Of course, T-Mobile CFO Peter Osvaldik likes to talk about getting rid of the age-old trade-off that consumers have had to make in wireless: getting the best value or the best network.
“That’s really at the heart of everything that we’re doing,” he said at the Credit Suisse communications conference on Wednesday.
That message should especially resonate now as consumers deal with rising prices and rivals like AT&T and Verizon raise fees and prices.
Since it acquired the 2.5 GHz assets from Sprint, T-Mobile has been going gangbusters on 5G, to the point that it now covers 225 million PoPs and is well on its way to reach 260 million by the end of this year. By the end of 2023, it expects to reach a population of 300 million with the “Ultra Capacity” 5G that relies on 2.5 GHz.
Big integration year
In the short term, completing the integration with Sprint is job No. 1. “This is a big, big year for us from an integration perspective,” with network decommissioning. That’s also where “synergies come to play,” Osvaldik said.
It’s also about migrating Sprint customers to the full “Magenta” value proposition and getting all the churn benefits from that. In addition, it’s eyeing growth opportunities, like the smaller markets and rural areas where T-Mobile historically wasn’t a player. By T-Mobile’s calculations, those smaller markets are home to 40% of the U.S. population.
Other growth areas are enterprise/government and high-speed internet. T-Mobile recently pulled an “un-carrier move” in the fixed wireless access (FWA) space when it announced how it’s taking on “Big Internet.”
High praise for network team
“Despite the macro-economic environment and the supply chain challenges, because of how Neville [Ray] and his team planned this out with precision rollout and precision supply chain and lean manufacturing principles and were able to secure long-term contracts and supplies early on, it’s just allowed this machine to continue to roll,” Osvaldik said.
The same lean manufacturing principles are being applied to the decommissioning of Sprint’s network in a controlled way, “and we’re coming into the biggest moment right now, the decommissioning of towers,” he said.
They’ve already done one-third of the 35,000 target sites to be decommissioned and are well on their way to complete the rest of them by the end of this year. The momentum from both the 5G network build and decommissioning is opening up “synergies” from the merger, according to Osvaldik.
As of April, some 37% of Sprint subscribers completed the migration to T-Mobile. That 37% represents Sprint customers that now have the entire “Magenta” experience, which means they’re using the T-Mobile network with a T-Mobile device financing plan and a T-Mobile-like rate plan. With those customers, churn matches that of T-Mobile customers, which is a big improvement given how high the churn rate was at Sprint.
The next couple months will be the big moment for network shutdown, he said, reiterating that it’s being done on a per cell site basis so that it’s very precise. The Sprint CDMA network was turned off at the end of May and the LTE network is next to be turned off; the rest of the towers will be decommissioned the remainder of this year. Then it will be time to follow through on completing the billing conversion.
During T-Mobile's first-quarter earnings call, Osvaldik said they were looking at 2024 to achieve the full $7.5 billion of run rate cost savings from the merger.