T-Mobile 5G hype vs Craig Moffett: “We’re not in the 5G era yet”

T-Mobile US reported total revenues of $19.8 billion and service revenues of $14.2 billion in the last quarter.  T-Mobile’s gain of 1.2M post-paid net additions was solidly ahead of Wall Street consensus of 1.0M, and was similar to last year’s pro forma gain of 1.3M.  The company  added 773K post-paid phone subscribers, dramatically better than last year’s pro-forma gain of just 104K, and blowing away consensus of 475K.

T-Mobile’s 773,000 postpaid phone customer additions during the first quarter handily beat AT&T’s 536,000 and Verizon’s loss of 178,000 customers, according to Walter Piecyk, a financial analyst at LightShed Partners.   They continue to take market share. Their annual post-paid subscriber growth rate of 3.9% marks a sharp acceleration from the 2.7% growth rate reported last quarter.

T-Mobile has already migrated 20% of Sprint’s customers, and 50% of Sprint’s traffic (a doubling from
last quarter), to the much more robust T-Mobile network. The vast majority of Sprint customers
are already enjoying service benefits from access (even with legacy handsets) to T-Mobile’s
lower frequency spectrum bands.

T-Mobile: America’s Largest, Fastest and Most Reliable 5G Network Extends its Lead

  • Extended Range 5G covers 295 million people across 1.6 million square miles, 4x more than Verizon and 2x more than AT&T
  • Ultra Capacity 5G covers 140 million people and on track to cover 200 million people nationwide by the end of 2021
  • Majority of independent third-party network benchmarking reports show T-Mobile as the clear leader in 5G speed and availability
  • Network perception catching up to reality with a nearly 120 percent increase in consumers who view T-Mobile as “The 5G Company” since Q3 2019

Image Credit: T-Mobile

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On the company’s earnings call, T-Mobile US CEO Mike Sievert said that “discerning customers” are choosing T-Mobile’s new Magenta Max pricing plan, which offers few limits in the amount of 5G data that customers can consume. T-Mobile’s new Magenta Max customers consume 40% more data than its other 5G customers, and fully 70% more data than T-Mobile’s average 4G LTE customers.

“The take rate has just been amazing,” T-Mobile CFO Peter Osvaldik said of Magenta Max. “There are premium customers that are attracted to this premium network.”

“We’ve never been able to outrun the insatiable demand that customers have,” Sievert said of Internet service providers in general. “So when you provide the industry’s only true, unlimited plan, they do what they do, they use it up.”

According to Sievert, that indicates that T-Mobile’s 5G network will be a big winner. “We’re really starting to pull away from the pack.  T-Mobile is positioned to maintain our 5G leadership for the duration of the 5G era.”

In a great example of braggadocio, Sievert said:

“We have again demonstrated that our unique winning formula and balanced approach enables us to grow share while delivering strong financial results. In our increasingly connected world, we recognize our role as stewards of this profitable company and industry, while continuing to use our Un-carrier DNA to bring change to wireless and broadband alike, to disrupt the status quo and ultimately benefit customers. And this quarter was no exception.”

T-Mobile said it now covers fully 140 million people with its 2.5GHz network, which it calls “ultra capacity.” By the end of this year, the company said that number will increase to 200 million people. Meantime, speeds available on that network will rise from an average of 300 Mbit/s today to up to 400 Mbit/s by the end of this year, the operator said.  5G speeds will continue to rise after that, according to T-Mobile’s network chief Neville Ray. “2022 is going to be even better,” he said.

Analyst Craig Moffett (who participated in the earnings call) put somewhat of a damper on all that 5G hype by stating: “But we’re not in the 5G era yet. We’re not even a year into the first generation of 5G iPhones. Less than 10% of Americans have 5G-enabled phones, and half of those probably only got a new phone because they needed a replacement. 5G isn’t really driving handset selection, or service provider selection, yet.”

“That T-Mobile continues to take share even in the twilight of the LTE era is reassuring.  In a world of roughly comparable networks, they are competing on the basis of price alone… and they are taking share rapidly. In 5G, they will compete not only on the basis of the industry’s lowest prices, but also the industry’s best network. As we’ve said before, T-Mobile’s ‘worst to first’ story is a generational one. Networks don’t achieve advantage overnight, and they don’t lose it overnight, either. Ten and twenty-year cycles in telecom aren’t unusual.”

“T-Mobile’s brand, and its network, have been ascendant for years. But they have, up to now, achieved only parity. Their path to network superiority is potentially even longer, and, we suspect, even brighter.”

T-Mobile continues to increase market share even in the twilight of the LTE era is reassuring. In a
world of roughly comparable networks, they are competing on the basis of price alone… and they
are taking share rapidly.  In 5G, they will compete not only on the basis of the industry’s lowest prices, but also the industry’s best network.

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References:

https://www.t-mobile.com/news/business/t-mobile-reports-strong-first-quarter-2021-results

https://investor.t-mobile.com/news-and-events/events-and-presentations/event-details/2021/T-Mobile-1Q-2021-Earnings-Call/default.aspx

https://seekingalpha.com/article/4424340-t-mobile-us-inc-tmus-ceo-mike-sievert-on-q1-2021-results-earnings-call-transcript

https://www.lightreading.com/5g/does-5g-make-difference-t-mobile-says-yes/d/d-id/769256?

 

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