T-Mobile has cold feet over US consolidation

Deutsche Telekom chief executive officer Kai-Uwe Ricke appears to have had second thoughts about the impact of consolidation in...

Deutsche Telekom chief executive officer Kai-Uwe Ricke appears to have had second thoughts about the impact of consolidation in the US mobile communications market.

Just three weeks after Ricke told reporters in Bonn that its US wireless subsidiary could benefit from the recent acquisition of AT&T Wireless Services by Cingular Wireless, the group warned of possible competitive disadvantages in its annual report released earlier this week.

Although T-Mobile reported strong growth in its 2003 financial year, the mobile operator "is still a player with a relatively small market share in the United States" and, as a result of the merger, could face "a negative effect on growth and profitability", according to the report.

Although Ricke may have wanted to put a positive spin on the merger during the Bonn conference, he has good reason to be concerned.

The deal, which is expected to be finalised by the end of the year, will create the largest US wireless company, with 46 million customers. Along with creating the country's biggest GSM network in the process, it will speed the group's ability to offer advanced wireless data services and upcoming 3G services to customers because of improved spectrum holdings, said Cingular president and CEO Stan Sigman.

John Blau writes for IDG News Service

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