Acquisition Positions T-Mobile USA for Strong Growth
Bellevue, Wash. — May. 25, 2004
T-Mobile USA, Inc. (“T-Mobile USA”), the U.S. operating subsidiary of T-Mobile International AG & Co. KG (“T-Mobile International”), the mobile communications subsidiary of Deutsche Telekom AG (NYSE: DT) (“Deutsche Telekom”), today announced it has entered into agreements with Cingular Wireless LLC (“Cingular”) to terminate their wireless network sharing joint venture and for T-Mobile USA to acquire 100% ownership of the shared networks in California and Nevada for $2.5 billion. The purchase price of $2.5 billion for the GSM network in California/Nevada will be offset by $200 million related to the unwinding of the joint venture, resulting in a net cash payment of approximately $2.3 billion to Cingular. In addition, T-Mobile USA will:
- provide network services to Cingular under a wholesale arrangement until Cingular’s customers in these markets transition to the networks it will acquire through its pending merger with AT&T Wireless Services, Inc. (“AT&T Wireless”);
- replace its existing roaming agreement with Cingular with a new nationwide agreement with improved terms;
- transfer 10 MHz of New York spectrum in exchange for certain California spectrum owned by Cingular as specified in the termination provisions of the joint venture agreement;
- acquire an additional 10 MHz of spectrum from Cingular in certain key California markets for $180 million; and
- receive an option to acquire an additional 10 MHz of spectrum in other key California markets from Cingular within two years.
While the joint venture has owned and successfully operated the networks that service both companies’ customers in these markets since its formation in 2001, this new agreement with Cingular is expected to position T-Mobile USA for continued operational success and strong growth in the future.
“Consumers will be the real winners from this agreement,” stated Robert Dotson, CEO and President of T-Mobile USA. “With this agreement, our customers can be confident they will continue to enjoy the reliable, high quality service currently provided by our world class network in California and Nevada without interruption. Also, the nationwide reciprocal roaming agreement ensures that our customers will have access to the nationwide networks of T-Mobile USA and Cingular, providing them with the greatest possible coverage.”
“As a result of this agreement, T-Mobile will continue its dynamic development as one of the growth leaders of the U.S. mobile market,” said Rene Obermann, CEO of T-Mobile International and Member of the Board of Management, Deutsche Telekom. “Within a short period of time, T-Mobile USA has built a customer base of nearly 1.7 million customers in California and Nevada. We anticipate that more than 20% of all T-Mobile USA’s new customers will come from these markets.”
Deutsche Telekom’s projection for the T-Mobile USA customer base at the end of 2004 has increased to more than 16 million. The estimate for the long-term customer base has been increased to between 30 and 35 million from current market estimates of around 25 million over a ten-year horizon.
The wholesale arrangement for network services provides T-Mobile with a minimum guaranteed revenue stream of $1.2 billion based on network usage over a time period of up to four years. This agreement provides for the orderly transition of Cingular’s customers off the networks in California/Nevada and New York City and ensures more efficient use of the California/Nevada network as T-Mobile USA’s nearly 1.7 million customer base in these markets continues to grow to utilize the additional capacity being vacated by Cingular’s customers.
The additional 10 MHz of spectrum T-Mobile USA will acquire for $180 million as part of this transaction is in San Francisco, Sacramento and Las Vegas. The purchase option for an additional 10 MHz relates to spectrum in Los Angeles and San Diego. T-Mobile USA will continue to have the use of Cingular’s spectrum currently utilized by the joint venture until Cingular’s customers transition off the networks.
The transaction is subject to the approval of Cingular’s acquisition of AT&T Wireless by U.S. anti-trust authorities and the Federal Communications Commission (FCC), and other regulatory approvals. Closing of the transaction is expected for the beginning of 2005.
T-Mobile USA Media Relations
About T-Mobile USA, Inc.
Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless operation of Deutsche Telekom AG. By the end of the first quarter of 2010, approximately 150 million mobile customers were served by the mobile communication segments of the Deutsche Telekom group – 33.7 million by T-Mobile USA – all via a common technology platform based on GSM and UMTS, the world’s most widely used digital wireless standards. T-Mobile USA’s innovative wireless products and services help empower people to connect to those who matter most. Multiple independent research studies continue to rank T-Mobile among the highest in numerous regions throughout the U.S. in wireless customer care and call quality. For more information, please visit http://www.T-Mobile.com. T-Mobile is a federally registered trademark of Deutsche Telekom AG.
About T-Mobile International:
T-Mobile International, one of Deutsche Telekom AG’s four strategic divisions, is one of the world’s leading international mobile communications providers. T-Mobile International’s majority-held mobile companies today serve more than 63 million mobile customers in Europe and the U.S. For more information about T-Mobile International, please visit http://www.t-mobile.net/. For further information on Deutsche Telekom, please visit the company website at http://www.telekom.de/investor-relations
This press release contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not
be placed on them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including those described in the sections “Forward-Looking Statements” and “Risk Factors” of the Form 20-F submitted to the U.S. Securities and Exchange Commission. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account.