Speaking at the UBS 50th Annual Global TMT Conference yesterday, T-Mobile CEO Mike Sievert talked about the carrier’s five-year plan, which it began executing in 2018.
The business plan includes things like tackling smaller markets in rural areas — about 40% of the country — where T-Mobile’s market share is only in the teens. And building a business unit, where its market share is just breaking into the double-digits. Sievert said 90% of business customers are currently with AT&T and Verizon, so there’s a lot of upside for T-Mobile.
And of course, he mentioned T-Mobile’s Home Internet fixed wireless access (FWA) service, saying it’s a “huge tailwind for us.”
But he said T-Mobile isn’t sitting back on its haunches in terms of its core mobile business either.
“We are number one in the big cities all across the country — I'll say, on average, the top 50 cities,” said Sievert. “We got here without winning the network story, and now we can win the network story. So, the strategy in top markets isn't to defend that share, it's to extend it by going after the tens of millions of people who never gave us a good look when we were coming from behind on network.”
Striking out at Verizon, he said over the last three years, T-Mobile has “slashed the perceived leadership of Verizon” in terms of network quality.
And he does have a point.
In the third quarter, T-Mobile gained 854,000 postpaid subscribers, AT&T garnered 708,000 postpaid subs and Verizon reported only 8,000 postpaid phone net adds.
Sievert said Verizon “gave us an assist with all their price increases this summer.”
Rural areas
T-Mobile is eyeing the 40% of the U.S. that is considered rural. Sievert said, “We actually take this 40% of the country, and we algorithmically break it into 775 markets and rate our relative competitiveness in all those markets on an ongoing basis. And when we achieve a level that we call license to play or better, that's when we pour in distribution and targeted marketing efforts and go after share gains.”
He said T-Mobile has moved from 30% of the rural market's license-to-play or better to 50% of the market's license-to-play or better. And the company is still learning how to compete in rural areas. “Even if we got no better at this, all I need to do is finish the job of getting more placings license-to-play or better, and we'll achieve the aspirations that we put out in front of people last year,” he said.
Asked if the next step would be “license-to-win” with stores in those rural areas, Sievert said “yes” that would be the next step.
eSIM
Switching gears, Sievert talked a little bit about eSIM, in light of the fact that the iPhone 14 is eSIM only, and all three U.S. carriers are now promoting the use of eSIM to provision new phones.
T-Mobile launched its eSIM program Easy Switch this summer. But Sievert pointed out that the technology is still a work in progress. He said it works better for a single line than for families. It works better for bring-your-own device than for trade-ins or other more complicated device transactions. It works better if the customer’s phone is already paid for and unlocked.
“However, yes, everything that removes switching friction in this industry, and eSIMs are one of them, it's good for us because we're the next share taker,” he said.
One final tidbit — Sievert was asked about competition from cable MVNO’s, and he said T-Mobile keeps close tabs on that competition, saying, “We're expecting Charter to have a fantastic quarter, maybe their best one ever.” But he feels like there’s room for competition from cable, at least from T-Mobile’s perspective.