Charter
T-Mobile’s growth trajectory increases: 5G FWA, Metronet acquisition and MVNO deals with Charter & Comcast
T-Mobile US is having a banner year. The “uncarrier” has again increased its annual earnings outlook, supported by the acquisition of fiber network operator Metronet and strong mobile customer growth in Q2. After gaining another 1.73 million postpaid customers in the quarter, T-Mobile now expects total postpaid net additions this year of 6.1-6.4 million, up from its previous guidance of 5.5-6.0 million. Postpaid customer growth strengthened compared to the first quarter and included 830,000 new phone customers and 902,000 other devices, while churn was little changed at 0.90 percent. Prepaid growth was more muted, with just 39,000 net additions. T-Mobile counted 132.778 million mobile customers at the end of June, up by around 1.9 million from a year ago. 5G broadband customers rose by 454,000 in the three months to 7.308 million.
In the three months to June, the company posted service revenues up 6% year-on-year to $17.4 billion, and core adjusted EBITDA (after leases) also was up 6% to $8.5 billion. The net profit rose 10 percent to a record $3.2 billion, and adjusted free cash flow increased 4% to $4.6 billion. Cash CAPEX rose 17.5 percent to $2.4 billion in Q2 and is still expected to reach $9.5 billion over the full year. The company also spent $2.5 billion buying back its own shares in Q2.
“T-Mobile crushed our own growth records with the best-ever total postpaid and postpaid phone nets in a Q2 in our history,” said Mike Sievert, CEO of T-Mobile. “T-Mobile is now America’s Best Network. When you combine that with the incredible value that we have always been famous for, it should surprise no one that customers are switching to the Un-carrier at a record pace. These durable advantages enabled us to once again translate customer growth into financial growth, with the industry’s best service revenue growth by a wide mile and record Q2 Adjusted Free Cash Flow.”
The new forecast includes the expected close of the Metronet acquisition on July 24th (today). The Metronet deal – crafted as a joint venture with KKR – will expand T-Mobile’s fiber reach by about 2 million homes across 17 states. It follows the completion of the deal with EQT to buy fiber operator Lumos.
T-Mobile plans to close the UScellular buyout and “become one team” on August 1st. “The combination gives us an expected 50% or more increase in capacity, in the combined footprint, and our site coverage will expand by a third from 9,000 to 12,000 sites,” CEO Mike Sievert said, noting that this will be in addition to 4,000 greenfield sites planned for this year, of which 1,000 have already been “lit up” to date.
T-Mobile stands at a critical juncture in its history, as it prepares to absorb more wireless and fiber assets, build a fiber network access business and enter a new market with the launch of T-Satellite in collaboration with Elon Musk’s Starlink. T-Mobile has already launched T-Mobile Fiber Home Internet and has forecast 100,000 fiber net customer adds in the second half of 2025 following the Lumos and Metronet deals. Sievert also reiterated that T-Mobile would continue to “keep an open mind” about any further fiber M&A.
T-Mobile is now the market’s fifth-largest ISP. Currently, the operator’s goals are to reach 12 million fixed wireless access subscribers by 2028 and to pass 12 million to 15 million households with fiber by the end of 2030, through both the fiber joint ventures and wholesale partnerships.
COO Srini Gopalan said on the earnings call, “We’re positioned to be a scale player in broadband,” claiming that the combined FWA and fiber targets would be equivalent to 40 million to 45 million homes passed as a broadband player, “and that’s before we go make other investments. As we’ve said before, we’re very open to looking at investments in fiber,” he added.
Separately, Charter Communications and Comcast announced Tuesday that they’ve cut a multi-year MVNO agreement with T-Mobile focused on their respective business customers. As the telecom industry growth rate is very low (real growth rate is barely positive), this additional source of revenue will be most welcome by the uncarrier. T-Mobile is expected to generate $850 million in incremental after tax income from its MVNO deals with Charter and Comcast. This revenue is included in the company’s updated guidance, but that guidance excludes the planned acquisition of UScellular assets.
T-Mobile Recognized as Network Leader by Third Parties:
- Ookla awarded T-Mobile as the only carrier in the country to win back-to-back Best Mobile Network awards in the largest, most-comprehensive tests of their kind, each leveraging half a billion real world data points on millions of devices measuring speed and experience
- Recognized by Opensignal for best Overall Experience for the fourth consecutive year and blew away the competition in best download speeds, nearly 200% faster than the nearest competitor, and upload speeds, approximately 65% faster than the nearest competitor
References:
https://www.lightreading.com/fttx/t-mobile-readies-for-the-next-stage-after-a-record-breaking-q2
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U.S. Home Internet prices DECLINE amidst fierce competition between wireless carriers and cablecos
Home internet prices in the U.S. are being driven down by fierce competition between mobile carriers offering Fixed Wireless Access (FWA) and cable internet companies offering legacy Hybrid Fiber Coax connections. The increased competition has driven down the cost of home internet service, a welcome break for consumers when prices are rising for many other essential products. The price of home internet service fell 3.1% in May from a year earlier, while the overall consumer-price index rose 2.4%, according to the Labor Department.
The WSJ reports that major home-internet service providers including Verizon VZ, Comcast/Xfinity and T-Mobile launched a flurry of price-lock guarantees, promising steady rates for as long as five years. CableCos Charter, which is acquiring Cox, unveiled a three-year deal last year.
Cable companies have struggled to retain broadband internet subscribers since mobile carriers began offering more affordable 5G fixed-wireless access (FWA) internet service in 2018. FWA, which relies on over the air transmission to cell towers instead of HFC access, brought competition into markets where cable companies had long enjoyed being the only game in town. Now both types of providers are growing more aggressive to attract—and keep—customers.
“The cable companies went from gaining subscribers and raising rates every year to declining subscribers and giving people price locks,” said John Hodulik, a UBS analyst. “They’re seeing churn rise in their broadband subscriber base. And they’re trying to nip that in the bud.” Fixed wireless can sometimes cost half as much as a cable-provided internet plan. Though network congestion and other connectivity issues can be an issue for some users, the lower price point has been luring cable customers away.
T-Mobile, Verizon and AT&T added a combined 3.7 million FWA customers in 2024. In sharp contrast, Comcast’s Xfinity and Charter’s Spectrum lost more than 900,000 home internet subscribers. That’s depicted in this graph:
“Our pricing wasn’t breaking through in the marketplace,” said Steve Croney, chief operating officer for Comcast’s connectivity and platforms business. He said the company’s five-year price lock, introduced in April, competes well against the telecom companies’ offerings.
Frank Boulben, chief revenue officer at Verizon’s consumer group, said his company has been trying to address the “pain points” customers have with cable companies, such as price hikes. That’s why the telco is emphasizing FWA vs its FiOS fiber to the home based service. Boulben said his company would focus on selling fiber service to customers as it becomes available to them.
Is FWA the ONLY real killer application for 5G? Even though it was NOT one of the envisioned use cases? Ericsson’s recently released Mobility Report says FWA will account for more than 35% of all new fixed broadband connections, with an expected increase to 350 million by the end of 2030. The report states that more than half of all network service providers (wireless telcos) who offer FWA now do so with “speed-based monetization benefits enhanced by 5G.”
About 80% of the global network operators sampled by Ericsson currently offer FWA, with the most rapid area of growth among CSPs (communications service providers) offering 5G-enabled speed-based tariff plans. These opportunities are about the ability to offer a range of subscriber packages with different downlink and uplink data options with 5G FWA. As with fiber deals, “increasing monetization opportunities for CSPs compared to earlier generations of FWA.” 51% of operators with FWA offerings now include these speed-based options, which is up from 40% on the same period in June 2024 and represents a 27.5% increase. The June 2024 number had grown 50% on the June 2023 equivalent.
Source: Ericsson Mobility Report
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“We are at an inflection point, where 5G and the ecosystem are set to unleash a wave of innovation,” said Erik Ekudden, Ericsson Senior Vice President and Chief Technology Officer. “The recent advancements in 5G standalone (SA) networks, coupled with the progress in 5G-enabled devices, have led to an ecosystem poised to unlock transformative opportunities for connected creativity. Service providers have recognized this potential of 5G and are beginning to monetize it through innovative service offerings that extend beyond merely selling data plans. To fully realize the potential of 5G, it is essential to continue deploying 5G SA and to further build out mid-band sites. 5G SA capabilities serve as a catalyst for driving new business growth opportunities.”
Fixed-wireless doesn’t work everywhere. Besides congestion weak signals can make coverage spotty. If your cell phone doesn’t pick up 5G coverage smoothly, fixed-wireless from the same company probably won’t work either.
Verizon, AT&T and T-Mobile are winning converts to FWA at a faster pace than many anticipated, said Jonathan Chaplin, a managing partner at equity research firm New Street Research. Charter agreed to buy Cox last month for $21.9 billion in equity and assume $12 billion of its outstanding debt, in part to acquire scale to better compete with fixed wireless access. However, fixed-wireless growth can’t last indefinitely. The wireless networks on which they run will eventually hit capacity, limiting how many subscribers they can add. Chaplin estimates the networks can support around 19 million total fixed-wireless subscribers—which he predicts they will reach in about five years, accounting for planned network expansions that the companies have announced. When that limit is reached, cable companies may regain the upper hand and keep growing their fiber customer base, Chaplin said.
The big three wireless carriers (AT&T, Verizon and T-Mobile) have all been investing in fiber-based wired networks via build-outs and acquisitions. AT&T is bringing new customers in via FWA, with the long-term goal to convert them to fiber-based service, said Erin Scarborough, who runs that company’s broadband and connectivity initiatives.
References:
https://www.telecoms.com/5g-6g/ericsson-says-fwa-is-boosting-telco-monetization-opportunities
https://www.ericsson.com/en/reports-and-papers/mobility-report
https://www.consumeraffairs.com/news/cable-vs-wireless-war-is-driving-prices-down-062525.html
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