T-Mobile US (NYSE:TMUS) is open to working with Dish Network (NASDAQ: DISH) as the satellite TV company ponders its wireless options now that Dish is flush with even more spectrum following the AWS-3 auction, according to T-Mobile CEO John Legere.
Speaking on T-Mobile's fourth-quarter earnings conference call, Legere said that he would place Dish in the same category as Google (NASDAQ: GOOG) and other companies that could disrupt the wireless industry and bring more competition to Verizon Wireless (NYSE: VZ) and AT&T Mobility (NYSE: T). "To us, they are all great for increasing flexibility and competition," he said.
Legere said the main question is what Dish will do with its trove of spectrum. "Frankly, we're open to all versions of it," he said. "I see no version of what Dish is doing…not being a positive for us."
Dish went into the AWS-3 auction controlling 50 MHz of mid-band spectrum, including 40 MHz of AWS-4 spectrum and 10 MHz of 1900 MHz H Block spectrum. In the auction, Dish's bidding partners acquired around 25 MHz of spectrum, including 13 MHz of paired spectrum. However, Dish does not have a network of its own and has repeatedly said it would look to partner with an existing wireless carrier, potentially to launch a mobile video service.
"I look at the spectrum portfolio and the video content, etc. that Dish [has] as a fascinating idea to consider," Legere said, adding that "Dish is a great opportunity for both the country and perhaps T-Mobile."
On the call Legere said that even though he thinks T-Mobile will soon surpass Sprint (NYSE: S) in terms of subscribers, T-Mobile is "rooting for Sprint" to take aim at Verizon and AT&T and steal market share from them. However, he said T-Mobile will happily take market share from Sprint as well.
T-Mobile COO Mike Sievert, who was just promoted from T-Mobile CMO (for more, see this story), said on the call that customers are not choosing T-Mobile because of lower prices. "They are choosing it because of the overall value proposition we provide as the 'uncarrier,'" he said. T-Mobile's competitors likely feel like there is a price war underway, he said, but are just waking up to the idea that customers are tired of being overcharged and treated poorly.
Legere said T-Mobile has now had seven quarters in a row of more than 1 million net wireless subscriber additions, and that such growth is becoming its "normal way of doing business." He said T-Mobile's market share is low enough that T-Mobile sees growth continuing "into the foreseeable future."
"Our growth is not related to competitors' actions," he said, adding that T-Mobile continued to grow despite promotions from Verizon and AT&T in the fourth quarter.
T-Mobile reported a net profit in the fourth quarter of 2014, swinging back into the black after a loss in the year-ago period amid rising subscriber figures. While T-Mobile's subscriber results were not a surprise-T-Mobile had pre-announced the figures in January--the company also posted financial results that were higher than analysts' expectations.
Here is a breakdown of T-Mobile's fourth-quarter results:
Subscribers: As it had reported in January, T-Mobile added 2.1 million total wireless customers in fourth quarter. The carrier nabbed 1.276 million branded postpaid net subscriber additions in the fourth quarter (of which 1.037 million were phone customers). For more on T-Mobile's fourth-quarter subscriber performance, click here.
Financials: T-Mobile said total revenue in the fourth quarter grew 19.4 percent year-over-year to $8.15 billion, ahead of analysts' expectations of $7.89 billion, according to a survey taken by Thomson Reuters. Overall, T-Mobile reported a net profit of $101 million in the fourth quarter, compared to a loss of $20 million in the year-ago period. T-Mobile reported fourth-quarter adjusted EBITDA of $1.75 billion, which was 4.2 percent ahead of what analysts at Credit Suisse had expected and 7.8 percent better than analysts' consensus, according to Credit Suisse.
LTE: T-Mobile said it remains on track to cover 280 million POPs with LTE by mid-year and 300 million POPs by year-end. Interestingly, the company noted it "has also commenced work with its partners to bring Licensed Assisted Access ("LAA") to production trials in 2015." LAA is also known as LTE Unlicensed and provides technology that allows wireless operators to transmit LTE data over unlicensed spectrum. T-Mobile CTO Neville Ray said there is a lot of momentum from chipset, handset and network gear vendors for LAA and that T-Mobile is "looking for early 2016 to have the first commercial products in market." He said the first use cases will likely be inbuilding solutions for enterprises and potentially consumers, but that LTE-U will eventually move to outdoor uses.
T-Mobile said it has deployed 700 MHz A Block spectrum in Dallas and Houston so far in 2015 and the company expects to continue to aggressively roll out new 700 MHz sites.
MetroPCS: T-Mobile said 87 percent of its MetroPCS customer base had moved from Metro's CDMA network and onto T-Mobile's network, up from 78 percent at the end of the third quarter. Further, the carrier said around 73 percent of the MetroPCS spectrum on a MHz/POP basis has already been refarmed and integrated into the T-Mobile network as of the end of the fourth quarter, compared to 63 percent at the end of the third quarter. MetroPCS added 500 new points of sale in the fourth quarter, bringing its total to 4,500 in its 40 new expansion markets. The company counts nearly 11,000 MetroPCS points of sale nationwide.
T-Mobile decommissioned the CDMA portion of the MetroPCS networks in Philadelphia, Los Angeles, San Francisco and elsewhere in the fourth quarter and has done so in Atlanta and Detroit so far in 2015. The company expects to complete the shutdown of all the remaining CDMA markets by the second half of 2015, and expects to incur network decommissioning costs of $500 million to $600 million to complete the shutdown of the remaining CMDA markets.
Smartphones: T-Mobile said it sold a record 8 million units in the fourth quarter, compared to 6.9 million units in the third quarter of 2014 and 6.2 million units in the fourth quarter of 2013. Smartphones comprised 93 percent of T-Mobile's total phone unit sales in the fourth quarter.
Churn: Branded postpaid churn was 1.73 percent in the fourth quarter, up from 1.63 percent.
ARPU: Branded postpaid Average Billings Per User (ABPU), which includes device installment billings and service revenue, was $61.80 in the fourth quarter of 2014, up 5.1 percent compared to the year-ago period, and the highest in the company's history.
For more:
- see this release
- see this presentation (PDF)
- see these slides (PDF)
- see this WSJ article (sub. req.)
- see this CNET article
Special Report: Wireless in the fourth quarter of 2014
Related Articles:
T-Mobile promotes CMO Mike Sievert up to COO amid other executive changes
Analyst: T-Mobile likely to dish on margins, spectrum and LTE Unlicensed during Q4 earnings
T-Mobile recovers from service disruptions in the Northeast
Verizon, SK Telecom join T-Mobile in testing unlicensed LTE, but Wi-Fi Alliance urges caution
T-Mobile's Legere, Sprint's Claure trade insults over Super Bowl ads
T-Mobile scores 2.1M total new customers in Q4
Article updated Feb. 19 with additional information from T-Mobile.