Dow Jones reports that Deutsche Telekom is in partnership talks with Harbinger Capital – the hedge fund planning to build a wholesale Long Term Evolution (LTE) network in the US – in a bid to make up lost ground to US rivals in the move to next-generation mobile technology. According to a report carried by the Financial Times the two firms are in ‘preliminary discussions’ for Deutsche Telekom’s struggling US unit – T-Mobile USA – to rent capacity on Harbinger’s proposed new network, though no decisions have yet to be taken. Such an agreement would benefit both parties. T-Mobile USA has been a principal source of growth for Deutsche Telekom for several years but is losing ground to larger rivals such as Verizon Wireless, AT&T and Sprint, which have all announced their 4G migration plans (LTE in the case of Verizon and AT&T, WiMAX for Sprint).
Harbinger announced in March that it plans to build an LTE network using terrestrial spectrum owned by satellite networks. It said the new network will achieve population coverage of at least 260 million by 2015 (not taking into account satellite coverage). Service trials are to begin in Denver and Phoenix next year. The firm announced last week that it has hired former Orange CEO Sanjiv Ahuja to lead the project. It reportedly needs to raise between USD1 billion and USD2 billion in equity and bank financing to fund the network. As well as T-Mobile USA, other potential strategic investors are thought to include Qwest Communications International and SK Holdings.