The resurrection of T-Mobile – NRC

Only when the internet does not work for a while do you notice how the Netherlands relies on digital connections. On Monday morning, November 25, 2019, a bulldozer disconnects a fiber optic cable between Zwolle and Leeuwarden. An hour later, as if the devil is playing with it, another fiber optic cable breaks near Arnhem.

In the afternoon, courts across the country are forced to close their doors. The court files are in the cloud, in a data center in the north. That is inaccessible due to the cable break. They will not soon forget that Monday at T-Mobile, provider of the Ministry of Justice.

Since 1 April, T-Mobile Netherlands has also been cut loose. Deutsche Telekom’s subsidiary is now owned by private equity parties Warburg Pincus and Apax. They paid 5.1 billion euros for the Dutch network provider.

Until a few years ago, T-Mobile lost out to KPN and VodafoneZiggo and mainly struggled with itself. But in four steps, the mid-engine became the market leader.

1 The strict German mother

With 2 billion turnover (2021), T-Mobile Netherlands is a small part of Deutsche Telekom, the largest provider in Europe (turnover 108 billion euros). Although active in the Netherlands since 2002, the head office in Bonn does not always take the subsidiary seriously. The board in the Netherlands is a dovecote – since 2010, a new top executive has been flown in on average every two years.

A subsidiary must obey, even when it is not convenient. In the autumn of 2014, Leon Toet – he was still a sales director at the consumer branch – heard that he was not allowed to sell the iPhone 6, the most coveted smartphone at the time. The accountant in Bonn says ‘no’: T-Mobile Netherlands is not allowed to pre-finance telephones; the money is needed elsewhere in Europe. †Penny wise, pound foolish”, Toet complains: the customers are switching to the competitor.

As a former state-owned company, Deutsche Telekom has little interest in the low-cost approach. After redundancies and cutbacks, the Dutch subsidiary is for sale. That almost succeeds in 2015, but private equity company Warburg Pincus offers just under the requested 2.6 billion.

Deutsche Telekom will place the Dutch subsidiary in a separate division and will replace the entire top of it in 2016. The search for a new CEO leads to Søren Abildgaard. John Strand, telecom consultant from Denmark: “Søren is one of the most successful leaders in the Danish telecom sector, the perfect person to get T-Mobile ready for a sale.”

2 The hip Danish father

With Abildgaard at the helm, T-Mobile gets more freedom, and someone who can give the brand its own face. That formula works in the United States, where T-Mobile US has long been led by the charismatic CEO John Legere. He represents the uncarrier, an atypical provider offering unlimited services. Legere wears T-shirts and trendy hot pink sneakers. That image fits Abildgaard perfectly. Just like T-Mobile US, T-Mobile Netherlands focuses on unlimited mobile bundles.

This creates skewed faces among German tourists, says strategy director Pieter de Klein: “They see that you pay 35 euros a month in the Netherlands for something that costs them 90 euros in their home country.”

As long as there is still a price fighter active on the Dutch market, the loss-making Tele2, T-Mobile cannot make a fist against KPN and VodafoneZiggo. An acquisition is obvious: after Tele2 has been incorporated and provider Simpel in 2020 too, T-Mobile will have about 7 million users. According to Abildgaard, T-Mobile will experience an important milestone in mid-2021, when his company generates more revenue from mobile services than KPN.

Internally, the Dane tries to create a family feeling and make employees proud of their own brand. His accessible Scandinavian working method is more suited to a Dutch service provider than the German approach. T-Mobile will become a ‘magenta family’ of 2,000 employees, after the bright pink color from the logo, and is ready for sale. First, Deutsche Telekom gets rid of the cell towers – “just bricks and concrete,” says Abildgaard. If the company is sold for 5.1 billion euros, he will also earn from it. How much, Abildgaard does not want to say.

Also read: Søren Abildgaard: ‘We will become the largest fiber optic provider’ .

3 A faster network

T-Mobile’s 3G network collapsed in 2009 with the introduction of the first iPhones in the Netherlands. With 4G things are going better: T-Mobile immediately installs the antennas that can handle a whole range of frequencies. This makes the network extra good in the speed tests.

T-Mobile has long positioned itself as a mobile internet provider, but that strategy is not sustainable. Cancellations increase as VodafoneZiggo and KPN lure customers with discounts on mobile telephony, along with broadband internet.

There is only one way to close that leak: offer a permanent connection yourself, preferably via fiber optic. T-Mobile rents many connections from KPN. The rental rates are a thorn in T-Mobile’s side, because there is little margin left. That is why the provider is urging the Netherlands Authority for Consumers and Markets for regulation. KPN wants to lower the rates somewhat, the company announced last Friday. T-Mobile says it does not yet have enough information to judge KPN’s proposal.

Deutsche Telekom refuses to invest money in fiber optics in the Netherlands. That is why T-Mobile has to work together with external parties: first Primevest Capital, and then the Open Dutch Fiber Network. Tim Poulus, Telecompaper analyst: “If you don’t have your own network, you have to invest less, but you do have to pay more lease costs. On a spreadsheet, they are ultimately communicating vessels.”

In the Netherlands, fiberglass is being rolled out in full, in many places even double. It is no secret with which T-Mobile – which now only has 738,000 fixed connections – wants to beat the competition. A test set-up for a 10-gigabit connection via glass is located in a house in Nieuw-Vennep.

On the laptop, the counter indicates a download speed of 8.5 gigabits, uploading goes with more than 7 gigabits. Not bad for a first test, according to the T-Mobile employees. The provider can only offer such speeds if it can install the ‘active equipment’ itself. KPN, which rents out fiber optic lines, does not allow this in all places.

4 Four brands, as long as they grow

T-Mobile Netherlands has four brands that all use the same network: T-Mobile, Tele2, Simpel and Ben. Tisha van Lammeren, member of the board of directors, is responsible for the consumer market. “Our four brands will last as long as they all grow,” she says pragmatically. Van Lammeren himself is prepared for anything: “I have clothing in the color of each of our brands. In my closet are magenta, blue, purple and black/gold.”

Van Lammeren is in charge of a male stronghold. “If I look at my own organization, there are still too few women and people from other cultures. On the other hand: T-Mobile did give me the opportunity to grow into a boardroom. I can’t imagine ever working for another provider.”

Have the guts to stick your neck out, is Van Lammeren’s motto. She did that herself when she explained her strategy to a group of investors during negotiations. “A barrage of questions – sometimes you wonder: don’t you like my answer or do you have a problem with the fact that I’m a woman? At moments like that I think of my father, he also worked in the telecom sector. Even if he is no longer there, I step out of the conversation for a while and ask: what do you think of this, Dad?”

He’d be proud, she’s sure of that.

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