Not known for attracting the enterprise segment, T-Mobile is “absolutely” going after mobile edge compute (MEC) and private networks as part of its long-term growth opportunity, according to CFO Peter Osvaldik.
In this space, T-Mobile has a couple things going for it: a distributed 5G network and a 5G standalone (SA) core, he noted during an appearance Tuesday at the Deutsche Bank Media, Internet & Technology Conference in Palm Beach, Florida.
T-Mobile’s competitors in business services have larger enterprise wireline businesses. Osvaldik was asked: Is that an advantage for rivals or is wireless a separate purchasing decision for these enterprise customers?
“I think you may be alluding to these wireline enterprise services that are in a constant state of decline, so I don’t know if that’s really an advantage for them,” Osvaldik quipped.
But he added that it’s an exciting time in the industry because it’s not just about a finite set of phone connections. MEC, private networking and network slicing are some of the services targeting the enterprise space. (The company has said it wants to double its share, from 10% now to 20% of enterprise and government by 2025.)
“It’s all of these incremental services that are coming about because of the 5G revolution,” he said. They bring use cases for private enterprise, government and consumers that haven’t existed before and will increase the potential share for the entire industry. Of course, “we’re best positioned to go after it.”
It’s all part of the longer-term growth for the company and what’s exciting is none of this was assumed in the company’s most recent guidance, he said. T-Mobile’s guidance includes adjusted EBITDA between $25.6 billion and $26.1 billion in 2022, up about 10% year-over-year at the mid-point.
T-Mobile is more focused on actual commercial relationships for what it calls 5G Advanced network services. “We’re not out there every week with a press release, ‘Here’s a trial, here’s a trial, here’s a trial,’” he said.
“We have the most distributed network,” he said. For some of the use cases around MEC, “we have a distinct advantage there because our data centers are the most distributed, creating the lowest latency” for those type of applications.
In addition, T-Mobile is the only one in the U.S. currently with a 5G standalone core, and “you really need a 5G standalone core to enable a lot of these use cases,” such as network slicing and private networks. “That’s why enterprises are tremendously excited to work with us,” he said, adding that’s in addition to T-Mobile’s 5G coverage differentiation on the low- and mid-band networks.
Verizon has been the most vocal of all the U.S. carriers about its resolve to offer MEC; it’s inked deals with all three cloud providers – Amazon Web Services (AWS), Microsoft Azure and Google. But it doesn’t yet have a full commercially deployed and functional 5G standalone network, which is coming. That will enable the types of services like network slicing that the industry has been talking about for years with regard to and is often considered one of the biggest 5G revenue opportunities for the carriers.
Osvaldik also spoke of T-Mobile’s work in the airlines industry, where it inked a deal with Alaska Airlines as its preferred wireless provider. Besides what passengers and airline personnel see on the planes, T- Mobile wants to provide MEC and private networking to Alaska Airlines. That includes over-the-wing, under-the-wing and gate applications that can help ground and flight crews provide better turn-around times and streamline operations.
T-Mobile recently made some senior management changes in customer care and sales and marketing, naming Callie Field as president of T-Mobile Business, taking over for Mike Katz. She previously was over customer care and he was over the business group. Now, Katz is back to his roots in marketing and serving as chief marketing officer. Jon Freier now oversees a combined retail and customer care department.
Osvaldik reiterated T-Mobile’s push into the small markets rural America (SMRA) arena, where 40% of the population exists and where T-Mobile of yesteryear barely covered. “As we started rolling out this 5G network, that is completely changing,” he said.
Internally, the area is referred to as “SMRA,” categorized into 775 distinct markets, and “we’re looking at each of those markets,” he added. Already, about one-third of new net postpaid accounts at T-Mobile were coming from SMRA in the fourth quarter.