T-Mobile CEO Mike Sievert talked up the company’s network prowess as driving its growth in the first quarter, saying customers are staying for the 5G network, value proposition and experience.
It’s a far cry from where T-Mobile was before the 5G wave hit, and he touched on that part, too, during the company’s Q1 earnings call on Thursday. He also acknowledged that while T-Mobile’s churn is improving, it’s not the best in the industry and T-Mobile can drive it lower.
T-Mobile reported 538,000 postpaid phone net additions in the first quarter of 2023, which was better than its two main rivals. It also reported 523,000 net customer adds for its high-speed fixed wireless access (FWA) internet service – more than AT&T, Verizon, Comcast and Charter combined, the “un-carrier” claimed.
Service revenues of $15.5 billion grew 3% year-over-year, including postpaid service revenue growth of 6% year-over-year. Net income was $1.9 billion.
T-Mobile is the last of the Big 3 wireless carriers reporting Q1 results. AT&T reported 424,000 postpaid phone net adds in its first quarter 2023. Verizon lost 127,000 postpaid phone customers in the same period.
T-Mobile’s postpaid phone churn in Q1 was 0.89%. That’s slightly better than Verizon’s 0.90% churn but not as good as AT&T’s Q1 postpaid phone churn of 0.81%.
Asked about the opportunity to drive churn lower, Sievert reflected on T-Mobile’s recent history.
“I think we’re at a fascinating, sort of historical moment in the history of our company,” he said. “We have spent six years on the chapter of our company comprised of dreaming about and then completing and then integrating the merger that would allow us to leapfrog AT&T and Verizon – from being last place in the LTE era to first place in the 5G era.”
Now, they’ve generally gotten that done. “We have the best network in the country. We have the best values and we’ve generally completed that merger, so now we have work to do to convince the American public that it’s true,” he said.
They’re now focusing on business customers and other areas where T-Mobile historically didn’t have a lot of market share.
“That’s a journey,” he said. “Our goal is to have the lowest churn in the industry on postpaid phones. We already have it on prepaid. We’re going to have it on postpaid phones… We have the best network and the best prices. That means we should have the lowest churn.”
Sievert didn’t disclose anything new about T-Mobile’s fiber trials.
Regarding the fixed wireless access (FWA) high-speed internet business, he reiterated the current model to reach 7 million to 8 million customers by 2025, and that’s essentially selling excess capacity on its mobile network.
Rivals continue to knock T-Mobile and Verizon about capacity for their home internet services because they’re serving them with their mobile networks. Sievert addressed that, saying T-Mobile created nationwide mapping of U.S. households, mapped to every sector on every tower and determined how that tracks with its expanding capacity. It only approves applicants to its 5G high-speed internet if there's enough capacity at that address.
T-Mobile President of Technology Ulf Ewaldsson said the 2.5 GHz spectrum is serving them well and they have a lot of excess capacity. The company has 275 million POPs covered with mid-band now and it’s moving to 300 million POPs by the end of the year.
T-Mobile President of Marketing Mike Katz said they’re seeing sequential decreases in churn in the FWA service and cable is the biggest contributor to its customer base in that business.
T-Mobile Business Group President Callie Field said they’re making great progress in their goal of doubling their market share in the business segment. They’re growing in customers and revenue and taking share from AT&T and Verizon, she said.
In Q1, the business account growth, phone net adds and phone churn were all better than Verizon’s, she said. She referenced AT&T's FirstNet division business and said T-Mobile saw 2.5x growth in its Connecting Heroes sector. “We’re winning and we’re winning across every segment,” she said.
The Veterans Affairs (VA) recently selected T-Mobile as it primary partner for another nine years and it has more than 50,000 phone lines.
Sievert said businesses thoroughly check out the phones before they choose a wireless provider and they’re picking T-Mobile because it has the best network, and that wasn’t necessarily happening a couple years ago.
The Dish factor
During the Q&A, MoffettNathanson analyst Craig Moffett said it’s becoming more openly discussed that Dish Network may eventually be a liquidation story and if that were to happen and the FCC were willing, would T-Mobile be interested in more spectrum?
Sievert said he wasn’t going to answer the Dish question because “my friend John Stankey kind of did kind answer it” during AT&T's earnings call and he was unfairly misquoted. “He gave an innocent answer to a hypothetical” that was kind of along the lines of “anytime there’s new spectrum, of course we’re interested” and there were all kinds of headlines that he wants to buy Dish’s spectrum, he said.
“I think it’s a little premature a question too,” Sievert added. “I don’t count Dish or Charlie [Ergen] out very easily. I’ve known him for a long time. I think it’s a premature question.”
But it raises a larger issue and that’s around whether the U.S. wireless industry has enough spectrum over the long haul for American competitiveness. To that, he would say there's "never" enough and always an opportunity for more.
That speaks to public policy. The FCC lost its auction authority this year and T-Mobile and others are urging Congress to restore that because the U.S. needs an ongoing pipeline of spectrum for everybody. “I think it’s very important that we get back on track with this,” he said, noting it’s importance not only for T-Mobile and its competitors but for American competitiveness.