Philipp Humm has resigned as CEO of T-Mobile USA, the fourth-largest U.S. mobile operator, and will be replaced by Chief Operating Officer Jim Alling on an interim basis.
Humm will leave T-Mobile USA as well as its parent company, Deutsche Telekom, where he ran the German mobile business before coming to the U.S. He will rejoin his family, who still live in Europe, T-Mobile said Wednesday.
Humm joined T-Mobile USA in May 2010 and became CEO in November of that year. During his tenure at the company's helm, he oversaw its failed merger with AT&T and its emergence after that process. In a press release, Deutsche Telekom Chairman Rene Obermann said Humm had improved the cost situation at T-Mobile. "Now we need someone who can convert initiatives into market-successes," said Obermann, who is also CEO of Deutsche Telekom.
T-Mobile has 33.4 million subscribers on its GSM and HSPA network and plans to offer LTE service beginning next year. Earlier this week, it announced a plan with Verizon Wireless for a spectrum swap.
Humm's term at the helm was dominated by the long process of trying to win approval for the merger with AT&T. The deal was announced in March 2011, and AT&T finally abandoned it on Dec. 19 after opposition from the U.S. Federal Communications Commission, the Department of Justice, several states and third-place carrier Sprint Nextel. All argued that the merger would reduce competition in the U.S. mobile market.
It's likely that Humm, the former head of T-Mobile in Germany and Europe, was brought in to manage a deal such as the attempted merger with AT&T.
"I can't imagine that they hired him not knowing that was what he was going to do," said analyst Jack Gold of J. Gold Associates.
Deutsche Telekom had signaled earlier that it wanted to leave the U.S. mobile market, Gold said. That may have been for good reason, he said, because T-Mobile USA has struggled to gain market share. It still trails far behind AT&T, with about 104 million subscribers, and Verizon, with 93 million. Running a national cellular network becomes a more attractive business at larger scale, because unused capacity means investment going to waste, Gold said.
"It's like sending airplanes half full around the country," Gold said.
In addition, it takes longer for a carrier to recoup money spent on the network, such as the cost of LTE, if it has fewer subscribers, he said. Scale also affects a carrier's ability to offer devices, Gold added. T-Mobile is the last of the major U.S. carriers without the Apple iPhone.
But the company did take some benefits out of the merger debacle. As part of a breakup deal, AT&T gave T-Mobile US$3 billion, spectrum licenses in 128 markets and a 7-year roaming agreement that will extend T-Mobile's reach by about 50 million potential subscribers. The spectrum swap with Verizon, if it wins government approval, is expected to give T-Mobile additional capacity in 15 major cities.