During a quarter where there wasn’t a lot of customer switching going on between carriers – and there’s an international pandemic – T-Mobile reported its highest ever number of postpaid net additions, coming in at 1,979,000. Total net additions were just over 2 million.
T-Mobile’s postpaid phone net additions tallied 689,000, which it termed “best in industry,” and it recorded 56,000 prepaid net additions in the third quarter. T-Mobile ended the quarter with 100.4 million total customers.
Total revenues were $19.3 billion and service revenues reached $14.1 billion. The company reported net income of $1.3 billion and free cash flow of $352 million.
Never one to pass up an opportunity to call out its rivals, T-Mobile said its third-quarter net additions were nearly as much as the rest of the industry combined. Its postpaid phone churn was 0.90%.
“We surprised the skeptics and the optimists yet again,” said T-Mobile CEO Mike Sievert during the company’s third-quarter earnings conference call on Thursday. It’s also pulling further ahead of AT&T as the nation’s No. 2 wireless provider based on subscribers. “This was a stellar quarter.”
So, given the industry is well into the fourth quarter, traditionally the busiest time for phone purchases and there’s a new 5G iPhone 12 out there from Apple, how does it look?
Sievert said while it’s already early November, it’s a very holiday-centric quarter and with Covid in the picture, they’re providing a little bit of a cautious guide, leaning toward a conservative estimate. However, the second half of 2020 overall doesn’t look materially different from last year, he said.
Postpaid phone net customer additions for the second half of 2020 are expected to be between 1.3 million and 1.4 million, including 600,000 to 700,000 in the fourth quarter of 2020.
Sievert also talked a lot about the synergies that T-Mobile is seeing as a result of the merger with Sprint, and the company plans an analyst day in January to delve further into those numbers. The company said it remains “highly confident” in its ability to deliver $43 billion of synergies and achieve the $6 billion of annualized savings from the Sprint merger from a combination of “cost avoidance” and expense reductions.
T-Mobile President of Technology Neville Ray said they’re on target to decommission 35,000 Sprint sites over the coming years, leaving 12,000 or 13,000 sites that would come into the fold of the T-Mobile network for capacity and/or coverage. The target network is in the range of 82,000 or 83,000 sites in total.
With about seven months into the transition, they have 15% of the Sprint postpaid customer traffic now using the T-Mobile network, which he said is more than he had anticipated. He didn’t commit to where they will be a year from now but the process will run into 2022.
Asked about in-building deployments, Ray said a big part of the 5G experience is in buildings; that applies not just to the enterprise but to the consumer. That’s where he sees millimeter wave spectrum playing a role.
While Verizon is building an on-street 5G network using millimeter wave, T-Mobile is using its low-band spectrum for 5G coverage and making sure the outdoor experience is good. “We’ll use millimeter wave where it makes sense,” and one of those is in-building coverage.
Sievert also emphasized that what’s driving the business right now are smartphone services. The types of services enabled by 5G – low latency, augmented reality, network as a service – those are all still in the future.
Sievert said when you “double click” and look under the earnings results of T-Mobile and its competitors, there are some “gymnastics” going on at rivals and he doesn’t think Cricket, AT&T’s prepaid brand, is growing at all. In fact, it may be going in reverse. But what you get from T-Mobile is “transparency,” he said.
For years, Clearwire and later Sprint boasted about their 2.5 GHz spectrum assets, which are now in the hands of T-Mobile and it’s aggressively using that spectrum to add the mid-band layer to its 5G spectrum “cake,” as Ray likes to call it. The big upside for T-Mobile is the consumer market doesn’t really understand what that means for T-Mobile’s network quality, so once that gets drilled into the minds of consumers, presumably it will see another big upside.
“Now we have a network story that’s just phenomenal and it’s about to get a lot better,” Sievert said. “It’s just going to be such a stark reality that consumers are finally going to have to pay attention,” and all those iPhone 12 users with T-Mobile will actually find high-capacity 5G and their friends are going to be jealous.