T-Mobile’s “Record Breaking” 4th Quarter, Prospects for Sprint Acquisition; 5G Bragging Rights?

Controlled by Deutsche Telekom, T-Mobile USA said it added 1 million postpaid phone customers in the December quarter, accelerating its holiday period gains from 891,000 new subscribers a year ago. For fiscal 2019, T-Mobile said it expects to add 2.6 million to 3.6 million subscribers.

T-Mobile CEO John Legere sounded very optimistic on Thursday’s  earnings call:

“We had the highest total customer net additions ever in Q4 and we followed that up with record breaking financials, which is a winning formula for our shareholders. T-Mobile led the industry in postpaid phone net adds for the fifth year in a row and we posted a Q4 record low branded postpaid phone churn. Both service and total revenues hit record highs in this quarter while adjusted EBITDA was our best Q4 ever. Our 2019 guidance shows our confidence for the standalone outlook for T-Mobile. We continue to meet the needs of wireless customers and translate that into incredible results. I feel good about the state of our business going into 2019.

I want to reiterate unequivocally that prices will go down and customers will get more for less. We’re entering the final stages of our regulatory review process and it’s an important time to document the commitments that we’ve made from day one. This is another example of T-Mobile putting its money where its mouth is and backing up what we said in our public interest statement.

In summary, I am very, very pleased with the progress we’ve made on our merger and the process so far and I continue to expect regulatory approval in the first half of this year. Okay, to wrap it up I also couldn’t be more excited about the performance in 2018 and our guidance shows continued momentum in 2019. The combination with Sprint means that we will be able to create a future that is even more exciting for American consumers.”

Legere also said that he expects the acquisition of Sprint to be approved in the first half of this year.

“We continue to work through the regulatory review process with humility and respect for all parties involved. A number of major milestones have been completed and we remain optimistic and confident that once regulators review all the facts they will recognize the significant pro consumer and pro competitive benefits of this combination. We continue to have a productive dialogue with both federal and state regulatory authorities.”

On Monday, T-Mobile told U.S. Federal Communications Commission it would not increase prices for three years, with few exceptions, if it gets approval to buy Sprint for $26 billion.

In sharp contrast,  MoffettNathanson analyst Craig Moffett said in a report published on Thursday:  “A series of developments over the past few weeks have forced investors to consider the possibility that T-Mobile’s merger with Sprint may be in more trouble than previously appreciated,”

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T-Mobile has just a 10 percent market share of business customers, said Chief Operating Officer Mike Sievert during the call, giving the carrier opportunity for more growth.  “Now that the network is there … we’re starting to see these kinds of customers come in, in historic numbers,” Sievert said. T-Mobile added network capacity in rural areas of the United States during the 4th quarter of 2018.

Legere summarized the wireless carrier’s progress and 5G and how the competition (mostly AT&T) responded:

“Our engineering team is hard at work furiously building out our 600 MHz and setting the stage for America’s first real nationwide 5G network next year. Our aggressive build out is on 5G ready equipment and we have made rapid progress in just one year since getting our hands on the spectrum. 2700 cities and towns in 43 states and Puerto Rico are live on 600 MHz and we already have 29 600 MHz capable devices in our lineup today including the new iPhones.

We have standards based 5G equipment deployed to six of the top 10 markets including New York and Los Angeles. We believe the 5G revolution should be for everyone, everywhere, and not just the few intense areas. While the other guys hyped 5G we continue to focus on real 5G using global standards based equipment, 5G NR that will light up and deliver for customers across the U.S.

How has the competition responded to our plans? Well, AT&T responded by trying to rebrand 4G as 5GE and we know the customers see right through their bullshit and Verizon by the way, their current standard pups, pre-standard 5G footprint covers what they even themselves call limited areas in four cities, while our 5G capable 600 MHz network already covers hundreds of thousands of square miles. Also we continue to expand our 4G LTE coverage and deliver industry leading network performance.

Our network now covers more than 325 million Americans with 4G LTE effectively matching Verizon’s population coverage. We now have 600 and 700 MHz low band spectrum deployed to 301 million people across the country and we continue to lead the industry in 4G LTE speeds. In Q4 our average download 4G LTE speed was 33.4 Mb per second once again ahead of all the competitors. We remain very confident in our outlook for 2019 and this is reflected in our guidance.”

T-Mo CTO Neville Ray, bragging about T-Mobile’s adding 600 MHz spectrum for both 5G NR and LTE, said that the uncarrier’s  600 MHz spectrum is deployed in more than 2,700 cities and is supported by 29 devices.  It is “going to be the biggest and largest and most transformative piece as we move through ’19 and into ’20. We do not take our eye off the ball at all on capacity and performance…The 600 LTE rollout has been going incredibly strong. As we get our software matured and ready for primetime, we will light up 5G services on those same radios. The 5G story is coming on super strong.”  If that wasn’t enough, Ray said:

“You can see an aggressive competitive response against 5G NR victory lap on the fastest LTE. AT&T especially trying to figure out how to not be second or third in that race for the coming couple of years. We’re going to be adding 600 MHz spectrum to the fight, both with LTE and with 5G NR and speeds and performance are going to continue to increase on this network into 2019 and materially more so in 2020 when we can reach our nationwide ambition on the 600 MHz 5G deployment……

Biggest focus right now is, as we’ve reference multiple times here is the 600 MHz build, that’s going to be the biggest and largest and most transformative piece as we move through ’19 and into ’20. I mean thousands upon thousands of new sites with 600 MHz capability coming on air, but we do not take our eye off the ball at all on capacity and performance. We’re at the best capacity performance in our company’s history right now, lowest congestion figures we’ve ever seen. We love to be that way.

The proxy for that in the marketplace is our fastest speed performance. And as I mentioned earlier, we continue to win on that front and look to maintain that lead. On the small cell piece, we are starting to see and introduce license assisted access, so LTE in the 5 gig space we’re seeing very positive results and returns from those investments and so a lot of opportunity to grow capacity in the urban calls. We’re not taking our eye off that ball, but big, big most major improvements coming on the 600 MHz side this year.”

On small cells:  “(we have) just over 21,000 small cells in play today. We plan on continuing our march on small cells another 20,000 or so plan to come off as we exit ’19 and into ’20. And we continue to densify this network to prepare for obviously a tremendous capacity and performance future.”

T-Mo President Mike Sievert on incremental revenues and pricing:

“So, on pricing, the short answer would be, we have big aspirations for incremental revenues and growth from 5G, but not through pricing, through our current smartphone plans. So the incremental revenues come from more and more users picking wireless technologies instead of other technologies for their conductivity.

There is a big broadband business that we expect to build, there are big enterprise opportunities, there are IoT opportunities, there more devices per users, there are new capabilities being developed, all of which we can monetize with revenue growth. But we don’t have plans for the smartphone plans that you see today to charge differently for 5G enablement versus 4G LTE.”

Legere concluded his bragging about T-Mo’s (not yet deployed with paying customers) 5G network:

“Yes, so again, as I said from the very first day back in April going into the first week of May, I’ve been down here in Washington with the very same story that the 5G Network that’s going to be built with the $40 billion worth of investment and the breadth and the depth is going to be something that the country needs and has yet to see, it’s going to be super charging the uncarrier, capacity will go up precipitously and prices will go down and jobs will increase. And that’s been a dialogue that has gone from sound bite to tremendous modeling and conversation and depositions and hearings.”

References on T-Mo’s 5G at 600MHz:

https://www.t-mobile.com/news/first-600mhz-5g-test

https://www.digitaltrends.com/mobile/t-mobile-5g-rollout/

https://venturebeat.com/2019/02/07/t-mobile-has-5g-towers-in-most-top-u-s-markets-handsets-arriving-in-2019/

https://www.lightreading.com/mobile/5g/t-mobile-quietly-confirms-5g-network-in-30-cities/d/d-id/748791

http://fortune.com/2019/02/07/t-mobile-5g-prices-sprint/

https://www.rcrwireless.com/20190207/carriers/t-mobile-us-600-mhz-update

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Related post: 

The Future of 5G—and the Risks that Come With It

 

5 thoughts on “T-Mobile’s “Record Breaking” 4th Quarter, Prospects for Sprint Acquisition; 5G Bragging Rights?

  1. T-Mobile talks 5G plan pricing, home broadband pilot, and TV and video services during earnings call

    T-Mobile CTO Neville Ray touched a bit on upcoming 5G handsets, saying that mmWave devices are expected in the first half of the year while devices that also have 600MHz will likely come in the second half of 2019. COO Mike Sievert then touched a bit on T-Mo’s plans for 5G pricing, saying that doesn’t plan to charge more for 5G rate plans, instead hoping to get revenue growth from offerings like enterprise, broadband, and Internet of Things. “But we don’t have plans for the smartphone plans that you see today to charge differently for 5G enablement versus 4G LTE,” said Sievert.

    T-Mobile execs also touched on home broadband. Sievert said that T-Mo is planning to run a pilot test of home broadband service using 4G LTE in the first half of 2019 with plans to move to 5G later. The T-Mobile COO added that home broadband is an important piece of its merger with Sprint, saying that New T-Mobile has “very ambitious home broadband plans.”

    https://www.tmonews.com/2019/02/t-mobile-5g-plan-pricing-home-broadband-pilot-pay-tv-service-earnings-call/

  2. T-Mobile-Sprint merger looks doomed–5G rationale holds little relevance to U.S. antitrust law:

    “There’s no justification to concentrate the wireless market in order to get 5G and better competition,” says Gene Kimmelman, a former antitrust attorney for the Justice Department.

    Regulators are skeptical about the claim that the market would be more competitive with three players rather than the current four. Mr. Kimmelman argues that the combination will only lead to higher prices and reduced quality.

    WSJ: Sprint Tells Regulators Its Business Is Worse Than Earlier Portrayed
    Sprint lost lucrative postpaid handset connections last quarter and expects to lose them for the entirety of the fiscal year that ended in March, excluding the prepaid-to-postpaid customer shifts, according to the filing.

    When it reported results for the last three months of 2018, Sprint highlighted that it had 309,000 total postpaid net additions, a year-on-year improvement. Sprint entered 2019 with 32.6 million postpaid connections and 8.8 million prepaid connections.

    “While these public statements and the individual metrics cited are all accurate, they are incomplete,” according to the filing by Sprint’s lawyers to the Federal Communications Commission, which was partly redacted. A Sprint spokeswoman declined to comment.

    It isn’t unusual for companies that have agreed to be acquired to claim that they have a brighter future with their suitor. Sprint, however, has increasingly stressed a narrative that it can’t survive on its own.

    In the same document, Sprint cites an analyst report suggesting that even entering into chapter 11 bankruptcy protection to restructure its balance sheet wouldn’t help long-term. “Sprint is in a very difficult situation that is only getting worse,” the filing said. “Sprint is not on a sustainable competitive path.”

    The filing states that the company’s board was told in January meetings that “many of Sprint’s most recent commercial metrics were well below plan and trending downward.” At a March 29 board meeting, CEO Michel Combes told directors that “Sprint is losing relevance with its customers.”

    Jeffrey Jacobovitz, chairman of the antitrust and competition practice at Arnall Golden Gregory LLP, said the approach wasn’t unusual. “It’s somewhat common in terms of a potential defense to the government challenging a merger,” he said. If such disclosures by a company are inconsistent with its public filings, however, it could cause problems with securities regulators, Mr. Jacobovitz added.

    https://www.wsj.com/articles/sprints-confession-we-are-even-sicker-than-we-look-11555581601

  3. Light Reading on Sprint’s 5G Launch- May 31, 2019

    “This is a day I hope all of you in this room will never forget… the launch of 5G and the launch of this new wireless generation,” said Michel Combes, president and CEO of Sprint, as he took the stage to kick off the event.

    They certainly won’t forget the bill. To get 5G service, customers will need to sign up for Sprint’s Unlimited Premium plan; the plan costs $80 a month, and it includes Hulu and Amazon Prime.

    Earlier, a group of media gathered to talk about the 5G network with Sprint’s CTO John Saw. He touted the advantages of Sprint’s spectrum position (in the 2.5GHz band) but noted that carriers, in the long run, would create the most value for their customers by providing low-, mid- and high-band spectrum.

    Saw said that when Sprint launches its first nine 5G markets — four were launched yesterday — the carrier will reach about 11.5 million people, covering nearly 2,180 square miles with 5G service. “That is why I’m confident in telling you that this is probably going to be the largest initial 5G launch in terms of coverage and footprint,” Saw said.

    For the most part, the industry hype has far outrun the promise of 5G. And Sprint, as a company, has had a lot of false starts, a lot of setbacks in the last decade (or longer).

    But on the subject of 5G, they can’t be dismissed. On AT&T’s network and Verizon’s network, you can’t currently buy a smartphone that gets a 5G signal in Dallas or Fort Worth. You can get 5G service on a smartphone in those markets with Sprint. Does that make Sprint the first carrier to market with a 5G mobile service?

    https://www.lightreading.com/mobile/5g/scenes-from-sprints-big-5g-launch/d/d-id/751851?

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