Opportunity keeps knocking for a mobile veteran

Former Olympic weightlifter sees key to success as cutting prices and simplifying charges

In the space of little over an hour, Jim Hyde, who runs T-Mobile in Britain, uses the word opportunity 38 times.

He is the kind of boss who often uses the word opportunity when really he means problem. He was dispatched to Britain at the beginning of last year from the United States, where he had been a senior executive at T-Mobile's north American division. He fixes you with his ice blue eyes. "I got a phone call a couple a years ago from René Obermann, who was then the CEO of T-Mobile International who said we've got an opportunity in the UK that could use some attention."

That "opportunity" was pretty big. The mobile phone market in Britain has gone from almost nothing 20 years ago to penetration of 110% to 120%; there are more mobile phones in Britain than there are people. Intense competition among the big four and newer entrants such as 3, Virgin Mobile, Tesco and Talk Mobile, launched this week by Carphone Warehouse, has put pressure on prices and encouraged customers to become increasingly promiscuous as they hunt the best deals and the latest handsets.

The performance of T-Mobile, since it was bought by Deutsche Telekom and rebranded from One2One in 2002, had been patchy. The long trumpeted arrival of broadband connections on mobiles, in which the network operators have invested billions of pounds, has also failed to excite customers so far. According to research by the regulator Ofcom, household spending on mobile phones fell for the first time last year, by 2% to £31.72 a month. The market leader in Britain is O2, with 17.8m users, followed by Vodafone with 17.6m, T-Mobile with 16.7m (including 4.4m Virgin customers) and Orange with 15.4m.


Hyde, 43, greets with a firm handshake. For a decade or so he represented the United States in weightlifting, including at the Seoul Olympics (he was injured in the competition), and still looks extremely fit; the American jock next door with teeth the colour of a clean sheet of paper. He is one of the old timers of the mobile phone industry, helping to launch Voicestream in the US and build it to 26m users, before it was taken over by Deutsche Telekom around the same time that it bought One2One.

The UK market, he says, is even more competitive than the US. "Nowhere in the world that I know do four of the largest brands in telecommunications all compete for business in the same market as we see here with Deutsche Telekom, France Télécom (owner of Orange), Telefónica (owner of O2) and Vodafone. "It is a very challenging market, with new competitors popping up, it seems like almost on a daily basis," Hyde says. "Some might argue that competition is driving the price down and at the end of the day, that's good for customers - others would say that's the beginning of the end of mobile operators. Hardly the case. We are all just getting started on the real opportunity when you start talking about things like mobile broadband."

Hyde dresses it in management manual guff, but the key, he ultimately says, is listening to what customers want, and much of that seems to be about cutting prices and simplifying charges. Under his aegis, T-Mobile has been grabbing market share, with a series of initiatives, including a flat rate for internet access (£7.50 a month) instead of charging for the amount of data used; lower flat rate roaming charges in much of Europe and the US; and removing the walled garden to allow truly open internet access.

Perhaps most central has been the Flext tariff, which allows users to spend a fixed monthly amount that they can split between calls, texts and picture messages, and sparked a price war. Flext was an attempt to get more T-Mobile customers on to contracts: One2One had historically a far higher percentage of lower spending pay-as-you-go customers than its rivals. So far 2 million customers have signed up to Flext, increasing T-Mobile's contract base by 25% last year and making it one of the only operators to show an increase in the average amount that users are spending.

Another reason for optimism, he suggests, is the iPhone, even though it is partnering with O2 in Britain. "The iPhone creates a tremendous opportunity in the marketplace. We certainly wouldn't be disappointed if we had the iPhone, but we're not disappointed that we don't. Here's why. The iPhone raises the awareness in the marketplace around what customers can do with mobile devices and it is not just about music on the go, it is about access to the internet, it is about browsing, it is about search. And what we've seen in the US is, while sales of iPhone have certainly been robust, sales of other smart phones and PDAs have outstripped sales of iPhones and just skyrocketed. So I think it will be a bit of a rising tide gonna raise all ships on this one."

T-Mobile is the only one of the big four operators not to offer fixed line broadband access into the home with the mobile service. "It is a bundling service and mobile revenues are being used to subside fixed line business - that's a cost. For us to build on a mobile only strategy, that allows us not to absorb that cost." René Obermann was promoted from T-Mobile to run Deutsche Telekom in November, underlining which part of the business is growing. He has pledged to build T-Mobile further in its most important markets: it is buying Orange in the Netherlands, is making another $2.4bn acquisition in the US and there are rumours of a deal with 3 in Britain. Worldwide T-Mobile has 109 million subscribers. Domestically, Deutsche Telekom is having a difficult time as its market is eroded by new more nimble competitors, leading to a series of profit warnings and a boardroom coup at the end of last year. Is that constraining investment in day-to-day operations? "I think there is a mis-per-cep-tion about domestic problems with DT," Hyde says, stressing each syllable. "DT is still the market leader in Germany in the landline business and the mobile business, right?

Price war

"You are talking about a company who group wide are going to deliver. I think our guidance is somewhere near €19bn in ebitda [core earnings] in 2007 with operating margins still plus 30%. I mean that is not a business that is in trouble by any stretch of the imagination. Now, in some cases expectations are at a level that might be higher than that, yeah; I've seen the statistics that say on the landline there is a price war in Germany right now that has led to some migration on the land line business."

Some migration? They lost 2 million land line customers last year. "Yeah, the landline numbers are significant for sure but the upside is the mobile business has done a very nice job. But in fact I've seen some good stabilisation results on the landline side as well and a clear technological path to success, even on the landline side, so I think the domestic problems have been overstated. Have they led to difficulty here getting done what we'd like to get done? The unequivocal answer to that is no."

Hyde was raised in the American midwest, near Chicago. His mother worked in telecoms and his father was a teacher and firefighter: what he describes as a solid middle class upbringing. He got into weightlifting at college under the tutelage of a Hungarian who defected to the US. After nine years in financial services, he joined Voicestream, just as the US mobile market was being deregulated. He eventually reached the role of vice president at T-Mobile USA. After a year or so living in London, he has moved with his wife and two children to a village closer to the office in Hatfield. He played his first game of baseball for 25 years last week in an American league in Hemel Hempstead.

Hyde has been briefed by his PR team on questions that might come up and has prepared handwritten answers on an A4 pad. What is in there I wonder? He flicks though. "I had some leadership stuff here which you may or may not be interested in," he says. "They said you might want to talk about mentors." Honestly, I'd rather talk about Catherine Zeta-Jones, who was the T-Mobile spokesperson in the US for a number of years. "Yeah, she was spectacular."

The company is a leading sponsor of the Tour de France and had a difficult time this year with doping allegations. I wonder if the company had considered pulling out. Hyde is typically, nay relentlessly, upbeat. "We have an opportunity I think to position ourselves as the lead and dominant sponsor in that sport but it is more than that, it is an opportunity to really do something that can make a noticeable difference.

"For instance we are funding not just random drug testing for our own team but we are funding any other team that wants to participate in random out-of-competition drug testing and that's just one example of what we can do to leverage the opportunity and do a lot of good for a lot of young athletes who want to do it the right way, and for that I am happy to be involved."

The CV

Born: Rockford, Illinois

Education: Arizona State University


1984-1995 Prudential Services

1995-1997 Toll Free Cellular

1997-2001 VoiceStream Wireless, customer service and sales roles

2001-2005 T-Mobile USA, rising to vice-president.

2006-present T-Mobile UK, managing director and chief executive.

Family: Married with two children. Also has two children from a previous marriage

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