T-Mobile U.S. profit beats estimates; Plan to launch 5G on 600 MHz in 2H-2019

T-Mobile USA, the third-largest U.S. wireless carrier by subscriber count, beat Wall Street analysts estimates for first-quarter revenue and profit, as competitive pricing lured new subscribers to its monthly cellphone plans.  Net income surged to $908 million, or $1.06 per share, in the three months ended March 31, from $671 million, or 78 cents per share, a year earlier.  Analysts had expected the company to earn 91 cents per share, according to IBES data from Refinitiv.   Revenue rose nearly 6 percent to $11.08 billion, in line with estimates.

T-Mo added a net 656,000 phone subscribers in the first quarter, up from 617,000 additions a year earlier and substantially more than the 612,000 new subscribers analysts had expected, according to research firm FactSet.

The wireless telco is awaiting approval of its $26 billion deal to buy smaller rival Sprint Corp, which it has said will give it scale to compete with market leaders Verizon Communications Inc and AT&T Inc.

T-Mobile US Chief Executive John Legere said during a post-earnings call with analysts that he remained “optimistic and confident” that U.S. regulators would recognize the merger as good for consumers, and said he still expects deal approval in the first half of this year.

Reuters reported last week that the U.S. Justice Department has told T-Mobile and Sprint it has concerns about the merger in its current structure.  At a meeting on Wednesday, U.S. regulators questioned Sprint and T-Mobile executives about the deal.

John Legere, CEO of T-Mobile said: “We’re off to a fast start in 2019 with customer growth that accelerated year-over-year, record low churn and we expect to lead the industry in postpaid phone growth. We’re executing on our business plan and our guidance shows that we expect our momentum to continue.”

On the earnings call, Legere added:  “And even with Charter and Sprint left to report. T-Mobile still took an estimated 88% of the industry’s postpaid phone growth. We also put up a customer growth number that accelerated year-over-year, extended our streak of more than 1 million total net per quarter to six years and delivered an all time record low postpaid phone churn results of 0.88%, by the way, that churn number is better than AT&T and within 4 basis points of Verizon.”

The company claims they have Industry Leading Network Performance:

  • 99% of Americans now covered with a 4G LTE network that is second to none
  • Fastest combined average of download and upload speeds for 21 quarters in a row
  • Aggressive deployment of 600 MHz using 5G ready equipment, now reaching nearly 3,500 cities and towns
  • On track to have the first nationwide 5G network available next year

Legere speaking on the earnings call:

“We continued to expand our 4G LTE coverage and deliver industry-leading network performance. Our network now covers approximately 326 million Americans with 4G LTE. And now we have 600 megahertz and 700 megahertz low band spectrum deployed to 304 million people across the country. In terms of 4G LTE speeds for 21 quarters in a row, we delivered the fastest combined average of download and upload speeds.

Our engineering team is hard at work building the foundation for America’s first real nationwide 4G network with an aggressive build out of 600 megahertz spectrum, which we expect to be ready next year as well as millimeter wave. Our 600 megahertz LTE deployment is on equipment that’s 5G ready. And we continue to make incredible progress since getting our hands on the spectrum. Almost 3,500 cities and towns in 44 states and Puerto Rico alive with LTE on 600 megahertz today, well ahead of expectations.

And we have 4,600 megahertz capable devices in our lineup today including the new iPhones. We plan to launch 5G on 600 megahertz as soon as we have compatible smart phones in the second half of this year. And if our merger with Sprint is approved, we will get access to unmatched available mid-band spectrum for 5G, which will result in a uniquely powerful 5G network with eight times the capacity by 2024 of the combined standalones today and 15 times average speeds by 2024 verses today.

We certainly watched Verizon’s 5G launch experiment on millimeter wave spectrum in tiny pockets of two cities with interest. Not surprisingly, customers are having a hard time finding a signal. And probably not just because Verizon won’t publish a coverage map. And I won’t even get into that trickery AT&T is using with customers on 5GE. While they both are pursuing 5G BS, we think 5G should be for everyone, everywhere. Having 5G on 600 megahertz in terms of coverage and adding Sprint spectrum for broad capacity will be a true game changer and will turn New T-Mobile into the undisputed 5G leader, not only in the U.S. but around the world. We remained very confident in our outlook for 2019 and it’s reflected in our guidance that Braxton will review in a minute.”

CTO Neville Ray answers a spectrum question from Simon Flannery of Morgan Stanley on the earnings call:

“As we’re rolling out 600 megahertz, we’re using 5G capable radio (3GPP Rel 15 “5G NR”). So obviously we’re taking new software on a regular basis, the 5G softwares coming in heavy and fast.

But here we are today, we’ve got over 1 million square miles of 600 megahertz LTE rolled out for across.  It’s working in 44 states and Puerto Rico. And we have a 100 million covered POPs on 600 megahertz LTE. So we’ve said that in 2020, we’ll have a nationwide footprint on 5G. And as we look at our launch environment, when we get the terminals in the second half of 2019, we’re going to be lighting up an enormous footprint on 5G, an enormous footprint on 600 megahertz.

And we have a lot of spectrum as you point out. We were incredibly successful in the auction, which seems like yesterday, that was two years ago. And we intend to put down a very large three, four lane highway across the U.S. with 600 megahertz. And I think it’s going to be in stark contrast to the pockets of 5G that are out there today and very, very limited from AT&T and Verizon. And Verizon maybe doing more cities, but it seems to be a handful of sites in very urban environments with very limited range.

And we’re not sitting there just throwing rocks at millimeter wave. We believe in millimeter wave, but – and we will launch millimeter wave services ourselves. But I can tell you now the software is not mature. We continue to work with the same equipment and software as the Verizon guys have decided to launch and even have the goal to ask their customers to pay $10 bucks more a month to access wherever they could find it. I believe they pulled that back today. They’ve pulled back the $10 price like they were trying to force on people, but comparing contrast tens of millions of covered POPs with 5G to handfuls. That’s the excitement and scale of what we love to do with 5G. Not in 2020, but in 2019. And as soon as we can get those devices onto – and into our customer’s hands, we will.”

John Legere:

“I just editorialize, I’ve been doing this a long time, I’ve never seen a team move as fast to deploy spectrum as an excellent team that moved on this 600 MHz. Yes, we use to think that we are now across 3,500 cities and towns in 44 states and Puerto Rico, 1 million square miles of territory with 600 and all of that already 5G compatible. We talk about being the first one to be nationwide next year, a lot of times that’s defined as 200 million, maybe we’ll march past that. But here we are in April of 2019 already having accomplished that kind of a milestone. It’s amazing.”

Ray answers a multi-part question from Craig Moffett of MoffettNathanson LLC:

“I talked the lengths are about what we can do with 600 megahertz and obviously, as we light up, think about just on a standalone basis, lighting up 30 megahertz nationwide on top of the assets that we’ve deployed today. So speeds are absolutely going to move from the 30, 35 net averages, they that exist in the network today, into the 60s and 70s peak speeds are going to move well north probably not quite doubling where we are today, but into the hundreds of megabits per second.

That’s achievable, right. As you combine an aggregate, the 600 megahertz in with the mid-band spectrum that we have. So that’s a very interesting proposition. But it fails in comparison to what we can do with the New T-Mobile. And the rollout that we can achieve with 2.5 gigahertz and especially the amount of spectrum mid-band spectrum that we can push into 5G early, and address this need of mid-band 5G, which the world – the rest of the world is running with. Craig as you know, here in the U.S., we have this mid-band dilemma. We can solve that with the combination of T-Mobile and Sprint, and really move forward with a tremendous 5G experience with breadth and depth and all of the data and the fact points that John pointed out earlier in the messaging.

So that’s the piece I’m focused on. Obviously on a standalone basis, it’s a different world. But then that’s us and AT&T and Verizon and everybody else trying to figure out how do we move to that next level of performance with 5G in a world where the mid-band spectrum that’s needed to really drive that is not coming from auctions or from other sources in any real timeframe that’s comfortable for anybody.

But the combination of T-Mobile and Sprint creates that mid-band opportunity in a way that cannot be created in the U.S. marketplace over the coming years. That’s what’s so unique and exciting about the opportunity. And Craig, that’s where I spend my time. I’m thinking about that piece. I know we’ve got a very strong network. I’m adding a lot of 600 megahertz, a new spectrum to the asset that we have. So a lot of confidence there, but the excitement and the thing that we long for and look forward to is this combination of the Sprint.”

………………………………………………………………………………………………………………………………………………..

References:

https://www.t-mobile.com/news/t-mobile-q1-2019-earnings

https://seekingalpha.com/article/4256978-t-mobile-us-tmus-ceo-john-legere-q1-2019-results-earnings-call-transcript?page=8

One thought on “T-Mobile U.S. profit beats estimates; Plan to launch 5G on 600 MHz in 2H-2019

  1. T-Mobile Prepping for 600 MHz 5G in 2H 2019:

    On the company’s’ earnings call T-Mobile CTO Neville Ray reiterated that the operator plans to have a nationwide 5G footprint in 2020, and said the company will light up an “enormous footprint” on 600 MHz for 5G in the second half of 2019 as soon as compatible handsets hit the market.

    Ray said 600 MHz LTE has already been rolled out over 1 million square miles covering 100 million POPs (points of presence), with 5G-capable radios being used in order to turn on 5G services later this year. He said the launch should be in “stark contrast” to the pockets of 5G being offered by AT&T and Verizon.

    Ray commented that T-Mobile believes in millimeter wave spectrum – which Both AT&T and Verizon are for their respective initial 5G launches in select parts of certain cities — but asserted the software is not mature enough and Verizon launched “way too early.”

    He said that on a standalone basis when T-Mobile lights up 5G on about 30 MHz of 600 MHz spectrum, speeds will increase into the 60-70 Mbps range, up from the average 30-35 Mbps T-Mobile currently delivers on LTE. He noted that peak speeds would move into “the hundreds” of megabits per second.

    https://www.ecnmag.com/news/2019/04/t-mobile-posts-strong-subscriber-gains-prepping-600-mhz-5g-2h-2019

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