T-Mobile has second thoughts about U.S. consolidation

Deutsche Telekom AG Chief Executive Officer (CEO) Kai-Uwe Ricke appears to have second thoughts about the impact of consolidation in the U.S. mobile communications market.

Just three weeks after the German CEO told reporters in Bonn, Germany, that its U.S. wireless subsidiary, T-Mobile USA Inc., could benefit from the recent acquisition of AT&T Wireless Services Inc. by Cingular Wireless LLC, the group warned of possible competitive disadvantages in its annual report released Tuesday.

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.

Last month, Ricke sang a different tune. "We aim to benefit from consolidation in the market because we know how difficult elephant marriages can be," he said at the Bonn news conference.

Though 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 finalized by the end of the year, will create the largest U.S. wireless company, with 46 million customers. Along with creating the country's biggest GSM (Global System for Mobile Communications) network in the process, it will speed the group's ability to offer advanced wireless data services and upcoming 3G (third-generation) services to customers due to its improved spectrum holdings, Cingular President and CEO Stan Sigman said at a news conference after the deal was announced on Feb. 17.

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