T-Mobile is “very, very happy” about how fast consumers are gravitating to its internet services using fixed wireless access (FWA), according to T-Mobile CFO Peter Osvaldik.
“Our churn has gone down sequentially every quarter, so consumers are telling you there’s a space for this product,” he said a Bank of America investor event on Tuesday.
That’s not unusual, he suggested, noting that it’s similar in the postpaid phone business where churn is high at the beginning and then tapers off. He didn’t say how much churn has come down for FWA.
For each of the past several quarters, T-Mobile has added more than 500,000 high-speed internet customers, ranging from 560,000 in Q2 of 2022 to 523,000 in Q1 2023. There’s no reason to believe that’s going to change anytime soon.
At the end of the first quarter of 2023, T-Mobile had 3.2 million FWA customers; its target is to serve 7 million to 8 million FWA customers by the end of 2025.
One of the main forms of competition in this category is cable, and Osvaldik said cable companies love to advertise “speeds that aren’t realized.” Based on third-party reports, actual cable speeds in the U.S. are about 200 megabits per second, which is roughly what T-Mobile offers and that’s been increasing every quarter, he said.
About 2.5 million more households will have availability for FWA when the FCC’s auction authority is restored and T-Mobile is able to flip the switch for the 2.5 GHz “Swiss cheese” licenses it won in the 2022 2.5 GHz auction. T-Mobile has been waiting for those licenses to be allocated and is mostly at the mercy of Congress.
That VA contract
T-Mobile’s FWA was one factor in winning the contract with the U.S. Department of Veterans Affairs (VA), which it announced in April. During his appearance at the BoA event earlier in the day, AT&T CFO Pascal Desroches described it as a government contract that AT&T “decided to walk away from,” suggesting there was something uneconomical about it.
Osvaldik said he couldn’t speak to how AT&T models its economics, but “it’s maybe easier to walk away when you actually don’t win the business and you’re forced to walk away.”
He also said the VA went through an extensive RFP process that looked at a number of factors, and the most important was the network, which includes things like indoor coverage and other connected solutions. “T-Mobile came out on top,” he said. “The incumbent came in third.”
The VA contract amounts to about 50,000 government/enterprise net adds for T-Mobile that will come over the course of several quarters, with about 20,000 affecting the Q2 numbers.
“It’s not just about phone. It’s on the back of the quality of what this network can provide that we’re able to win in spaces like enterprise and government that historically have been single-digit share for us,” he said.
Osvaldik reiterated what T-Mobile CEO Mike Sievert said a couple weeks ago about the Q2 2023 postpaid phone net adds being at or above last year’s Q2.
The non-talks with Amazon
Similar to AT&T’s Desroches earlier in the day, Osvaldik squashed any ideas around talks with Amazon about including wireless service with Prime through an MVNO deal.
Amazon typically doesn’t comment on anything, so its comment denying any kind of deal says something, he suggested, in addition to all three carriers denying such talks.
He declined to comment about what Dish Network might do with Amazon but added that T-Mobile’s MVNO arrangement with Dish doesn’t allow for resale of its network to a different brand like that.