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The FCC approved T-Mobile’s acquisition of Mint Mobile, which uses T-Mobile’s network under an MVNO arrangement
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T-Mobile outperformed its rivals AT&T and Verizon, adding 532,000 phone customers in Q1
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75% of T-Mobile’s customers have 5G devices
What a week for T-Mobile. On the heels of its plan to acquire Mid-Atlantic fiber-to-the-home provider Lumos, the company announced 532,000 net postpaid phone subscribers in the first quarter of 2024 and won FCC approval for its acquisition of Mint Mobile and Ultra Mobile.
During its Q1 earnings call Thursday, CEO Mike Sievert boasted about T-Mobile’s Q1 performance, where it again delivered the highest free cash flow margins in the industry.
“Our model is working. It’s consistent and our confidence in it only builds with each passing quarter of success,” he said.
Sievert declined to say whether T-Mobile is interested in acquiring more fiber providers in other parts of the country. Their strategy is to find ways that are “very capital light” to put the T-Mobile brand in this space, he said.
“We’re not interested in any wholesale changes that basically change who we are,” he said – while keeping all doors open, saying they’re “open minded” and like the model they’ve struck with EQT and Lumos.
Fiber can relieve some pressure on the 5G network and extend the total addressable market, he noted. In areas where Lumos currently operates, T-Mobile has a long list of customers who are on the wait list for fixed wireless access (FWA).
In Q1, T-Mobile added 405,000 high-speed internet customers, passing the 5 million mark for FWA subscribers.
T-Mobile likes to talk about outperforming its peers. Earlier this week, AT&T said it acquired 349,000 postpaid phone net adds in the first quarter 2024. Verizon reported postpaid phone net losses of 68,000 for Q1.
Let's talk numbers
T-Mobile’s total service revenues of $16.1 billion in Q1 increased 4% year-over-year while postpaid service revenues of $12.6 billion increased 6% year-over-year. Net income was $2.4 billion, a 22% increase year-over-year.
Postpaid phone churn was 0.86%. Prepaid churn was 2.75%, a slight improvement over the year-ago quarter. Prepaid net customer losses were 48,000.
T-Mobile updated 2024 guidance, with postpaid net customer additions expected to be between 5.2 million and 5.6 million, an increase over the prior guidance of 5.0 million to 5.5 million. It continues to expect cap ex to be between $8.6 billion and $9.4 billion.
About 75% of postpaid T-Mobile phone customers are on a 5G device and nearly 95% of its 5G network traffic is on mid-band spectrum.
Sizing up the Mint deal
T-Mobile announced plans last year to acquire Mint Mobile – the T-Mobile MVNO made famous by part-owner Ryan Reynolds – for up to $1.35 billion.
Sievert called the folks at Mint Mobile “rock stars” in the direct-to-consumer and value segments. “We’ll work to further fuel their success,” he said. The transaction is now expected to close on May 1.
Consumer groups had wanted the FCC to impose a phone unlocking condition on the transaction. Earlier this week, T-Mobile filed a voluntary handset unlocking commitment, promising that it will automatically unlock existing Mint Mobile and Ultra Mobile devices that are capable of automatic unlocking if they have been activated on the T-Mobile network for at least 60 days and are not currently on a device financing plan.
But that commitment isn’t nearly as broad as what the consumer coalition had asked for, according to Michael Calabrese, director of the Wireless Future Project at New America’s Open Technology Institute.
It’s a positive step, but doesn't go far enough, according to Calabrese.
“Since T-Mobile is not agreeing to unlock phones that are not yet fully paid for, their concession may be mostly cosmetic and not apply to very many customers,” he told Fierce. “It certainly would be nowhere near as pro-consumer as Verizon’s unlocking policy.”
If it’s in the public interest to unlock new devices on T-Mobile’s network, then that’s the case for all their customers, not only those customers acquired from Mint Mobile, he added. “A uniform policy for all T-Mobile customers would also bring the U.S. closer to the sort of industrywide unlocking policy that is already required by the regulators in Canada and the United Kingdom,” he said.