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T-Mobile Pumps It Up

Executives at T-Mobile have said they will spend $2.7 billion on a GSM network upgrade. That amount is in addition to the $4.2 billion the firm recently spent on an auction for new U.S. spectrum.
Considered not long ago to be an acquisition candidate and lagging in the latest mobile phone technology, T-Mobile has made a decision to battle its U.S. counterparts for technology leadership. The company is committing nearly $7 billion to the effort.

In recent days, executives at T-Mobile, a unit of Germany's Deutsche Telekom, have said they plan to commit $2.7 billion to upgrade its GSM network. That amount is in addition to the $4.2 billion the firm recently spent on an auction for new U.S. spectrum.

"The auction and the resulting acquisition of additional spectrum is an important step forward for us, and not just for T-Mobile, but for the Deutsche Telekom group as a whole which benefits from the growth of its U.S. business," Deutsche Telekom's chief executive Kai-Uwe Ricke said in a statement. The U.S. unit is the German parent company's largest source of wireless revenue.

Although most U.S. citizens possess cell phone service, Ricke pointed out that mobile phone growth potential is higher in the U.S. than in Europe, which is nearly saturated with cell phones.

T-Mobile believes it has an advantage over other U.S. mobile phone providers because it can install advanced wireless technology quickly now that the technology has matured.

T-Mobile lags behind the firm with the largest number of subscribers -- Cingular Wireless; those two firms share the same European-developed GSM services. In the second place subscriber position is Verizon Wireless, whose subscriber base is growing rapidly. In the third position is Sprint, also growing rapidly and which shares the same CDMA-based technology as Verizon.