T-Mobile US earnings, revenue, and subscriber adds top estimates + Analysis of U.S. 5G leadership
T-Mobile US 3rd quarter 2020 results, reported today, were highlighted by crossing the 100 million wireless “customer” milestone (more clarity below) after reporting record-high postpaid net subscriber additions that were nearly as much as the rest of the U.S. telco industry combined. Controlled by Deutsche Telekom, T-Mobile reported third-quarter earnings of $1 per share, down a penny from $1.01 a share a year earlier. Including the merger with Sprint, pro-forma revenue rose 74% to $19.3 billion, the company said. The Sprint merger closed April 1st.
Since closing its merger with Sprint seven months ago, T-Mobile has been driving hard on integration including unifying employees and customers under one brand, rapidly improving the Sprint customer experience, and quickly rolling out 2.5 GHz spectrum to build the world’s best 5G network. Merger synergies are being realized faster than expected and the company expects to deliver more than $1.2 billion of synergies in 2020.
“Last quarter T-Mobile overtook AT&T to become #2 in U.S. wireless and today we announced our highest ever postpaid net adds. Now, with over 100 million wireless customers and America’s largest 5G network, there is no doubt that we’re the growth leader in wireless,” said Mike Sievert, T–Mobile CEO. “Customers are choosing T-Mobile in record numbers because we are the only ones that can deliver this combination of value and experience with a true 5G network that is available to customers in every single state! We’re consistently and profitably outpacing the competition – and we’re just getting started!”
T-Mo’s strong financial results included:
• Total service revenues increased year-over-year to $14.1 billion in Q3 2020, driven by the Sprint merger and continued customer growth.
• Total revenues increased year-over-year to $19.3 billion in Q3 2020, driven by the Sprint merger and continued customer growth.
• Net income increased year-over-year to $1.3 billion in Q3 2020, as revenue growth outpaced expense increases. Merger-related costs were $288 million pre-tax and $208 million, net of tax, in Q3 2020.
• EPS was relatively flat year-over-year at $1.00 in Q3 2020, as growth in net income was offset by a higher number of outstanding shares as a result of the Sprint merger.
• Adjusted EBITDA increased year-over-year to $7.1 billion in Q3 2020 primarily due to the Sprint merger and continued customer growth.
• Net cash provided by operating activities increased year-over-year to $2.8 billion in Q3 2020.
• Cash purchases of property and equipment including capitalized interest increased year-over-year to $3.2 billion in Q3 2020, as the company accelerated the build-out of its nationwide 5G network and ramped network integration activities related to the Sprint merger.
• Free Cash Flow decreased year-over-year to $352 million in Q3 2020.
Delivering Merger Synergies Faster Than Expected:
T-Mobile says it remains highly confident in its ability to deliver $43 billion of synergies and achieve the $6 billion of annualized savings from the Sprint merger from a combination of cost avoidance and expense reductions. In fact, the company is delivering faster than expected and targeting more than $1.2 billion of synergies in 2020. The company said in its earnings report that they:
• Expect more than $600 million of network synergies primarily from avoided new site builds and early site decommissioning.
• Expect approximately $500 million of sales, service and marketing synergies primarily from accelerated rationalization of retail stores, marketing consolidation and organizational redesign.
• Expect approximately $100 million of back office synergies primarily from accelerated organizational redesign.
The network team is quickly adding capacity to the T-Mobile network to facilitate more Sprint customer traffic. 15 percent of Sprint postpaid customer traffic has already been moved over to the T-Mobile network and customer network migrations have begun, as the company enabled cross-provisioning last month, thus separating the network migration from the billing system migration and enabling gross additions and upgrades from Sprint customers to be activated on the T-Mobile network.
The company also added 1.29 million devices other than phones to its network in the third quarter as school districts built out wireless hot spots to students during the coronavirus pandemic. The increased new wireless connections pushed T-Mobile’s total customer base to 100.4 million. T-Mo counts any wireless device with its own mobile identifier as a single customer.
Management also said that 15% of former Sprint traffic has been shifted over to the T-Mobile network. T-Mobile said its 5G network currently covers 270 million Americans. But that’s mostly on lower-frequency spectrum bands that meet the technical requirements of 5G but don’t deliver the full speed and capacity benefits the new technology promises. Sievert said Thursday that T-Mobile expects to have nationwide 5G coverage on the mid-band 2.5 GHz spectrum by the end of next year.
Extending 5G Network Leadership:
T-Mobile says they’re on a mission to build America’s best 5G network, offering all of the Un-carrier customers unrivalled coverage and capacity in every place that they live, work and play. The company has already been the first to launch a nationwide 5G network, first to launch standalone 5G (without a 5G core network implementation standard), and first to have 5G coverage in all 50 states and Puerto Rico.
- America’s largest 5G network covers 270 million people in 8,300 cities and towns across 1.4 million square miles. That’s more square miles of 5G coverage than Verizon and AT&T combined – 3.5x more than Verizon and 2x more than AT&T.
- T-Mobile continued to leverage its network to expand into new complementary 5G business opportunities like broadband and video to grow revenue per household. ◦ Expanded its Home Internet Pilot service to parts of 450 cities and towns, laying the groundwork for a nationwide 5G commercial launch of fixed wireless broadband.
- Launched its latest Un-carrier move with the introduction of next-gen streaming services TVision LIVE, VIBE and CHANNELS, and the TVision HUB, a new streaming device.
Image Credit: GoranJakus/Dreamstime …………………………………………………………………………………………………………………………………………………………………………………..
T-Mo marketing boss Matt Staneff said remote classes triggered a surge in demand for broadband connections, though the company only counted what it considered long-term accounts among the customer additions. School districts in California and New York were among the first to provide the cellular hot spots to students without enough internet bandwidth at home. “We have the capacity in the network to handle all this traffic,” Mr. Staneff said. “The education system was caught off guard and will never want to be that way again.”
Regarding the wireless telco’s 5G leadership in the U.S., analyst Craig Moffett wrote:
T-Mobile, can benefit from 5G simply by taking market share (from AT&T and Sprint). T-Mobile’s 5G network will be the first to offer significant mid-band coverage, and therefore to deliver meaningfully higher-than-4G speeds, and that advantage is likely to last for years into the future. That advantage will matter most in precisely the segment in which T-Mobile under-indexes most: business wireless.
That T-Mobile is poised to be first in 5G is an extraordinary turn of events. When AT&T made its ill-fated bid to buy TMobile in 2011, T-Mobile was a distant fourth place network. Their 3G GSM network was fast, but coverage was poor, and they compensated with ultra-low prices. T-Mobile made huge strides towards closing that gap in the 4G era, but their position in business wireless still lags. Their prices have remained the industry’s lowest, and their urban speeds are often now the industry’s fastest, but their coverage map is just now catching up. In 5G, T-Mobile won’t just catch Verizon on network quality; we expect they will pass them by. Worst-to-first stories are rare. You don’t have to believe that 5G is “the next big thing” to believe that T-Mobile itself is, well, “the next big thing.”
When T-Mobile’s 2.5 GHz spectrum is more or less fully deployed, they will have 2.5 GHz-based 5G available to 100M pops (potential 5G subscribers- NOT traditional Point of Presence) by the end of 2020. By the end of 2021, T-Mobile’s 5G service will be genuinely differentiated.
Spectrum licenses acquired from Sprint have helped T-Mobile engineers to expand their 5G footprint. The company said its existing 5G towers cover about 270 million Americans.
5 thoughts on “T-Mobile US earnings, revenue, and subscriber adds top estimates + Analysis of U.S. 5G leadership”
Good summary. Didn’t realize that T-Mobile had provided so many hot spots to school districts/students.
Thanks Ken. Lots of items in T-Mo’s 3Q 2020 earnings report were a positive surprise. They’ve passed AT&T as being #2 wireless provider in the U.S.
Separately, T-Mo never said if they kept Sprint’s wireline assets, especially their fiber optic backbone used by telcos and MSOs.
11 Nov 2020 update from Light Reading:
“We’re deploying 5G at a variety of spectrums – so many customers will have a faster experience on a 5G network while others may still see the best performance on our 4G LTE deployments,” explained Brian Caraway, general manager of C Spire’s wireless division, in a release.
Those comments acknowledge a painful truth among network operators: Most initial 5G offerings in the US on lowband spectrum aren’t much faster than existing 4G networks. “5G is a new technology that will improve with time, but regardless of where you live, C Spire is dedicated to providing the best network experience for the most customers possible,” Caraway said.
C Spire said its 5G efforts stem from $200 million spent on recent 4G and 5G network enhancements that include the deployment of new 2.5GHz spectrum as well as the addition of new technologies like carrier aggregation and 256 QAM.
C Spire also plans to deploy 5G on its 28GHz millimeter wave (mmWave) spectrum holdings at some point in the future. This highband spectrum can support blazing-fast speeds, but suffers from relatively short transmission ranges.
C Spire said its initial 5G rollout will start in select Mississippi markets this year and will expand to other, unspecified markets next year.
“As a privately-held company, we do not publicly disclose more detailed information about our plans for providing 5G until the service is available to customers,” the company wrote in response to questions from Light Reading.
C Spire’s overall rollout plans largely dovetail with similar efforts by its larger rivals. For example, C Spire said it will likely use Dynamic Spectrum Sharing (DSS) technology in the future “as needed.” Verizon recently switched DSS on nationwide, while AT&T has been testing it in some markets. T-Mobile, meantime, has said it will avoid DSS as it deploys 5G on its 600MHz and 2.5GHz holdings.
Like AT&T and Verizon, C Spire said it is using the non-standalone (NSA) version of 5G for its initial launches and will be testing and potentially launching the standalone (SA) version of 5G next year. T-Mobile, for its part, switched on SA earlier this year.
And like AT&T and Verizon, C Spire said it is “interested” in open RAN technology – which promises to separate 5G hardware and software, potentially lowering costs – “but it is not a technology we are currently deploying in our network.”
As for offering fixed wireless Internet services over its new 5G network – as T-Mobile and others plan to do – C Spire said its initial 5G efforts are targeted at mobility services, but that “does not limit or prohibit our use of other 5G services like fixed wireless 5G.”
Finally, it’s worth noting that C Spire now officially joins the ranks of 5G operators. The carrier claimed to be the first in the US with 5G in 2018, though it did so with fixed wireless equipment using proprietary technologies based on the 802.11 Wi-Fi standard.
C Spire provides wireless service to roughly 1 million customers across Mississippi, Alabama and elsewhere. The operator sits behind U.S. Cellular – which counts around 5 million customers – as one of the nation’s biggest regional wireless network operators. U.S. Cellular launched its initial 5G services last year.
T-Mobile previously disclosed it will shutter Sprint’s 3G CDMA network on January 1, 2022. That has caused some controversy following Dish Network’s request that T-Mobile maintain the network through a portion of next year – a request that T-Mobile has denied. An unspecified portion of Dish’s Boost Mobile customers still rely on Sprint’s CDMA network.
The overall Sprint network shutdown efforts are part of T-Mobile’s plan to assimilate Sprint following its blockbuster $26 billion purchase of the operator in a transaction that closed last year. T-Mobile is in the process of building a 5G network using Sprint’s spectrum and tower assets and is working to shift Sprint’s legacy customers off the Sprint network as a result.
Already, T-Mobile said it has managed to move about 33% of its Sprint customers onto its T-Mobile network.
“Moving customers who are on old networks onto modern, advanced high-speed networks means they will need to have phones and devices that can tap into the latest technologies and don’t rely on older ones. We’ll ensure that we support our customers and partners through the transition. We began sending notifications late last year, and everyone who needs to act will be given advanced notice and hear directly from T-Mobile,” the operator wrote on its website.
Interestingly, T-Mobile has no plans to turn off its own 2G network. “We’ve also shared that we plan to retire T-Mobile’s older GSM 2G and UMTS 3G networks as well, but no date has been set. We will update this page with any additional information in the future,” the operator wrote.
Of course, T-Mobile isn’t the only wireless provider working to shutter older networks in order to devote more resources to newer and more capable networking technologies. For example, AT&T plans to shut down its 3G network early next year, while Verizon now plans to shutter its 3G network at the beginning of 2023.
T-Mobile notches 4.95 Gbps on 5G standalone network
T-Mobile is claiming a new first for standalone 5G. The operator used a combo of 2.5 GHz and mmWave spectrum to reach nearly 5 Gbps on its commercial SA 5G network.
T-Mobile said it’s the world’s first New Radio Dual Connectivity (NR DC) data call on a commercial standalone 5G network, which resulted in download speeds of 4.95 Gbps. The data session took place in the September-October timeframe on a single site in Southern California, utilizing 100 MHz of 2.5 GHz spectrum and 800 MHz of mmWave, according to a T-Mobile spokesperson. Ericsson provided the network gear, and the call was conducted on a test device, the spokesperson said.
The mmWave portion used spectrum in the 39 GHz band. T-Mobile has long touted a layer cake strategy for 5G but put far less emphasis on mmWave than competitors like Verizon in early days – instead focusing on low-band 600 MHz for coverage and now 2.5 GHz since it later amassed a trove of mid-band spectrum from Sprint that provides a mix of coverage and capacity.
At the FCC’s third millimeter wave auction T-Mobile spent around $931 million to buy licenses in the 47 GHz and 39 GHz bands. Limited deployments, for example to boost capacity before big events like the Super Bowl LV in Tampa earlier this year or in the major market of Las Vegas, have used 39 GHz. Other locations like New York and Los Angeles have used 28 GHz.
While T-Mobile holds the bragging rights of first operator to deploy a nationwide 5G SA network at scale (and still the only U.S. carrier to do so) it hasn’t made much noise about impacts since the rollout.
RELATED: How’s 5G standalone doing in the U.S.?
During third quarter earnings results this week, T-Mobile CEO Mike Sievert made a short mention of 5G SA efforts and called out enterprise interest in advanced capabilities.
“We’ve already seen an increase in our win share for traditional postpaid services and we’re well positioned to capture advanced 5G services with the most widely built out 5G network and the only stand-alone 5G core, which is exactly why many large enterprises are in active trials with T-Mobile for advanced capabilities like mobile edge compute and private networks,” Sievert said. “And let me remind you that these advanced 5G services represent upside to our plan.”
The recent test focused on throughput although advanced capabilities like network slicing or ultra-low latency tend to be a focus of standalone 5G benefits, rather than straight speed gains. For 5G speeds, like in T-Mobile’s recent data call, spectrum resources and technologies like carrier aggregation or dual connectivity seem to get more attention. That was illustrated in recent Opensignal testing that showed T-Mobile’s 5G service using additional 2.5 GHz spectrum boosted user speeds significantly – but standalone 5G wasn’t the main driver.
T-Mobile until this point has largely focused on 600 MHz for users connected to the SA 5G network, who actually saw slower speeds than those on non-standalone (NSA) 5G which also incorporate 4G LTE mid-band frequencies to support 5G, according to Opensignal.
T-Mobile and U.S. carriers AT&T and Verizon all started initial 5G deployments in NSA mode, which helps get 5G up and running faster by having the option to still lean on 4G.
“Now, we can see that the 2.5 GHz band is predominantly used with NSA and so SA is not the key reason for the improvement in 5G speeds (although it likely does continue to have other benefits),” wrote Opensignal in an October 27 analysis.
Still, 5G experience improved as latencies dropped with help from the SA core and network reach expanded with the rollout, according to an earlier report.
“T-Mobile appears to have initially targeted its use of SA 5G to boost the reach of its 5G network, and therefore used its 600 MHz band for SA 5G — a low band that generally propagates further compared to higher bands like its 2.5 GHz band, but doesn’t allow for the same speeds,” Opensignal concluded in a February report on the operator’s 5G SA performance.
However, as T-Mobile’s most recent test shows, a mix of 2.5 GHz and mmWave with SA 5G dual connectivity can deliver ultra-fast results.
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