T-Mobile gains cred in smaller markets as ‘the 5G company’

T-Mobile President and CEO Mike Sievert said his company is “really focused” on rural areas – not because that’s where it promised to build out 5G – but because “it’s the size of the prize.”

Big wireless carriers tend to be pretty low-key in smaller and more rural areas because the economics don’t pencil out – they represent large geographic areas to cover and fewer people to pay for service. But T-Mobile made a lot of promises to get its merger with Sprint approved, and one of them was to cover rural areas with 5G (pdf).

Already, T-Mobile is seeing the most rapid movements in its brand reputation in smaller markets and rural areas these days compared with more populated areas, Sievert said during a Goldman Sachs investor conference Wednesday.

RELATED: T-Mobile in ‘early innings’ of rural distribution game

People who identify T-Mobile as “the 5G company” is growing. Particularly in small markets and rural areas, “we are up 52% from just a year ago in terms of the reputation of people saying, ‘Hey, that company is the 5G company.’ And that’s just an example of how our brand is evolving,” he said.

Its distribution with Walmart is one important change in rural areas, as well as the “hometown experts” that it’s hiring. Strategic partnerships are another part of the mix.

Sievert also made a point to bring up T-Mobile’s 5G mid-band deployment compared to rivals AT&T and Verizon. For mid-band, AT&T and Verizon are mostly banking on C-band spectrum that won’t be available until late this year, and that’s not going to be coming anytime soon to the more rural areas.

“This first tranche of C-band, there’s the same amount of C-band coming for AT&T plus Verizon as T-Mobile will have already deployed by the end of this year,” in the 2.5 GHz band, he said.

“We will have 300 million people covered by the end of 2023 with Ultra Capacity 5G, and that’s 400 megabits per second, transformational speeds and capacities. They’re not even going there. There’s a reason. It’s really hard to do. Do you know that getting from 200 million people to 300 million people is five times the land mass you’ve got to cover? And that’s in our funded plan and the capital plans we’ve already showed you. We’re going there, and we’re going there right now,” he said.

Update on cyber attack

Sievert addressed the cyber attacked that struck T-Mobile last month, affecting more than 50 million people. “When something like this happens, we take it very, very seriously,” he said.

T-Mobile brought in security experts from Mandiant and consulting firm KPMG to help. “We’re going to make sure that we learn from this,” he said.

As it relates to the business: “We’re finishing the quarter strong,” he added, reiterating what CFO Peter Osvaldik said last week about momentum building up as they head into the fourth quarter.

RELATED: T-Mobile slinks back to normal levels after security breach

“I think customers realize that these attacks are an ongoing series of events from companies in every industry and that their data is already out there. They of course are concerned, but on the other hand… the evidence appears that most customers, I think unfortunately, because of how common these attacks are, are willing to look forward, and we’re seeing that in our results.”

Those handset promos

T-Mobile’s guidance for this year includes adding between 5 million and 5.3 million postpaid customers, of which Goldman Sachs estimates 3 million will be postpaid phones. That would once again lead the industry despite a low switching environment, which historically has worked to T-Mobile’s advantage.

Switching is picking up compared with the pandemic period, but the third and fourth quarters typically are higher for switching, so it’s hard to separate those two things, Sievert said.

T-Mobile was “by far” the postpaid net add leader on the Magenta brand, yet it’s integrating with a Sprint base with historically higher churn. So if you “net it all out,” then “our performance is very good,” he said. But looking underneath the covers solely at Magenta, “it’s stellar.”

As part of its iPhone 13 promotion, T-Mobile is offering up to $1,000 and in some cases up $800 of trade-in value. Sievert was asked what it would take to entice T-Mobile to move from so much handset-based marketing to something tied more closely to its network advantage.

RELATED: T-Mobile grows 5G fixed wireless internet footprint in four states

For T-Mobile, it’s all part of this era when consumers need to move from 4G to 5G. “Right now, we’re moving from what was zero percent a year and a half ago to 20 percent and better of customers that have 5G. We need that to be everybody because we’re way ahead on 5G,” he said. 

Similarly, they’re moving through an integration and a lot of Sprint customers don’t have fully compatible devices with the T-Mobile stack. They need all of those Sprint customers to be fully integrated into the T-Mobile business, and that will take time.

“We’re way ahead,” Sievert said. “That’s why we want everybody to have a 5G handset, so we can showcase this lead. Why are our competitors doing it and then coming to conferences like this saying it’s a genius move? I can’t figure that out, because what they’re doing, in effect, is spending $1,000 … to get you to move from a phone that works about the same on T-Mobile and Verizon to a 5G phone that works way better on T-Mobile," he said. "That’s what they’re spending $1,000 to do and then coming to a conference like this saying it’s economic. We’ll see if it turns out to be economic or not, but it definitely plays to our advantages, the more our competitors focus on 5G phones.”