It is only when the internet is down for a while that you realize how dependent the Netherlands is on digital connections. On the morning of Monday, November 25, 2019, an excavator disconnects a fiber optic cable between Zwolle and Leeuwarden. An hour later, as if the devil were playing with him, another fiber optic cable breaks near Arnhem.
In the afternoon, courts across the country are forced to close their doors. The judicial files are in the cloud, in a data center in the north. That is inaccessible due to cable breakage. They won’t soon forget that Monday at T-Mobile, provider of the Ministry of Justice.
Since April 1, T-Mobile Netherlands has also gone offline. The Deutsche Telekom subsidiary is now owned by private equity parties Warburg Pincus and Apax. They paid €5.1 billion for the Dutch network provider.
Until a few years ago, T-Mobile lost to KPN and VodafoneZiggo and mostly fought with itself. But in four steps, the mid-engine became the market leader.
1 The strict German mother
With a turnover of 2 billion (2021), T-Mobile Netherlands is a small part of Deutsche Telekom, the largest provider in Europe (turnover of 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 arrived on average every two years.
A subsidiary must obey, even when it is not convenient. In the fall of 2014, Leon Toet, who was still director of sales in the consumer branch, heard that he couldn’t sell the iPhone 6, the most coveted smartphone at the time. The accountant in Bonn says ‘no’: T-Mobile Netherlands cannot pre-finance phones; the money is needed in other parts of Europe. †Penny pound wise fools”, complains Toet: customers are switching to the competitor.
As a former state-owned company, Deutsche Telekom has little interest in the low-cost approach. After layoffs and cuts, the Dutch subsidiary is for sale. That almost succeeds in 2015, but private equity firm Warburg Pincus is offering just under the $2.6 billion requested.
Deutsche Telekom will put the Dutch subsidiary into a separate division and replace the entire top in 2016. The search for a new CEO leads Søren Abildgaard. John Strand, Telecommunications Consultant from Denmark: “Søren is one of the most successful leaders in the Danish telecommunications sector, the perfect person to prepare T-Mobile for a sale.”
two The Modern 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 run by charismatic CEO John Legere. he represents the uncarrier, an atypical provider that offers unlimited services. Legere wears trendy hot pink t-shirts and sneakers. That image fits perfectly with Abildgaard. Like T-Mobile USA, T-Mobile Netherlands focuses on unlimited mobile packages.
This creates biased faces among German tourists, says chief strategy officer Pieter de Klein: “They see you paying €35 a month in the Netherlands for something that costs them €90 in their home country.”
As long as there is an active price fighter on the Dutch market, loss-making Tele2, T-Mobile cannot make a fist against KPN and VodafoneZiggo. An acquisition is obvious: after Tele2 and the provider Simpel are incorporated also in 2020, T-Mobile will have about 7 million users. According to Abildgaard, T-Mobile will experience a major milestone in mid-2021, when his company generates more mobile service revenue than KPN.
Internally, the Dane tries to create a family feeling and make employees feel proud of their own brand. His approachable Scandinavian way of working is more suitable for a Dutch service provider than the German approach. T-Mobile will become a ‘magenta family’ of 2,000 employees, after the bright pink color of the logo, and is ready for sale. First, Deutsche Telekom gets rid of cell phone towers, “just bricks and concrete,” says Abildgaard. If the company is sold for 5.1 billion euros, he will also make a profit on it. How much, Abildgaard does not want to say.
3 A faster network
T-Mobile’s 3G network crashed in 2009 with the introduction of the first iPhones in the Netherlands. With 4G, things go better: T-Mobile immediately installs antennas that can handle a wide range of frequencies. This makes the network very good in speed tests.
T-Mobile has long positioned itself as a mobile Internet provider, but that strategy is not sustainable. Cancellations are on the rise as VodafoneZiggo and KPN lure customers with discounts on mobile telephony, along with broadband internet.
There’s only one way to plug that leak: offer yourself a permanent connection, preferably via fiber optics. T-Mobile leases many connections from KPN. Rental rates are a thorn in T-Mobile’s side, because there’s little margin left. That is why the provider is urging the Netherlands Consumer and Market Authority for regulation. KPN wants to lower rates a bit, the company announced last Friday. T-Mobile says it doesn’t have enough information yet to judge KPN’s proposal.
Deutsche Telekom refuses to invest money in fiber optics in the Netherlands. This is why T-Mobile has to work together with external parties: first Primevest Capital and then Open Dutch Fiber Network. Tim Poulus, analyst at Telecompaper: “If you don’t have your own network, you have to invest less, but you have to pay more leasing costs. In a spreadsheet, ultimately, they are communicating vessels.”
In the Netherlands, fiberglass is being fully implemented, in many places even twice as much. It’s no secret why T-Mobile – which now has only 738,000 fixed connections – wants to beat the competition. A test setup for a 10-gigabit connection through glass is in a house in Nieuw-Vennep.
On the laptop, the counter indicates a download speed of 8.5 gigabits, the upload goes with more than 7 gigabits. Not bad for a first try, according to T-Mobile employees. The provider can only offer such speeds if they can install the ‘active equipment’ themselves. KPN, which leases fiber optic lines, does not allow this everywhere.
4 Four brands, as long as they grow
T-Mobile Netherlands has four brands that use the same network: T-Mobile, Tele2, Simpel and Ben. Tisha van Lammeren, member of the management board, is responsible for the consumer market. “Our four brands will last as long as they all grow,” she says pragmatically. Van Lammeren himself is up for anything: “I have clothes in the color of each of our brands. In my closet there are magenta, blue, purple and black/gold.”
Van Lammeren leads a male bastion. “If I look at my own organization, there are still very few women and people from other cultures. On the other hand: T-Mobile gave me the opportunity to become a boardroom. I can’t imagine working for another provider.”
Have the guts to take risks, is Van Lammeren’s motto. She did so herself when she explained her strategy to a group of investors during negotiations. “A barrage of questions. Sometimes you ask yourself: do you not like my answer or do you have a problem with the fact that I am a woman? At times like this I think of my father, he also worked in the telecommunications sector. Even if he’s gone, I get out of the conversation for a while and ask: what do you think of this, dad?
He would be proud, she is sure of it.