With 260 million PoPs covered on mid-band and 320 million on low-band, T-Mobile US holds to 2023 capex guidance
T-Mobile US has a 5G spectrum strategy it sees as a major differentiator that has put it ahead of competitors. Speaking with Mike Rollins at the Citi 2023 Communications, Media and Entertainment Conference, the operator’s CFO Peter Osvaldik said the company’s lead in 5G will drive a 2023 strategy marked by “customer-driven coverage” and the ability “to continue to drive industry-leading customer growth, and doing it in a profitable, accretive way.”
T-Mobile US, Osvaldik said, has substantively completed the integration and decommissioning of assets acquired in the Sprint merger ahead of the stated timeline. “What remains…is predominantly billing conversion.” Behind the scenes this involves mapping former Sprint customers to T-Mobile rate plans, then doing a “streaming conversion” from one billing system to the other. “It’s very seamless to the customer in an effort to make sure we’re not driving irritants and churn…That’ll be the last big piece that’s done at the end of 2023.”
On the network side, Osvaldik stuck to previously reported 2023 capex guidance of $9 billion to $10 billion. He said T-Mobile US now covers 260 million points of presence with its 2.5 GHz spectrum that came with Sprint, and covers 300 million PoPs with its 600 MHz holdings, which is deployed as a Standalone 5G network. Asked by Rollins about opportunities presented by additional spectrum like mmWave, C-Band and CBRS frequencies, Osvaldik said high-band spectrum will always have a place in dense urban environments and venues, while knocking Verizon’s much broader mmWave 5G network.
“The focus is really how do we drive this plethora of spectrum out there for the benefit of the consumer, bridging the digital divide, and driving” growth opportunities like fixed wireless access among others. “All of that would have to be incremental…in terms of targets and service revenues, free cash flows, etc…”
Specific to T-Mobile US’ fixed wireless home internet service, Osvaldik sketched out an “excess capacity model…We look at every sector on a site…we’re modeling out what the projected growth is from postpaid phones, which is what we’re protecting at all costs…and looking at all the other connected devices and saying, ‘All of that can’t fill up the capacity we’re generating.’” This analysis allows the company to assess how many fixed wireless subscriptions it can offer in a given area, which also creates an opportunity for mobile subscription pull throughs and a lift in ARPA and ARPU. He sees around 500,000 subscriber additions per quarter as where T-Mobile US is aiming as it continues to build out capacity. “Demand is fabulous on this product…This is a growing business.”
Beyond fixed wireless, Osvaldik also discussed T-Mobile’s newfound ability to attract network seekers in the top 100 markets, and its focus on small and rural markets where about 40% of the U.S. population resides. The company is also pursuing low double-digit growth in from its T-Mobile for Business enterprise organization.
Big picture, he said, post-merger T-Mobile US can “bring the best network and the best value. Bringing these together, as well as leveraging these under-penetrated markets we have, is what drove growth.”