an overview of what Deutsche Telekom is all about, and also of our current strategy and a little bit on the outlook for the company. So I am going to speak for maybe 20 to 25 minutes, and then if you have any questions at that time, I will try to address them at that point.

Okay. Of course, you should [read], since we are listed on the New York Stock Exchange, you should look at our SEC filings and all that good stuff. Since we are fully listed, we are subject to the SEC reporting requirements. For example, very recently we published our annual report on Form 20-F, which you can download from our website or you can get a hard copy from our office, which has the usual disclaimers and a lot of information on the company.

Okay. What is Deutsche Telekom? I think in this country, we are best known as the parent company of T-Mobile USA., which is our U.S operation. But we have also a very big presence in Europe. In fact, we are Europe’s leading integrated telecommunication carrier in terms of revenues. As already mentioned in the brief introduction, we basically have three segments. The biggest one, in terms of revenue contribution, is the mobile segment. As you can see here, 55% of Group revenues came from the mobile segment last year.

The second biggest segment here is Broadband/Fixed network, which is basically our fixed line incumbent business in Germany, plus some Eastern European businesses are in there as well. 31% of revenue came from that segment last year. And the smaller segment here is Business Customer, that’s a segment, where we basically service our large enterprise customers in particular, so that’s 14% of revenue.

As already mentioned, I think one of the highlights of the stock, especially, at the current share price, is that we have a very attractive dividend. The management board, as already mentioned, proposed that the dividend should be increased. We pay an annual dividend, by the way, that the dividend should be increased from EUR0.72 to EUR0.78 per share. The dividend is going to be paid in May. If you are an ADR shareholder, if you hold the U.S. share, you would get the U.S. dollar equivalent of that amount at that time.

So, the dividend, as you can see, was increased by 8.3% over the previous year. The dividend yield currently is actually north of 7%. And by the way, we are only paying out 52% of our free cash flow right now in terms of dividends. So, even with that dividend payout, we still have a dividend yield of over 7%, which I think is very attractive.

Once again, in order to get the 2007 dividend, you basically would have to buy the share some time before May 2008. The exact dates and so on, we can provide to you on demand. We have a market cap right now; this was in middle of March, of round about $77 billion. We are listed in the New York Stock Exchange, ticker symbol is DT, and we’ve been listed there since our IPO, which was back in 1996. Prior to that, the company was 100% government-owned, so that’s kind of the history there.

As you can see here at the bottom, we have 240,000 employees worldwide including 34,000 here, at primarily T-Mobile USA in the U.S. So, very sizeable operation, as you can see in the U.S. as well.

This is just a brief overview about the main Group financials. The point that I'd like to make here is that, obviously since our biggest growth driver is the U.S. business, the dollar development or the weakening of the dollar had an impact on our results. You can see, for example reported revenue growth last year was 1.9%, assuming constant foreign exchange rates, the revenue growth rate for the Group would have been 3.6%. So you see the influence there.

Similar for the adjusted EBITDA, which went down in reported figures by 0.6%. With constant exchange rates, we would have seen a growth rate of 0.8%. So again, this was a major influence of the U.S. dollar there.

Adjusted net income went down by 22%. Basically, that is due to increased depreciation and amortization, as a result of some new acquisitions or consolidations we did, as well as higher P&L taxes, those were the two main drivers there. And finally, free cash flow which we consider one of the main metrics for the Group and also for the dividend, as already mentioned, increased by 4.5% to EUR6.6 billion last year.

You have the presentation in front for I hope. I'm not going to repeat everything on this slide; that would be too long. But basically, these were some of the targets that we had outlined for last year. And on the right side, you can see that basically we achieved all our targets that we had laid out last year. Just to mention, some of the key ones, we had forecasted adjusted EBITDA of $19 billion, achieved $19.3 billion. We had forecasted free cash flow of $6.5 billion, which was already raised from earlier guidance of $6 billion. We achieved $6.6 billion and so on. In the interest of time, I am not going to read everything here, so let's proceed.

If you look at the strategy of Deutsche Telekom, we basically have -- the strategy consists of four elements. So number one is, to improve our competitiveness in Germany and Central Eastern Europe. So that's very important. We are facing some of the usual incumbent problems back home in Germany. Number two would be to grow abroad with mobile, and that's again a big driver there in U.S., but we are also in the U.K., for example, Eastern Europe and we recently announced the plan to go for ultimately control of the Greek operator OTE. I am going to talk about that a little later.

The third element of the strategy is to mobilize the internet, so we are a big believer that in the future and already now, more and more people will access the internet not just on their laptop or on their PC, but also on mobile devices, such as the BlackBerry or iPhone, just to mention two examples.

And then the last area here is to strengthen or to build our customer business or as we call it sometimes network-centric ICT. We recently announced that we've made a partnership actually with a U.S. company, which is called Cognizant. You may have heard of them, in systems integration. And the idea there is that we are getting significant offshoring capacities. Cognizant has about 40,000 employees in India and China, whereas we, for historical reasons have a relatively small employee base in those low cost countries.

Okay. So, let me run through the strategy in some more detail. I'm starting with the first element, which is improved competitiveness in Germany. That's clearly one of the key elements of the story. Basically, what our objective here last year was to improve our share in German broadband. As you can see here, chart one shows you the broadband retail net add share in percent. So what this means is, what was our share of the total growth in German broadband, so that's DSL primarily, a little bit cable modem and stuff, and as you can see, we basically were down quite low in 2006, but starting in Q4, 2006 and onwards, we have been really able to improve our market share, and we've been consistently over 40% of broadband net adds since the fourth quarter of 2006. So, this was a big objective for the company, to improve our market share here. And this was why we were successful. Basically, we introduced more attractive tariffs. We have now, for example, a basic bundled offering, which is unlimited voice and internet in a six megabit DSL line. It's EUR40 for example right now, just to give you an example of our current pricing.

At the same time, we still have line losses. I think, given that our accessed market share as you can see here, on the lower right hand corner is still 82%, and this is something that is to be expected. Also, regulation is setup in such a way that it encourages competition, so access line losses is something we will continue to face. I think Management has been very upfront about that. And to some extent, if you have very strong DSL growth then you also get line losses, because what happens is, we get a lot of customers, but our competitors do too. And typically if somebody switches, let's say from Deutsche Telekom to a DSL competitor, that person would take the PSDN line with him, so we would lose that PSDN line at that point. So that is something that is happening. To some extent that is unavoidable, but again, our objective has been to improve our own share and thereby also have an influence on line losses, going forward.

Okay, so that was fixed lines. When we talk about improving competitiveness in Germany, we also talk about the mobile business. And basically, here our objective was to improve again our share in the market, or to stabilize our share in the market. As you can see here on the upper left hand corner, those are the contract net adds that we were generating in German mobile. You can see we had an improvement from 2006 to 2007. In 2007, we added almost 1 million contract customers in Germany, which is improvement of over 20% from a year before. So, again also here a stronger showing in the marketplace from Deutsche Telekom or T-Mobile in Germany in this instance.

The lower left hand corner, you see the contract churn in Germany, which is very low, which shows you that basically we have satisfied customers, otherwise the contract churn wouldn't be this low.

Okay, so basically if we talk about improving competitiveness in Germany, it has two elements. On the one hand, we want to improve our market share and improve our standing in the market, at the same time, because we have top line pressures, because for example, line losses I already mentioned that, we need to address the cost base. So this is just essential for the company. We cannot grow the EBITDA from top line alone, at least not in Germany, so we need to address the cost base as well.

So, what we have done. We basically have very significant personnel restructuring program underway. We have a program to reduce our headcount by 32,000 people over three years from 2006 to 2008. This, by the way, is a voluntary program. That means, basically we are paying people to take early retirement or to leave the company with severance payment. And as you can see last year, for example, we had a net headcount reduction of over 11,000 people in Germany, a 6.9% reduction there. We also had a reduction in terms of the amount of outside temp work we are using. And most importantly, I mean all this would be meaningless, if as you can see at the bottom here, the personnel expenses, we were actually able to reduce personnel expenses as a result as well. We had approximately 8% reduction in domestic personnel expenses last year, which helped to show up the margin in the domestic fixed line business, and I'll get to that in a minute.

There are also some recent developments here. So, the main message here, again I am not going to read everything on the slides, but this means that the personnel reduction that we have is also continuing into 2008. Most importantly, maybe the point here at the bottom, we did form additional provisions in the fourth quarter last year for future staff restructuring. So this is already going beyond this 32,000 program. And this is restructuring, these are provisions for additional early retirement of primarily civil servants. So that's coming up as well.

Okay. Here you see it, on previous page I talked about the personnel reduction. The personnel reductions are a big driver of the overall OpEx savings in the Group. So, last year we had an objective of net reduction in OpEx at broadband fixed network, that is fixed-line domestic of EUR0.9 billion, as you can see here. And basically, we delivered on that. A lot of the savings came through in the fourth quarter, as you can see, EUR0.6 billion of the EUR0.9 billion, we achieved in the fourth quarter.

So, where did this savings come from? There was personnel cost, there was IT billing, there was reduced rent, also some termination costs were saved by the reduction in termination rates in Germany. And we did reinvest some of those savings. For example, into higher DSL net adds as already seen, higher number of shops, better customer service. So, after those investments the net savings were EUR0.9 billion, which was exactly the target for the year. And what you see on this page, maybe just focus on the right hand side here, you see the development of the domestic revenue for fixed-line in 2007 quarter-by-quarter, also for adjusted EBITDA.

And the message here is, I think, you can see that revenue is still coming down slightly but it's kind of stabilized around the EUR5 billion level. Probably, more important at the bottom here, we did achieve an improvement in the domestic, adjusted EBITDA going up from first quarter to fourth quarter. In fact, the margin, which is not shown here, also improved from around 32% in the first quarter to 36% in the fourth quarter. And that's basically the result of the cost cuts that we implemented. So from our perspective, that was an encouraging result.

Alright, let's move on here. The second area is to grow abroad with mobile. So this really has two elements. On the one hand, it means organic growth, so organic growth for example, in the U.S. or in the U.K., but it also means potentially acquisitions. So first of all, in terms of numbers, you can see our international revenue growth last year was really strong for T-Mobile. It was 12.2% year-over-year in 2007. EBITDA increased even more strongly. Some of that was helped by a consolidation but nevertheless, even on organic basis, there was good growth. At the same time, we did some acquisitions in order to strengthen our operation. Specifically, we bought a company in Holland called Orange Netherlands, which we bought from France Telecom. We already have a presence in the Netherlands, so we basically were able to bring those two operations together and reduce the number of players in the Dutch market from four to three. So it's really market consolidation and market repair; good stories there.

In the U.S., we recently bought a company called SunCom. SunCom was interesting for us, because SunCom had coverage in some areas where we didn't have coverage previously, predominantly in the Carolina, also Puerto Rico and the U.S. Virgin Islands. So that's also recently closed.

I'll come back to the OTE thing in a minute. Last thing I'd like to mention, short of market repair, market consolidation, one thing you can do is also try to share some of the OpEx with your competitors. So in the U.K., for example, we made an agreement recently where we're going to share our 3G network with another operator in the U.K. called “3” and that will allow us to save over £1 billion in OpEx and CapEx over 10 years.

Okay. Let's talk about the key operations briefly here starting with the U.S. I think the U.S., especially if you look at in dollar terms. Of course in Euro terms, the growth was somewhat less due to the strength of the Euro. But as you can see in dollar terms, we had a strong year last year, over 16% revenue growth, almost 14% EBITDA growth, and we added 3.6 million customers.

So, I would say why is T-Mobile in the U.S. successful in the marketplace and has been successful for many years, I think one differentiation, which is not mentioned on the chart, is that we have successfully differentiated us by having the best customer service in the wireless industry. I think various independent surveys, such as J.D. Power, for example, have shown that over and over again.

We were also the only wireless company which appeared under the top 50 service leaders in Business Week in the most recent issue in February. Once a year Business Week comes out with a list of the 50 service leaders, and we were the only wireless company among the top 50 service leaders in the U.S. Our position right now is 27 on that list, but the only wireless company on that list.

Also, we have some differentiated products such as myFaves for example, where by paying $10 more you can get unlimited calls to five numbers irrespective of the network. That is something that is really working well. We have 5 million myFaves customers, and we gained 5 million myFaves customers just in the first 15 months after introduction of this product.

Okay. Let's proceed. The U.K., also a good story interesting about the U.K. is we are having good growth there even though this is the market which is very highly penetrated, you could say. In some ways, you would expect higher growth in the U.S., because the U.S. still has a lower penetration than Europe. But U.K. is an interesting example, even though the U.K. penetration is up there over north of 100%.

Nevertheless, we were able to achieve some good revenue and EBITDA growth numbers last year. We had a big focus in the first half of 2006 of strengthening our customer base, getting more contact customers with attractive tariffs, and we were successful in that. And that's also one of the reasons why, for example, we saw a strong ARPU in 2007. The blended ARPU went up from EUR29 in 2006 to EUR31 in 2007. So I would say, overall a good story.

The margins in the U.K. business are still lower than in some of the other business we have. That's just a reflection of the fact that the U.K. market unfortunately remains still a very competitive market, but in a competitive market, I think we've been able to improve our standing here.

And finally, you have Central Eastern European countries. We do have a presence, even prior to the OTE transaction that I will talk about in a minute, in a lot of Eastern European countries. So, as you can see here at the bottom, we have, for example, Poland, Czech Republic, Hungary, Croatia and so on and so on. So, we have a good presence there. As you can see here, also good revenue growth figures, good EBITDA growth figures for all these markets.

Generally, they have a good market structure, meaning there are only two or three competitors in those markets typically. And so we see healthy EBITDA margins in these markets. For example, as you see, average margin about 39.4%, which is higher than what we have in Germany or the U.K. or U.S., for that matter. So, those are very healthy markets from that perspective.

All right, let's talk about OTE a little bit. The important point to make about OTE is, OTE by the way I'll show you what they have in a minute, OTE is a Greek operator. They have presence all over Southeastern Europe. We recently announced an agreement to buy a 20% stake in that company, but the important point is this is a conditional purchase agreement.

So what we have said, we're only going to go forward with this transaction if we can get to a shareholder agreement with the Greek government, which is still allowed to shareholder in OTE, which will at the end of the day allow us to control this company, get management control and fully consolidate this company.

So only if we get that, we would move forward with this transaction. We have set ourselves a deadline of I think it's around end of April until when we want to finish the negotiations with the Greek Government. And so only if we can move forward there, we would go ahead with this transaction.

Basically, the main condition is, as it says on the Slide as well, is that we want to get into -- okay, we are in discussions with the Greek Government that we can get management control of this company. So they have 28%. We have 20%. So together, maybe adding on our own side a few more percentage of shareholdings, we basically would be in a position to control this company.

But we need an agreement with the Greek Government, because they are still the main shareholder here, and that's what all these discussions are about. And only if we can achieve that, we would move forward with this transaction.

By the way, at this point, we do not want to get a higher share. The maximum share we said we are aiming for at this point is 33% or less. Why 33%? If you go beyond 33%, we have to make a tender for all the outstanding shares, and that's not something we are planning to do at this point.

So maybe before I say why all this is great and wonderful, let me show you the map. And basically, here you see why OTE fits well with our current operations. I talked about our strong Eastern European operations and you can see that OTE. So the pink areas here are the areas where Deutsche Telekom is currently and then the light blue area is the areas where OTE is present.

So, OTE is both a fixed line operator and a mobile operator, and basically it has the key attraction for us, clearly the mobile operations. So they have mobile operations in all these countries; just to mention the main ones, Romania, Bulgaria, Greece, for example. And you can see some of the statistics here.

We think those our attractive markets. The average GDP growth of those markets is over 4%. Some of these markets recently have become part of the EU such as Romania and Bulgaria. So, we think those are attractive markets, which will enhance the overall growth profile for DeutscheTelekom, for the Group.

I can address more questions on OTE later on, but in the interest of time, let me move forward to the remaining parts of our strategy here. First of all, I have talked about that we are a strong believer that the internet is mobilizing. More and more people will access the internet not just on their desktop, but will also access as via mobile devices. And we are seeing as a result of that, this is not just what we are talking about, but we actually are seeing very strong growth in what we call non-messaging data revenues.

So what does that mean? That is all the mobile data revenues excluding the traditional SMS and texting, which is kind of a mature, at least in Europe, a mature business. So the new stuff is really growing well. What is that mobile internet access; for example, e-mail again, Blackberry an example. As you can see overall last year, non-messaging data revenue growth was 40% to almost EUR2 billion for the group. This is also based partially on the fact that we upgraded our network to HSDPA in Europe.

So we have seen very strong volume growth for 3G data in Europe. Almost eight times the volume in 2007 as in 2006. We've marketed in Europe we've marketed the product called web'n'walk, that basically means mobile Internet access. You are paying for mobile internet access. We had 3.2 million web'n'walk customers at the end of last year, plus 1.3 million in 2007 alone.

myFaves, I have already talked about that. We did launch in the U.S., of course if you think of iPhone, you’ll probably think of AT&T. In Germany it's all about Deutsche Telekom. So we are the exclusive provider of the iPhone in Germany and also in Austria. By the way, we launched that last November. Another thing we did, we are one of the founding members of what is called the Open Handset Alliance with Google.

Google basically has come up with a new software, which is an open XML -- it's an open platform. So basically any developer can get access to the code that is something that was missing sometimes in the past. We didn't have such software. A lot of the software written was proprietary. So the idea is that you have an open platform, and the idea is that that will encourage people to develop more applications for mobile phones and you will see the kind of same explosion of developments in new applications that you already saw for the internet. We are working with them. First hand set base with this new software platform which is called Android will be launched in the second half of this year.

Last point here, we made a strategic partnership recently with Yahoo. Yahoo is now, at least in Europe, our exclusive search provider on mobile phones. The interesting thing about that is that the agreement with Yahoo allows us to take a share in their search related advertising revenue they are generating. So that's of course is interesting for us.

Okay here we'll see the same story, graphically, so you see the web'n'walk user which I talked about up 71% .You see the non-messaging, non-voice revenue, which is growing by 42% in Europe, 38% in the U.S and you see the myFaves users, which are also growing very strongly.

Okay let me check. I guess I have 10 minutes more. So not going to talk a whole lot then about the last area which is build network centric ICTs, because already mentioned I think, the major development here was our partnership alliance with Cognizant. I already mentioned that earlier which will improve our market positioning. That's our expectation.

So let me end my discussion by talking about briefly, repeating what are the targets that we have laid out for 2008. So we have six targets, three are financials, three are operational. The three financial targets are we're looking to have a stable EBITDA and stable free cash flow. So that basically means, I mean, underlying barriers that we will see some further top line and bottom line pressure in German fixed lines. But at the same time we will see continued growth in mobile.

Overall this will offset each other, so we're looking overall for a stable group EBITDA, stable free cash flow. So continued high free cash flow. Based on that we want to maintain attractive dividend policy as already mentioned. In terms of operational targets, we have three operational targets as you can see here. The first one is we want to maintain this better momentum that we have from the German broadband market, German DSL market. We are looking for a minimum 45% share of the German broadband net adds in 2008, which is actually slightly better than what we achieved last year.

We are looking for continued growth in the U.S. So we are targeting 3 million net adds in the U.S., and that doesn't include the 1.1 million customers we are getting from the SunCom acquisition. And at the bottom there, we do believe and we are seeing that the momentum that we are seeing in non-messaging data revenues or data revenue excluding messaging that those will continue to grow by approximately 40%. That's what you see at the bottom. So still good operational momentum, stable financials and attractive dividends. I think those are the main things that we foresee for 2008. And that's pretty much the story. So I think we have about eight minutes for some Q&A left.

So, if you have any questions, I'd be happy to try to address them. Yes.

Question-and-Answer Session

Unidentified Audience Member

(Question Inaudible)

Nils Paellmann


Unidentified Audience Member

(Question Inaudible)

Nils Paellmann


Unidentified Audience Member

(Question Inaudible)

Nils Paellmann

Maybe we’ll address that one by one. Let’s start with Japan. I think the issue with Japan is that they are not using GSM. But there is hope because they’ve also upgraded to UMTS. So I think in the future you will have phones, I think you already have phones today where you can do some UMTS roaming. I know Japan is always tricky because they are not using GSM.

Unidentified Audience Member

You don't have any arrangements yet in Japan?

Nils Paellmann

We have an arrangement. The way it works currently is, we have a roaming arrangement, but we would give you, when you enter the country, we will give you a different phone. But I’m actually looking at Mr. [Schultz]. Do we have UMTS roaming with Japan now, I don’t know?

Unidentified Company Representative

As far as I know, not yet.

Nils Paellmann

Yeah. Okay. I think the problem is that they started so early with UMTS that their own UMTS standards, I think its called FOMA is again a little different from the UMTS which was deployed in Europe. So they were a little bit too much ahead of the curve. But I think HSDPA which they have upgraded to there, let's hope that maybe at some point there will be a common standard.

Unidentified Audience Member

(Question Inaudible).

Nils Paellmann

Okay. The perspective is how does the OTE deal look from the perspective of minority shareholders or third party shareholders? And what I can tell you is we think that if we combine with OTE, we can also -- I didn't talk about that earlier, that we can realize significant synergies. In other words, we are lot bigger than OTE. So we think for example, we can raise significant procurement synergies and I think the benefit would actually be larger for OTE than for us because we already get good purchasing conditions. But OTE would benefit from being part of a larger group. So that's probably the main thing that I can say at this point.

Unidentified Audience Member

(Question Inaudible).

Nils Paellmann

Yeah, we're talking about net present value of all those synergies, based on preliminary analysis of EUR2 billion, net present value, so that's about EUR200 million per year. That's mostly procurement; a little bit IT billing cost, and also termination, because of course the Greece was a favorite tourist destination. So we will save a little bit in the future if T-Mobile Germany or T-Mobile U.K. customers go to Greece for example.

So I think we have some good perspective talk. I think from the Greek government perspective, they have said for a long time that they are looking for a strategic shareholder in OTE and they're actually based on statements by the Greek government, the Finance Minister and so on. They have welcomed our move here. So they are in favor and I think they don't want to reduce their stake to zero at this point. They do want to maintain a shareholding, but I think the signs are that this is that is proceeding well.

Unidentified Audience Member

(Question Inaudible)

Nils Paellmann

Well, we want to make a decision by the end of April, and I think that's their target as well. So we'll have discussions with them and hopefully come to a conclusion fairly soon. Yes.

Unidentified Audience Member

Can you give a market share in the U.S. AT&T, Verizon, yourself, Sprint-Nextel then the other regional carriers? Where do you fit-in in terms of the subscriber base in revenues? Can you [comment] anything on that?

Nils Paellmann

Sure the question was how T-Mobile U.S. fits into the overall picture in the U.S. We have about -- well now with SunCom we have about 30 million customers in the U.S., which is about half of what AT&T has over Verizon. I think Verizon has around 60 million and AT&T around 70 million if I am not mistaken.

So what we've said because we are a little bit smaller in the U.S. anyway, not globally. But in the U.S., that our focus has been very much on consumers in the U.S. So, we ourselves primarily as a consumer brand. We don’t have a large enterprise sales force; we are not trying to sell a lot of T-Mobile phones to Fortune 500 companies. That’s different from a Verizon or AT&T, where they have to focus on those customers as well.

So that's how I think that's how we try to differentiate ourselves in the U.S. We also try to differentiate ourselves with, as I have said good customer service earlier, and also a unique product like myFaves for example. And I think if you look at our track record, since we bought VoiceStream a few years ago, that was then re-branded into T-Mobile. I think the track record has been very good.

We have been consistently, I think when we announced the transaction back in 2000 first, VoiceStream had something like 2 million or 3 million customers, now we have 30 million. There has been consistent growth over the years. We have always grown more than our fair share and, so I think the track record of the U.S. business is good. We also have the good management. The management team, Robert Dotson CEO, has been there for over 10 years. So I would say a very experienced management team which is not always the case if you look at some of the other operators.

I think we have to end here. Maybe what we can do, we can continue the discussion offline because I think they have to keep to a strict schedule here.

Helen Baud

And if anyone would like to join Deutsche Telekom, we do have a breakout room available. We’ll certainly escort you down there. Thank you very much.

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