T-Mobile US (NYSE:TMUS) CEO John Legere said that the carrier's momentum on subscriber growth has continued in the third quarter, with the company besting all of the figures it posted in the second quarter. Legere also said that he thinks it's inevitable that there will be a convergence of the U.S. cable and wireless industries.
As of early September, Legere said that T-Mobile had already exceeded the total net customer additions it reported for the second quarter, when it had 2.1 million. Speaking at the Goldman Sachs Communacopia Conference, Legere said that with 12 days still left in the third quarter T-Mobile had already matched the number of branded postpaid net customer additions and branded postpaid phone net customer adds it had in the second quarter, which were 1 million and 760,000, respectively.
Further, Legere said T-Mobile has already exceeded the 411,000 branded prepaid net customer additions reported for the third quarter of 2014 and tripled that figure from the second quarter, when it had 178,000.
Legere noted that in five of the last seven quarters T-Mobile has added at least 2 million total customers and has added at least 1 million for 10 quarters in a row. He also noted that in the second quarter total revenues grew 14 percent year-over-year, service revenues were 12 percent and the company reported $1.8 billion in adjusted EBITDA, up 25 percent year-over-year and 31 percent from the first quarter.
When Legere began as T-Mobile's CEO around three years ago the company had 11 percent U.S. market share, he said. Today, that figure is around 17 percent. He indicated T-Mobile will end the third quarter with at least 61 million total customers.
When asked what is driving the continued momentum, Legere said that T-Mobile is continuing to listen to customers and what they want, and that "the stated intent of the 'uncarrier' moment is to fix and change a broken and arrogant industry," and that T-Mobile will continue to do that. He said the goal is to make it so that no wireless carrier in the U.S. offers a service contract.
Legere said that AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ) are "not adapting to anything" and are being dragged "kicking and screaming" into a changing industry. He also joked that Verizon seems to have just discovered equipment installment plans (EIP). (In fact, Verizon has offered EIP as an option since July 2013, but in August said all new customers would need to adopt EIP on its new plans). The T-Mobile chief also promised that "Uncarrier 10 is coming soon to a theater near you."
Amid analyst speculation that French telecoms conglomerate Altice could make a bid for T-Mobile after snapping up U.S. cable players Suddenlink Communications and Cablevision (NYSE: CVC), Legere repeated a comment he has made before, and said that the U.S. wireless industry should not be thought of as simply the four Tier 1 carriers. "How many seconds is it before the cable industry converges into wireless?" he said. "Do you really believe the Comcast (NASDAQ: CMCSA) future in wireless is to be an MVNO with Verizon? Give me a break."
Legere said that "the timing of the cable industry coming into the wireless industry is purely determined by who blinks first." He said to forget about potential deal structure and noted that with unlicensed spectrum (and presumably the ability to deploy LTE-Unlicensed technology, which T-Mobile supports), there are several technological and consumer benefits that a converged cable-wireless player could deliver.
In terms of the company's network, T-Mobile CTO Neville Ray said that "this network is an incredible success story" and that it covers 293 million POPs with LTE today and will be above 300 million by year-end, beating its goal. He also said that of the 190 million POPs covered by T-Mobile's Band 12 700 MHz A Block spectrum, T-Mobile has around 165 million deployed today.
So far this year T-Mobile has added 400,000 square miles of LTE coverage and will add another 600,000 square miles by year end. Most of that will be through the continued deployment of the 700 MHz spectrum in rural areas, which is opening up new market opportunities for T-Mobile where it did not have a network presence before. Legere said T-Mobile will continue to bring LTE coverage to around 260,000 homes every single week for the rest of the year.
Ray said T-Mobile has succeeded in creating "the most dense mid-band network in the U.S." and that its 5x5 MHz 700 MHz deployment has been enough to "make a great start" on deploying low-band spectrum.
Apple's iPhone 6s and 6s Plus support Band 12, and T-Mobile is so confident that its LTE coverage has improved that it announced a lifetime coverage satisfaction guarantee. For as long as customers use their iPhone 6s or 6s Plus on T-Mobile's network, if they aren't completely satisfied with their coverage experience they can return the device in the first month of service and get a full refund. After that, T-Mobile said it will unlock the device and refund up to a full month of service.
However, Ray, Legere and T-Mobile CFO Braxton Carter stressed the importance of next year's incentive auction of 600 MHz broadcast TV spectrum, as well as the 30 MHz spectrum reserve set aside for smaller carriers to bid on.
"We are showing up, we are going to be very aggressive," Legere said, adding, "We will scoop up as much as humanly possible and it will be the biggest mistake any of them [other wireless carriers] have ever had if they don't show up."
Carter said that T-Mobile has met with all three major credit ratings agencies and thinks it can increase its leverage and take on new debt to finance the purchase of 600 MHz spectrum without "any adverse consequences," like a credit rating downgrade.
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