T-Mobile US (NYSE:TMUS) executives are making no secret of their desire to work with Dish Network (NASDAQ: DISH) and its chairman Charlie Ergen as Dish ponders how it will enter the wireless industry.
Less than a week after T-Mobile CEO John Legere said that T-Mobile and Dish working together "makes some sense," CFO Braxton Carter was effusive in his praise of Dish.
"Charlie Ergen's done a masterful job of creating a very, very differentiated mid-band spectrum position," Carter said, speaking Thursday during an appearance at the Morgan Stanley Technology, Media & Telecom Conference. Carter noted that mid-band spectrum is ideal for data capacity and that Dish's spectrum portfolio is "an extremely interesting asset."
"I think probably the safe thing to say is whatever Charlie [Ergen] does he's probably not the least bit interested in building his own network," Carter said. "And we think we would be a very interesting party to work with Charlie in many different ways in the deployment of the spectrum. So stay tuned. I think only Charlie knows what he ultimately has in mind."
Dish, via designated entity bidding partners, secured 25 MHs of AWS-3 spectrum at auction for $10 billion when discounts are factored in. Dish already controlled more than 50 MHz of spectrum going into that auction, including 40 MHz of 2 GHz AWS-4 spectrum.
Ergen said last week that T-Mobile might be an interesting partner for Dish. Dish wants to launch an innovative mobile service that has video as its core offering.
In his wide-ranging discussion at the Morgan Stanley conference, Carter also said he was not concerned about T-Mobile's growing subscribe base stressing the network. However, a just-released J.D. Power report on network quality puts T-Mobile behind AT&T Mobility (NYSE: T) in some key regions where T-Mobile had been ahead last summer, including the Northeast and West.
"We have currently the densest network in our footprint in the U.S," Carter said, noting that of the company's 54,000 cell sites, 50,000 of them have fiber backhaul connections.
"We've never had low-band spectrum," he said. "So our network was architected for mid-band spectrum and given what's happened with data we're in a wonderful position."
T-Mobile currently covers around 265 million POPs with LTE and plans to expand that to 280 million by mid-year and 300 million by year-end. The company will do that in two ways. First, it will refarm 1900 MHz PCS spectrum to deploy LTE (while still maintaining a small sliver of spectrum for GSM service) and also by expanding its footprint via its 700 MHz A Block spectrum.
"We estimate that we have multiple years of runway with our current spectrum holdings," Carter said.
"T-Mobile has cited its low number customers per MHz compared to other operators as evidence of its available capacity but T-Mobile customers are more concentrated in urban environments than AT&T and Verizon and the only subs/MHz that matters are the ones at any given location at the busiest hour of the day," BTIG analyst Water Piecyk wrote in a blog post.
"Network perception is also not always reflective of the network reality," he added. "It takes time for changes in network quality, for better or worse, to show up in subscriber numbers. We will continue to rely on a variety on quantitative and qualitative reports to evaluate network performance, but we believe the quality and perception of T-Mobile's network is currently rising. We therefore do not expect the network performance of T-Mobile to negatively impact churn or subscriber growth for at least the next [six] quarters."
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