T-Mobile has been touting the same company line for months, and it’s not deviating from that. During an investor event Tuesday, CEO Mike Sievert reiterated the company’s plan to succeed as the carrier offering the best value and best 5G network, and “we’ve caught up with the other guys on LTE,” where most customers are today.
Even with Sprint coming into the mix – and Sprint had some of the worst churn in the industry – T-Mobile reported postpaid phone churn of 0.98% in the first quarter of 2021, compared with 1.03% in the fourth quarter of 2020.
About half of Sprint’s traffic is now on T-Mobile’s network. “We’re the only ones in Q1 that had improvements in churn, and that’s for a reason,” he said, according to a Seeking Alpha transcript. “We’re dragging around this higher churning Sprint business, but we have a formula that we’re confident in as to how to satisfy them and retain them… Right now, the Magenta T-Mobile brand is the lowest churning brand in all of wireless. And there is a reason for that. They are starting to understand that they get to keep this value, but now they have the best network.”
The credit metrics between the Sprint customers and T-Mobile customers are not as different as one would think, he said. There are some differences, and “you have a blend.”
Some Sprint customers are loyal to the Sprint brand and “great payers, long-term postpaid people who got involved in wireless years ago. Some of them a little higher ARPU, meaning they are more involved with our products.”
Others have more of a mixed profile. Blended together, “it looks good. I mean it’s a good customer base of people that really like their – what they are hearing as they get introduced to the new T-Mobile.”
Sievert wasn’t asked about the ongoing fight between T-Mobile and Dish Network over the planned shutdown of its CDMA network in January 2022. Dish claims it’s going to affect millions of Boost Mobile prepaid customers who don’t have compatible handsets and they’re going to be left in the lurch if more time isn’t provided to prepare for that network transition. T-Mobile argues that it gave Dish plenty of time to plan for the shutdown and its message to Dish has been: go do your job.
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Sievert spent a considerable amount of time explaining why T-Mobile is in such a great position to capture customers in the fixed wireless access (FWA) market.
Areas where wireless mobile operators and cable operators converge are where cable companies like Comcast and Charter Communications, through MVNO agreements with Verizon, are going after mobile subscribers, and in the internet arena, where mobile operators like T-Mobile are going after cable companies on their home turf.
Sievert admitted that he didn’t adequately forecast cable’s success at getting into mobile. Before they entered, “we kind of side-eyed them and said, ‘yes, they are an MVNO, they will never be able to really, but they got after it and very effectively,” he said. “They have been more successful than we thought in a consistent way that now has been in the run-rate for years. Let’s face it. It’s not a new phenomenon anymore. And their gross share isn’t really that material. Their net add share is reasonably material… The truth is, without owner economics, they can’t compete with us sustainably for our best value proposition.”
T-Mobile commercially launched its 5G Home Internet offering to more than 30 million households earlier this year. It has stated plans to serve 7 million to 8 million subscribers with fixed wireless by 2025.
Interestingly, Sievert reiterated T-Mobile’s claim that is has the leading spectrum position, “by far.” It’s similar to a claim Verizon CEO Hans Vestberg made earlier in the day at the same investor conference. Although it's coming up from behind on mid-band spectrum for 5G, Vestberg said Verizon has the “best position of spectrum,” including with C-band and millimeter wave.
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T-Mobile often cites its three layer-cake spectrum strategy and war chest of 2.5 GHz spectrum specifically. “Just this year, we will move from our current 60 to 80 megahertz deployed in mid-band 5G to 100 megahertz,” Sievert said. “That’s what AT&T and Verizon have available by the end of the year on C-band together, the sum total of them, because they took the 60 and 40. We have got that amount already on a superior piece of spectrum, 2.5 GHz, that propagates farther. And so that’s the theme you can expect over the next couple of years.”
When AT&T and Verizon get hold of their second tranche of C-band spectrum at the end of 2023, “we will already have 300 million people deployed on mid-band with 200 megahertz against 300 million people… That’s going to be double what they can offer in terms of a capacity depth and breadth. It really speaks to not only just the spectrum position, but the rate and pace of our deployment and our ability to get it all scaled over to 5G.”
Emerging from Covid
Asked about record-industry phone adds in the first quarter of 2021 and how that might play out the rest of the year, Sievert said he couldn’t speak broadly for the industry, but for T-Mobile, the first quarter and beyond is “very much affected by stimulus.” Government stimulus checks related to the pandemic have been credited for much of the spending.
The other dynamic is the re-opening of many businesses and institutions in light of the vaccinations and easing of Covid-19. T-Mobile is one of the best positioned companies around with the re-opening because, once again, it gains when there’s an active switching environment, he said. It’s been leading on postpaid phone and service revenues and more during a “muted switching environment,” when there wasn’t a lot of churn overall over the past year or so.
“But going forward, we expect that muted switching environment to abate, and we’re already starting to see that,” he said. As traffic re-emerges and things get back to normal and people have some cash in their pocket, “it’s a great time to be at T-Mobile.”