Q2 2020 T-Mobile US Inc Earnings Call

Good afternoon, welcome to the T Mobile second quarter 220, 20 earnings call following opening remarks.

I will be open for questions either conference line by pressing star followed by the number one and via Twitter by sending a tweak to act T mobile IR, we're at Mike Sievert, using cash stag pm USA.

I would now like to turn the conference over to Mr., Jack Henry Senior Vice President and head of Investor Relations for T. Mobile USA. Please go ahead Sir.

Good afternoon, and welcome to the T Mobile second quarter 2020 earnings call.

Our Mike.

Yep.

Our CFO will re our president technology.

And our Chief marketing Officer.

Jim Your our Chief Communications officer, as well as other members of the senior leadership team joining us or not.

During this call normally forward looking statements that include projections and statements about our future financial and operating results. Our plans the benefits we expect our merger was.

This is an operations in light of Carbonite gene other statements that are not historical facts.

Such statements are based upon the current beliefs and expectations of our management are subject to significant risk and uncertainty outside our control that could cause actual results.

Surely, including the risk factors set forth filings with the FCC.

Reconciliations between GAAP to non-GAAP metrics Oh, we just got on this call can be done in the quarter result section the Investor Relations page.

Also I wanted to point out that concentrated acute you 20 each line.

Combined results due to normal unless otherwise noted.

Prior period results in Orange materials that accompany our Q2 results.

That's a standalone T mobile prior to the merger was fine.

Could you provide some honored I'm honored to pro forma historical financial long supplemental basis.

They are not directly comparable with the actual results for mutual one second quarter and going forward nor are they directly comparable with the previously provided pro forma financial some prepared prior to the completion of final purchase price accounting policy language issues.

We're not providing pro forma historical customer base metrics to be inability to reprocess historical activity in all new T Mobile's number policy.

As such the focus or comments on future results and the comparable forward looking guidance is the best way looking at the business moving forward.

With that I'll turn it over to Mike.

Okay. Thanks, Jon in hide everybody listening in are watching on line, we're coming to you live in socially distance from here in our Bellevue headquarters in ways. It nice to be back in the office for ones, even if we're behind it gets huge plexiglas panels and sitting 10 feet apart.

First of all let me just saying thanks in advance for your patience because Mike I'll start remarks will be just a few minutes longer than usual today given that this is our first quarterly report or the new company and there's a lot to counteract comments I'm not filibuster.

Q2 was our first quarter together and what a quarter. It was I am incredibly fired up about everything this new combined team has accomplished since we last spoke to name and I'm more excited than ever about the future of Shimon.

We have already hit major milestones in record time and made significant progress on integration and we did it wow, what cheating incredible business results for the quarter, you know that vary quarter, our competitors were telling you'd we'd be two distracted by the merger to execute that core.

So let me start by saying that we kicked off the quarter by achieving something nobody really bought possible just a short time ago. Our total branded customer counts surpassed 80, Mg making us the number two player in wireless at the beginning at <unk>.

This monumental milestone in U.S. wireless history was it, especially historic achievement for all of Us.

Even better we haven't looked back since we have no intention of slowing down our lead versus age and she is even wider as we talk to you today in Q2 T. Mobile once again led the industry in total branded customer growth or that once the second consecutive quarter firmly establishing new T mobile ads b leading.

Both company in the industry now with over 98 million customers at quarter end were staring down Verizon and our sights set on the number one spot.

Despite the significant challenges, we all phases for do you mobile studies, including combining with a much slower growth company in spring and continuing to deal with a global pandemic that led to a lower switching environment. This chain gap did and the liver, we didnt skip a beat.

We moved faster, we again led the industry, adding 1.2 million total branded customers across postpaid and prepaid in Q2.

More than three times H E rising.

Hi.

Oh postpaid net additions were 1.1 billion also leading the industry and over three times more than brides, and who was the closest competitor.

We actually got something of a formula error, when trying to divide by negative number for our teaching and Keith.

Okay. I believe we got that [laughter] Needless to say, we are still competing aggressively NRG is having fun with it.

And while we're on this topic I do want to take this opportunity to recognize our T mobile for business.

Really stepping up in a big way to help schools and businesses adapting to new remote learning and weren't challenges.

Most of our Overperformance this quarter versus guidance on postpaid was in this area.

We also delivered 253000 postpaid phone net.

Leading the national carriers again at the 26 order in a row.

After taking a 90000 unit postpaid customer disconnect accrual related to the Fccs keeping Americans connect.

Not to be forgotten.

We also delivered Q2 postpaid phone churn up she ROE 0.8%.

Eight churn of just 2.81 person I'm, particularly proud of the churn progress as we integrate the traditionally higher churning sprint business.

Now, let's talk about how all of our teams hard work in real time adjustments to the rapidly changing market resulted in incredibly strong Q2 financial results. This includes adjusted EBITDA of $7.0 billion, which exceeded our guidance our new CFO Peter on smaller will share more on our financial results in a moment, but I'll just.

Mike.

Our formula is pretty soon.

Lasting and customers leads to customer growth, which leads to revenue, which if we run the company while leads to EBITDA and cash flow from a lot of which we invest right back into our customers and their network.

It's a virtuous cycle that.

Our early success as the Uncarrier and well continue to propel us our goal of being number one in customer choice and number one customers Barnes <unk>.

While delivering these results we kicked off a huge list of accomplishments decision do T mobile to win.

I will share more details about our work in the market.

Just wanted to mentioned three big milestones first our team executed the largest dual tranche secondary offering in U.S. just the sale of Softbank shares in T mobile and actually created a positive trading dynamic in our stock with the transaction.

We also but not a major merger commitment when we closed our transaction with huge divest the sprint prepaid.

And we issued $4 billion at senior secured notes at a weighted average interest rate just 2.16% all three had super successful.

On the customer side, we launched connecting Chemos, providing free smartphone service I G access to state and local nonprofit first responder agencies nationwide. This was the second initiative in our Fiveg for good Uncarrier announcement last year idling T mobile connect a low price plan, we launched ahead of schedule in Q.

The final part of that move project 10 million will be coming very soon states.

And we unveiled our latest on carrier move scams scams and Robo calls are huge customer pain point can in fact, they are the leading FCC complaint. So we put together the industry's most comprehensive solution customers helps stop this abuse.

Scam shield, we're helping protect T mobile natural by T mobile and sprint customers of big ticket scammers or free.

18 team brides and make customers paid for I, requiring a certain plan or falling or premium how this move clearly mattered consumers because this announcement drove massive social media engagement and the most press coverage. We proceed since our first Uncarrier move way back in March 2013.

And like all I'm carrier moves scam shield is designed to change wireless good. So I hope that 18000, Verizon will step up to our challenge joined us in taking this problem a lot more sir.

I can't forget to mention that Cheetah mobiles share team continues to break records. We just recently received the highest ever store recorded in our interest.

On the J.D. power 2020 customer care survey, taking home our six went into route and the 20 at time, we'd ranked highest among full service.

Our team loves our customers and it shows.

Okay, I really just scratched the surface on what this team accomplished this past quarter, but I know, you're all really interested in our top.

And that's of course integration and the work we're doing to go Big go fast synergies.

Let's start with the network. This is a huge piece of our synergy realization Neville and his team our full steam ahead, we've talked about the fact that our.

I guess block of our synergies.

From a network and then it's a three step process as we first light up the available sprint spectrum on the new T mobile anchor network, which second creates the capacity to migrate sprint traffic over and then third allows us to finally decommission the sites that aren't in the go forward.

All of that of course of course takes time and amazingly decommissioning.

Stat, our initial sites already underway.

Network teams working in overdrive to migrate sprint postpaid traffic onto the T Mobile network and shows back as of today, we have already moved more than 7% of this traffic.

Well, we even started customer migration.

As possible because we now have more than 85% sprint postpaid base with devices that work on the T. Mobile networks, something you made fully available right out of the gates. So now over 10 million sprint postpaid customers on average are using the T Mobile network every single day.

Plus just weren't based historically had limited access to multi voice over LTE, we already have roughly 75% spread postpaid base now enabled on bolt so they're enjoying a better voice experience with simultaneous data.

Stats strike you as surprising and unprecedented because they are.

We also on the should we unveiled our retail operations unified our retail operations rebranded thousands of sprint stores T mobile stores last Sunday.

This is an important milestone for our business and while we did we also rolled out the needed tools and systems across our distribution footprint will allow us to serve both legacy bases of postpaid customers in all T mobile stores.

Clear this was a massive lift I just can't say enough about how our team flawlessly nailed this effort and executed incredibly fast this would have been a major accomplishment even outside of a pandemic. It was really amazing to see all of that come to life. During these complicated.

Since be bringing two big brands like T mobile and sprint together only comes around once you wanted to market.

One carrier fashion like doing something really big our customers, So we launched or for Uh huh.

Or lines of the industry's best unlimited for $25. Each per month. This is possibly our most it vicious consumer promotion ever and it includes fiveg access remember the other guys maybe charging extra for Fiveg hours includes now to be clear. This is a limited time promotions to celebrate.

And build awareness for the newly integrated brand, but even after its Don will find other ways to compete we said we'd bring the competition with this merger and I hope we've addressed any lingering questions on that.

I've said, it before and I'll say it again, we're here to show customers that they no longer have to choose between the past value and the best network with T mobile they'll get.

Our team has also been working hard to rapidly deliver T mobile benefits to legacy sprint customers and their lumping all the uncarrier goodness like having access to the same great unlimited plans without future step ups and perks like T mobile tuesday's. So the synergies we're starting to see you're not just for our investors our customers are winning big too.

At the same time, we focused on evolving our organizational structure and designed to become one team I'll be more efficient and more effective clear roles and responsibilities from points.

Thats, all move faster and deliver results for the business. This was a process that we originally expected to take 12 to 18 months with nearly completed it in just one quarter and we felt it was important.

And we're hiring.

Doubled down in areas that are focused on better serving our customers today and in the future kicking off our Uncarrier JOTS. Initially had 5000 new positions just first 12 months alone.

We also accelerated the rationalization of hundreds of retail stores work that we originally planned to do over several quarters and we consolidated a began to adjust our marketing spend well ahead of schedule. These actions in Q2 alone are beginning to unlock significant synergies now setting us up financially to be able to make investments throughout 2020 and next year.

And ultimately unlocking future synergies on a net.

As time I told you out what's even more confident in our synergy plans, but I was before them or I.

I just I hope now you understand why we're executing lightning fast we said, we would now weve laid down a ton of track because based on the quick action, we've taken I'm confident in our ability to not only deliver 43 billion in synergies like previously talked about.

Centrally unlock even more than originally planned tend to do it all faster.

Now let me just say a few words about one of my favorite topics our rapidly expanding.

In the five key race T mobile is pulling way.

In the past few years, we've heard a lot of competitive banter in March speed when it comes to Fiveg all talk and most of it is just hot air ATM TM Brides and don't want you to see what's becoming so painfully obvious T. Mobile is miles ahead of Baltimore and we're quickly pulling away from the pack, but instead of taking my word Florida Horizons are 18 teeth.

For that matter, let's just take a look at a few actual facts nobody disputes that we have America's largest fiveg network and the competition doesn't even close just this week, we had a major break when we launched Standalone Fiveg now our Fiveg network reaches over 250 million people and 1.3 million square miles.

We now offer coverage across all 50 states and Puerto Rico on.

This geographic coverage is roughly double ATM fees and exponentially higher than Bryce.

Not just our reach that matters its the experience our customers have on our network to that differentiates T Mobile's fiveg from the other wireless.

Horizon as you know likes to spend a lot of time, telling you that they have a real fiveg what fiveg is all about ultra wide band or millimeter wave.

Lets the facts on the tape T mobile customers with Fiveg handsets already have faster average speed in more places horizon customers with Fiveg.

And we're just getting started lighting up our mid band.

We're already lighting up into 2.5 gigahertz in major metros, including New York Elite Houston, Los Angeles, Dallas, Washington, DC and Atlanta.

By the end of the year customers will find mid band.

I was and of cities and towns across.

The end of this year.

We're currently seeing average speeds north.

800, Megabits per second I don't know most home internet speeds and eight times faster than Fourg ultimately peak speeds of the gig.

It'll be even faster as we exit the year cross massive.

But even today, we have the advantage take a look at open signals latest report where T mobile customers have the best Fiveg availability, meaning that I'm carrier customers get a five C.G. signal more often than customers on any other network. That's two times more than 18.

And.

56 times more than pricing.

Not to mention hoopla found the T mobile customers going to Fiveg signal nearly four times more cities and Verizon or an ATM t. combined hideaway brides and would also like to excitedly tell you in that same nuclear test say at the fastest fiveg speed scores, but they often forget to also mentioned that you can only find their.

Zero point or percent of the time.

And maybe they'll deliver nationwide fiveg coverage someday, but they'll beg borrow in steel from their LTE network to do it claiming that tools like dynamic spectrum sharing overcome their spectrum short.

When you get to what's real about Fiveg T. Mobile's network is demonstrably ahead of the competition, even as we just start pouring on the gas and it's now cleared a most observers that it takes all spectrum bands to build a real Fiveg network and our strategy to use 600 megahertz low band as the foundation for Fiveg, something we had planned.

For years and advance what's the right moved to make but it also shows just how well positioned we are taking share in the Fiveg era that everyone is now talking.

T mobile controls 319 megahertz combined low in mid band spectrum on average nationwide, that's more than 80 and key and for rising combined.

We also have more millimeter wave spectrum that 80 Mg and get this we already have as many fiveg devices on our network as Eightseventy horizon combined.

This is a huge advantage for us as fiveg becomes more prevalent for businesses.

All of our brands will benefit from a robust fiveg network and according to the facts on the ground T. Mobile customers are already taking advantage of how quickly we lit up that 600 megahertz footprint and the work Weve already begun to do to rapidly increased pasadena speeds, but the second layer of our fiveg layer cake, our deep soon afterwards.

Honestly I don't think I could be more excited about the progress we've made on this network and what we're building every single day.

Fastest precedent never will tell us more about all of this when he gets his first question almost regardless of the question actually gets asked.

As the growth leader in wireless were poised to bring and even more capable uncarrier even more customers in more places we're building the best network and offering the best value hotspot Supercharging. The Uncarrier is all about.

We set the stage for strong second by delivering powerful Q2 results, but as you know we're not stopping there I really believe that as the Fiveg era. Finally gets underway at scale. Later this year. This is our moment we're way ahead.

We have the strongest assets and we have what we're very quickly become the demonstrably superior network in the U.S. combined with the I'm carriers brand DNA, that's a powerful combination than our competitors struggled to match that will translate.

Yes.

Okay, now I'm going to ask our new CFO, Peter on the Baltic to take us through the financials and our guidance. Most of you know Peter prior to taking this role Peter was already a huge contributor to our outstanding results. He served for years as our Chief Accounting Officer and number two financial.

Dissipating in every major financial decision that we.

Like me he knows what it's like to have big shoes to fill his transition to the CFO role has been seen it comes at an important time for our business. So I'm thrilled to have them in the role in theater taken away.

Thanks, Mike I couldn't be more excited to lead a CFO. During this critical tackle the business we have an incredible all started leadership team.

Which could be working alongside.

Well continue to execute on our proven playbook.

Walked incredible synergy potential of this merger procedures to comp.

I wanted to get into the financial details I wanted to cover off on a few points, which laid the groundwork for our reporting.

First realigning the legacy sprint and T mobile subscribers to our go forward New T mobile policies, the net impact of exchanges as outlined in more detail in our Investor fact book.

Resulted in a net reduction in total branded customers 14.1 million as of April 1st as compared to the Standalone balance as previously reported for sprint T mobile expert.

The biggest adjustment the removal of 9.2 million customers associated with the dish talking about structure, including 963000, which have been classified as postpaid phone customers previously reported sprint figures.

The adjustments also included approximately 3 million subscribers associate Everett reseller arrangement, which were reclassified from posted to wholesale and recall that we no longer report wholesale subscribers, rather focusing on wholesale revenue.

It is important to remember that these adjustments have no net impact on profitability.

In addition, we are providing disclosures around the various impacts from purchase accounting that policy aligned in our 10-Q, but in the interest of time I won't get into too much detail right now.

Okay now, let's get into some of the financial details of the second quarter.

During this quarter, our pre tax financial results were impacted by merger related costs of 700.

Over 19 related costs of 341 million.

Well as noncash impairment charges of 418 million related to changes in our postpaid billing system strategy and a strategic shift in product plans for key vision enable rhythm Merck.

These costs, a combined 1.56 billion before taxes are excluded from adjusted EBITDA.

Q2, net income of 110 million and diluted earnings per share of nine cents were negatively impacted by this combined factors by 1.25 billion and one doctor one per share.

Adjusted EBITDA amounted to 7 billion exceeding our guidance range.

Total service revenue of 13.2 billion was primarily driven by the merger as well as continued customer growth.

Really offset by an estimated 1% to 2% headwind from probing related.

And note that our reported service revenues excluded there's which was reflected in discontinued operations next quarter, but revenue from these customers will reported in our wholesale service from.

Net cash provided by operating activities for 777 million, which includes 370 million for merger related costs and 243 million per cobot 19 related.

This includes the onetime impact of 2.3 billion in gross payments for the settlement interest rate swaps on merger finance.

Cash purchases of property and equipment, including capitalized interest of 190 million amounted to 2.3 billion.

Free cash flow, excluding the settlement of interest rate swaps that I've, just mentioned was 1.4 billion and recall for the swap. The net cash outflow was only 1.1 billion. If there was an inflow of 1.2 billion in cash flows from investing activities for the return of collateral previously provided.

Postpaid ARPU or average revenue per account amounted to 130.57 postpaid phone or period was 47 bunge.

In terms of customer quality our results in the second quarter were impacted by the macroeconomic environments appropriately.

Total bad debt expense and losses from sales of receivables was 263 million or 1.49% of total revenues. This includes approximately 46 million of incremental expense related to the FCC pledge that was excluded from adjusted EBITDA.

If we normalize for this amounts attributable to the FCC pledge bad debt would have been 1.2 or 3% of revenues inline with last quarter.

As we monitor the impacts of coated 19 in the FCC pledging our business. We are encouraged by some of the early trends 95, Percentish. All accounts that took advantage of a pledge of mid some foreign payments that's going on.

Not withstanding high customer engagement and solid team performance. Thus far there is a small subset of FCC touch customers that likely will not recover as a result are posted results for Q2 reflect an accrual of approximately 110000 deactivations.

Alluding 90000 postpaid phones as Mike mentioned for customers that were still with US if ended the quarter under the FCC plunge, but whom we expect the likely not pay off their women. So.

Shifting gears to our capital markets activity in just one quarter's a combined company, we raised $27 billion, including 4 billion of senior secured notes issued in June at an average yield.

6% adept neutral refinancing transaction in which the proceeds will be used to retire high yield debt.

With an MPV benefit of approximately 400 million record low average yield for our company. This deal was extremely well receive and as a testament to the strength of our business and balance sheet.

Also we delivered a 20 billion secondary sale of Softbank shares to the public and T. Mobile received up 300 million dollar feet. So fitting the transaction. In addition to be reimbursed for all expenses.

Just remarkable execution by the team in transactions that are extremely proud of.

Okay, Let me now kind of our guidance, which we want it to provide as we continue to prioritize transparency during uncertain times and when others across the industry have opted to provide a little or no guidance compared to normal practice.

We are not until uncertain to either but we recognize our unique situation as we provide you with the first set of combined results this quarter, including the impacts of purchase price accounting and policy alignments and therefore, we felt it was very important that would provide best efforts guidance for the back half loaded.

As always we will continue to closely monitor consumer behavior, the smallest economic environment related to the pandemic and how that may impact or second half results.

New T mobile aspires to continue to lead the industry in postpaid growth and expect posted net customer additions between 1.7 and 1.9 million.

Just to double click here a bit this guidance assumes higher postpaid phone net adds in the third and fourth quarters from what we saw in Q2.

Also while there was a tremendous opportunity to move quickly in wind shear postpaid other devices since businesses in schools adapted to an environment that remote working learning, we expect to see a more balanced mix of postpaid phone versus other additions in the back half of it.

We expect higher gross adds industry churn levels increase both from typical buyer seasonality.

And the muted churn effect in Q2 as a result coated.

And we see this as an exciting opportunity that's I'm not sure Jake.

Adjusted EBITDA is expected to be in the range of 12.4, the tool or 12.4 to 12.7 billion for the back half 2020 and includes leasing revenue of 2.4 to 2.6 billion, we expect higher as to your net expenses in the second half driven by higher selling expenses due to increased gross ads and the impact of close to 300 million.

Okay at 19 related costs, which are excluded from adjusted EBITDA in Q2, moving back into normalized selling expenses.

Purchases of property and equipment, including capitalized interest are expected to be between 6.6 point 9 billion as we continue to build on America's largest Fiveg network, we expect capex to be relatively flat from Q2, the Q3 before ramping significantly in Q.

For the second half of 2020 merger and integration related costs not included in adjusted EBITDA are expected to be 800 million to 1 billion before taxes and subject to our ability to grow faster and integration.

While expenses in Q2 were primarily driven by severance and merger deal fees, we expect merger and integration related costs in the second half to be primarily operational focus.

Net cash provided by operating activities, including payments for merger and integration related costs is expected to be in the range or 5.3 5.7 billion.

Free cash flow, including payments for merger and integration related costs is expected to be in the range of three hundreds of 500 million impacted by the aforementioned merger costs and increased capital spending on the network.

And lastly in the back half of 20 to 20 are expected effective tax rate will be in the range of 31% to 33% due primarily to certain nondeductible merger related costs incurred in the first half of the year.

The impact the tax rate throughout 2020.

However, we anticipate our future rate to be more in line with historical levels.

Now, let's get to your questions you can ask questions via phone or via Twitter, we'll start with a question on the phone operator first question operator, I'd like to this point out that in honor of rich Greenfield and everybody headlights said, we will only be taking questions. This quarter from people that begin their question, what the phrase great quarter guys [laughter].

[laughter].

Getting operator.

Thank you if you'd like to ask a question again. Please press star one on your telephone keypad first we'll go to Phil Cusick from JP Morgan Your line is open.

Hey, guys. Thank you.

A lot of things to ask about but I think the the number one as on as I'm talking to people here is on the second half guides.

The 12 for to 12, seven can you help us.

Bring that back to what I would have considered like a historical T mobile cash EBITDA.

Yes, he benefit.

Some netting out of all these benefit.

Absolutely, but Peter why don't you start it's really it's really about backing out the lease revenues. If you want to look at what what kind of what we call core EBITDA not so much.

Yeah, Yeah, absolutely you know let me let me begin with obviously.

There the second half guidance is also reflective of increased gross adds asked you today right and that's both from a seasonal uptick that we expect with industry trend, which is typical Q3 second half, but also as a result of the Covidien 19 cost $300 million to were excluded in Q2, but again will become part of the normal run rate.

And then you have the leasing revenues as you said if you wanted to get to record adjusted.

Yes.

Okay. So that that 10, one to attend the 10 1 billion or so that's what you would consider to be sort of a cash EBITDA number the way T mobile used to offer it.

Yes, the way, we just off we're in right.

It really changed and Joe in terms of how we think about the stuff right. So we have adjusted EBITDA, then you have leasing and lease revenues get back out.

To get to this more operational joo adjusted even as what we focus on and guide on those so it's important that you understand that and obviously, bringing in spread theres a much bigger piecing component inside the differences between the two are greater now that we've merged.

Yes, and that's that's the second thing I wanted to ask was.

Historically sprint did a lot of leasing T mobile tried it and I didn't seem like you guys like that very much should we it looks like guidance. We should expect you to continue to be to be leasing phones in a pretty substantial way at least through this year. How do you think about that offer.

I mean, I'll start and I'll ask Matt Stan jump in.

It's it's not that we didn't like it it's that work.

Our view is that hasn't always been demonstrated to add to enterprise value add because the customer satisfaction is that there and then you see costs later on as a result, so but it's a tool in the tool kit. We've always done some of it I think depends on how it's done and we're open to guide doesn't necessarily imply.

On a any big change obviously, so leasing revenues come from the run rate that in.

Informed by the customers already in the base, but Matt other thoughts about financing in general and how we think about yeah.

That's great. So you know as Mike said, we're going to continue generally stable on.

Right now we've got a new proposition in the market largely it's T mobile or the one thing. We do have said, we haven't spent casper and were very aggressively taking care of most customers are watching and managing a churn happened in turn go down a lot of them on lease upgrade offers and so what you can expect over time, obviously, it's we're not going to take away things customers because.

We increased churn we're going to continue serve them and so that's part of what do you see in leasing next as we got options.

Global the T mobile options that were still going to take care of sprint customers. So it'll be kind of more of a gradual change and the total next versus what we're doing for new customers.

Im saying for share while they do all the clock off right now as you know we asked day, a one and therefore, our main go to market for us to centered around yet, but we have all these tens of millions of sprint customers and a lot of them may like leasing and one another at least device and we're happy to provide them. So.

See that.

Hello.

Thanks, Bill Skus.

And we'll go to our next question John Hodulik from give yet your line is open.

Okay, great quarter guys.

Go for won't.

I took a two questions.

First of all the EBIT secured I thought was.

Definitely put a little bit of a surprise, especially the sprint. Yeah go ahead, I think 1.8% thinker and.

What do you doing to bring that down.

So quickly, especially given all the integration efforts with the store closings and that kind of thing that's number one and then number two so given the availability. The 600 megahertz spectrum can be pent up demand for for new phones are you guys looking at that the launch of the I phone in the fourth quarter.

As an opportunity to take share and.

Does that bake into the guidance because that I'd point out that you had 7 billion in EBITDA for the quarter that is expecting sort of pulled in the house for them for the rest of the years, obviously, it looks like you're expecting though that not necessarily to be one basis as we look out through the fourth quarter pedigree. Thanks.

Sounds good that's going to start I'm sure I'll start on churn.

That's a great number that's a great number to have in the first quarter now that we're together and that in a comparison is accurate no T. Mobile wasn't was among the leaders in the category and as you said spread was.

Hi ones I think last reported Q4 X.

And the blackout 80, 80 basis points one thing to consider is this was done in Q2, when coupled with acute and we said the this switching flows were down we're taking care of customers and that collection home. We've accounted for all of that the Q2 was a bit of an anomaly in you've seen that across the industry in terms of what churn as we.

We have been very hard at work, we've been talking about what we've done getting this friend customer base access to the network. We've got 10 million customers kind of on a daily basis using the network you deployed pulte with a much better experience and we'd been hard at work do you mean value to the sprint customer base, and taking uncarrier principles and deploying them pretty broad.

Sadly across the base. So we're not predicting where churn will go back as Peter said seasonally it's going to be up a little bit and a you know in the third quarter and we've put that into our guidance.

And I can't predict where terminal go.

I can't say the things, we didn't get to where it was <unk> 0.80 last quarter. When you keep doing more out as we look forward.

Not to mention and in addition to the legacy T mobile side of things, which will be increasingly difficult for us to unpack for you because we're asking one down were one business going forward, but legacy T. Mobile's side had a blockbuster low churn and so blended in that also helps. So this is really gratifying and we have tailwinds on.

Turned over the medium and long haul because we know what drives that we've seen this journey on the T mobile side from some of the highest churn in the industry to some of the best churn in the industry and its network and where I just got done talking at length about how no one's going to be able to catch us on network. So we're really excited and to Matt's point seasonally this year there are going to be two dynamics.

I co, but we think the impacts of it will start to abate, which bring some normalcy back into.

Actually this quarter.

As well as what's normal for T mobile, which is a seasonal uptick in the second half all in the against the backdrop of real exciting tailwind so.

That's the first piece and the second piece you asked about was kind of how to think about the second half and you know I will say, we have burden on our plan.

With the Activations that we think are necessary to deliver the growth we guided to me and that means we know that gross activations will be up in the second half why I. Just told you that seasonally and due to coded churn will be up well outrun that churn. The other guys churn will be up and that's an opportunity.

The other guys churn goes up a little bit that's when we when we compete you asked about phones I don't know I can't comment about phones I really hope there is a well rounded five cheat on portfolio as we exit the year. So I'll just leave it there and if there is that would be a great competitive moment for us so.

Okay that helps them.

Yeah. Thanks, Mike.

Okay.

Oh next well go to.

Mike Crowley with Goldman Sachs.

Sorry, Brett Feldman with Goldman Sachs I apologize.

Got it went up and you.

They keep us we even had hoped they like hopefully like next I want to either close to the quarters. Congratulations on that I want to talk about integration.

Express your confidence in synergy targets that you had outlined in any of these all the commentary it sounds like you just moving faster.

I think we would've expected you know when you first mouthfeel two years ago and so when a question to be do you think you could start seeing the synergies coming to your numbers more quickly and that would seem likely be accretive to the NPV and also the integration spending that you outlined for the second half is here actually looks pretty modest considering that you previously talked about spending 15 billion.

Dollar through the integration. So that's been you're going to went much more significantly as a new passes you what would drive that or are you actually at the point, where maybe you are realizing greater efficiencies associated with the integration as you can get closer to execution on thank you.

Yeah, Let me start going ask got unable to comment.

First of all I love. The fact that some of the tower companies are out there sort of starting some thats information about our pace I just got done telling you. We're in all the biggest cities in the country with two and a half gigahertz fiveg already.

We will be in thousands of cities and towns across this country as we exit this year with that layer cake. So we're you know that's what where we'll be running really fast reason it feels tough over there at the tower companies is because both Standalone T mobile and sprint or planning on lots of new sites.

Spread for coverage and T mobile for capacity New T. Mobile has synergies that's called site avoidance and I know thats tough if you're a tower company because billions and billions of dollars of site avoidance offices, the kinds of comments, you're now hearing from on.

That doesn't affect our rate and pace, we're going like crazy and you're right. There's there's not only speed potential which is NPV freedom, but look the faster we get out in front of the pack on a monster Bull customer Approvable network leadership, the more of the operating results start to give us the potential to start talking to you about the magna.

To that synergies as well and the enterprise value created from outgrowing our competitors. So why don't you tell us a little bit about the rate case, because I know that's on everybody's mind, Vienna somebody's. Thanks, Mike I mean, when moving up an incredible price I mean, I could not be more pleased with the progress that we've made in what's a few short weeks since we.

Combined with UBS.

I mean, it's on two fronts I mean, we've been rapidly accelerating the breadth of this network Mike talk to the 250 million people now cover the T Mobile's low, but I'm fine Gee, you 327 million of people covered with LG too right I'm will closing in on the opportunity for you know muffins you feel.

So that gives us the breadth depth comes from the two and half gigahertz spectrum, a mid band slice that so important.

All I can tell you is where they could not cake super Super fast so to give you on semi gear and dimension that for you I mean as we exited.

Second quarter every week, we will starting up great uncertainty going about 600 sites are weak.

In the last month number is going to 700 sites we.

So you cannot do that math thousands of sites in the month.

In the quarter on we are running very very hard.

Being that mid family of the network.

Through this great opportunity.

My Count line, the experience and the speeds. So the only a question about you know fiveg phones in full quota we have a great line up today.

Lots of great phones, Great news from Samsung just the other Doug announced and we want to make sure that there's really only one fiveg network, but you would look to put the funds you found them on its from T. Mobile the coverage is spotty a best for made TNT nascent firms are isom when you could combine great coverage with great.

Performance and speed with mid band inside the full quarter.

Is gonna be a complete engine so.

Equaled a great numbers, but we are only just getting started with this network rollout on the pace is phenomenal.

My Count line, but obviously, we're not building an older places the Standalone T mobile and sprint I'm too I mean, that's good for this business right. We are starting to generate those cost avoidance sites avoidance synergies the pace real price in second half of this year.

So those numbers you know more as we close out.

2020, a tremendous progress on the right I couldn't be happier now and guys know so happy you know we could be doing some more with the China guys.

Public process in play right now we have choices that we can make.

So I would fully anticipate the will stop more tower build as we move into the second half, but we've seen it doesn't slow us down we have lots of options to build we're building for years.

Peter just very briefly on Bretts last part time, he was asking about the operational spend and it was maybe you sounded like might have been a little less than he was expecting given the Q2 spend you want to unpack that a little because I think it's important that people understand yeah, absolutely right and you know it's Ted what you saw in Q2, while it wasn't elevated of amount of merger related cost there was a lot of.

Its action and then restructuring and severance right from acceleration.

When we flip into the second half is primarily when I would call operational synergy capture now. So that's the you know when you think about the case, that's one element sit or in there and of course, it's subject to us identifying ways to prudently go faster, which we're going to continue to do just like you saw in Q2, so in other words operationally and rapidly.

Drilling in the second half the operational component of our cost to achieve in Q2 was actually quite small most of it was deal related transaction costs and study and it's all operational from here on forward, it's a big big uptick and actual cost to achieve flowing through the system in the second half.

It is depending on the budget.

Yes.

In doing so the budget in the outlook for integration.

And nothing really has broadly changed in our aspirations and at some point by the way you raise your good question at some point I know, what we owe you went update and all that we keep saying and I hopefully we backed it up with actual evidence and reasons why we're saying it today I give any something to chew on but we keep saying hey, we're more confident now.

With this this two year old plan, we think we think it maybe a little conservative I know, we owe you. Some some more color on that but listen we have like exactly one data point for this company. So far and that's today's report so we're going to get a little bit more of a line established for you and then we'll give you a different updated a way to think about the future. So I know you that.

Okay fair enough. Thank you.

Okay. Thanks.

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Do you.

Hey, Michael Rollins.

I'm sorry go ahead.

Yeah.

Sorry, operator who's next.

Next we have Michael Rollins from Citi. Your line is open.

Hi, we had union thanks [laughter] [laughter].

[laughter], Thanks for squeezing me and I appreciate it.

A couple of quick question first when the deal was originally announced management teams talked about in the pro forma.

There was an expectation that revenue headwind of sprint plans migrating to T mobile plans and as you've now.

Finished its process of bringing this spring.

Metrics in measures over to T. Mobile how do you look at any potential headwinds from repricing to T. Mobile plans over the next few years and then secondly, we just curious if we can get an update on the distribution and distribution presence as youve integrated there's still more.

Managing through the pandemic, maybe some observations of customer behavior is changing no pun store reopening data more digital or if its reverting back to historical no getting into the store and have a hand holding that the you know the reps in the store deliver.

Our customers. Thanks.

You bet.

By the way I got so enamored with the second part time in the first part again people what was the main thrust for never had revenue yeah. So it wasn't on pricing and revenues, an ARPU and all that I'm one of the things you've got I think from our report was that we see it relatively stable outlook in the near term you know.

Our competitors I guess didn't guide or give you much to go on we felt with a new company. It was important for us to just do a best efforts view and we don't see catalysts in the near term for big changes, one way or the other in ARPU.

Separately, you heard Peter start to talk about Arqule and that we were looking at this out of household level, because we think theres and the Fiveg era theres all kinds of opportunities to develop deeper relationships with households that would be accretive ARPA without necessarily affecting our.

Thirdly, I'll say, our our plan all along has been to bring a intense level of competition to this market like we've always done as the uncarrier, but now in a sustainable way back by the long term network plans that we happened that's obviously going to be to the benefit of consumers and we funded that fully in our model how about relate.

To ARPU, specifically and how that will unfold over the years again I know, we you know we have a two year old set of thoughts and will at some point need to update that but a few things to say, we're bringing competition into the market.

Thats, who we are we've got the capacity to do it wouldn't be crazy not to leverage that capacity advantage to compete hard and grow topline revenues through competition. So that's number one number two in the very near term, we see no real catalyst one way or the other for ARPU changes. So we see a generally stable for the second half as we.

As we comment.

And then that you want jump into the second half yeah, I'll tackle that Mike I think the question was a little bit around insufficient upfront looked like it and what we've seen with coke. So the first thing I'll say as what we've shown this quarter.

Great ability to execute our plant had always been ticket today, one within 90 days or so from closing, we effectively get that slipped a little bit out that we.

All the adversity, we had degree learn a lot of things many companies that sell pull this off and today. The vast majority of all distribution points already our co brand or Brian and his team level and more often running going forward like many retailers. There was an acute issue right. When you all retail shut down and we had to keep our employees.

Safe keep consumer safe petabyte protocols in place. Our team is level worked very very quickly to be safe and take care of customers and we saw some some changes.

And you know buying traffic switching from retail into digital now historically T mobile hasn't relied heavily on digital sprint provide a little bit more and then number increased a lot, but it was a very small percent an increased by a lot and it's still a relatively small percent I'd say those numbers have been generally stable as well as we recovered.

We had gone and I've been able to open the vast majority of stores in a safe way to serve customers and the communities.

And as the market is open back up.

The trends have what I'd say generally stabilized we do intend over time like many folks to serve customers, where they want to get Sir that's digital that's full digital what we've seen a lot it's.

Hi, and its customers start digital and then to fill in retail and we're fully set up to support that we're going to continue to support pass me.

Another way of saying that and one of the reasons why we don't break down digital is that that and I know it sounds a little Cajun, Mike, but all of our customers come in through digital.

And all of our customers merely come in through retail so in other words their hybrid approach is almost everyone deeply research as a rate by many started a card. Some finished schuchardt, even the ones that come through pure digital the majority of those get some kind of human touch. Shortly thereafter, so it's it's a hybrid model and that hybrid model to your point is changing.

It's not changing in a way that's going to bring material changes to our financials anytime soon because right now anyway customers expect the human interaction at some point in the process and I hope that changes overtime.

As long as they do that's where our people shine and you know our people are just you know we won JD power again, we just one the highest scores ever in the history of JD power per customer care. So human interactions are real source of strength of ours and even digital customers benefit.

The last part of your question was about retail a rationalization about the store counts about our reach I can tell you that I'll go to John prior if he's on the audio line just for a quick comment.

Because he really engineered our head of consumer markets engineered this day, one with so much coordination with our.

Communications group, our marketing group, our product and technology groups or engineering groups. John has led the go to market approach and we simultaneously reached more people as T. Mobile now with a deeper population reach of retail than ever before while going faster on store rationalization than people expected to go share a couple of those stats John.

Everybody Yeah, it's been an incredible blast 90 to 120 days like Mike said, just a few moments ago. We've got to you might have notified nearby but from a unified a unified operates the buying the T. Mobile brand. It wasn't really you guys is that no matter, if you're going into a legacy.

He mobile store or legacy sprint store. The answer is yes, we can help you and what we did here is we took the legacy T mobile systems and installed them into our legacy sprint stores and then we took the legacy split system installed them into our legacy T mobile stores, we rebranded everything so if you're driving around the public see these theaters.

Say sprint now part of T. Mobile so we've got the screen exterior signs down the new banners up and they'll be permanent T. Mobile sinus that will be following over the next you know something we'd some months, but what we wanted to do is be able to customers in a position will say yeah. We can help you know one or two coming into the store they've always come into or maybe you're coming into a store that's more convenient.

You know and you know we're in a position where yeah. We're not to do you get from this started that store, but we can help you in all of that so we've we've done a an extraordinary amount of training lots of system work from a product and technology teams and our team has been in a great spot to do that and like Mike said, just few moments ago, not only simultaneously reduce.

We've seen some overlap stores that you guys know we've talked about this that we'd have store, but just a really run on top of one another imports are going to rationalize that optimize that as you need to but at the same time, we have no expanded presence, we actually have 10 million more on covered pops across the country that works then it too so about 275 million people now.

Were distributed to prior to close there was about 265 million. It. So there were places in the upper Midwest into Great Lakes for example, where our distribution reach wasn't as great, but the spring distribution reach was really what's really there. It's what we've been able to get those synergies and get all that behind us get more locations to sort of more customers put our teams.

Mission to be able to help you know new customer bumped the T mobile platform and then also take care of our spring branded customers.

Until they migrate to the T mobile platform over the next sort of year. So I'm I'm Super proud of what our team has accomplished it's been an amazing amount of work in like both what Mike massive few moments ago in this environment, It's it's really wrong, but really for road what our teams have done. So I appreciate the appreciate the time like.

It looks to us at the beginning of this like we reach about 275 million people with our distribution now while going faster than expected on retail rationalization. So it's a win on both fronts really terrific.

Congratulations John operator, let's go back to the phones.

Next we'll go to Simon Flannery from Morgan Stanley. Your line is open.

Great. Thank you very much good evening, Mike I think a a fast cold you talked about some early wins and enterprise I Wonder if you could just pull back more broadly I'm, just thinking about where it where do you see the bigger sort of seems of opportunity.

You had a lot of.

Color around the areas, where you thought you could make progress as a standalone T. Mobile now your combined with sprint where do you think the the best opportunities to take share our over the next couple of years with the with the new network.

Yeah terrific.

I Love. The fact that we are a wireless pure play with the highest capacity in the history of the wireless industry in our plan and because that's ultimately to our advance enterprises. They have they have a complex mill you.

Solution providers from the biggest companies in the world and what they want from our industry is a high capacity connection at a great value and the surround around that with.

And easy to manage that and we need to be the best at doing business with in this category. So we're very focused on being the winning pure play I cats and his team have done a phenomenal job Mike got out of the gates very quickly in this merger and had his day one weeks ago.

Our T mobile for business team integrating our go to market against a enterprises public sector opportunities et cetera, I mentioned in my remarks that T. Mobile for business led the way we had to update you mid quarter on our guidance and then we just updated you again that we beat the high end of the range of our guidance. Most all of those were large.

Really but not entirely due to some outstanding opportunities to serve businesses public sector and schools for example in this rapidly changing landscape.

Customers have reached out to us and said Hey, we need help.

We need a great deal, we need a high capacity service for kids.

You know we talked a lot in our project 10 million about the homework gap if you recall, but that's translated now it's a school weren't gap. That's all day, it's not just homework and T mobile has the capacity to serve.

And that's just phenomenal so Mike if you're on the line would you want to say anything else about the opportunity ahead.

Yes, no. Thanks, Mike Yeah, I think you're I think you're exactly right I know I mentioned last last earnings everywhere and it's really interesting time in the middle of co bid.

And then as we come out of co that as companies are doing their their long term planning and maybe even thinking about possible recession that we're seeing buying happening in this category to fast at a faster rate than we typically would have seen rather for the company's waiting 345 years to bottoms category is happening in fact, it's happening faster to the timelines have compressed and that's good.

As a huge opportunity for us where in many enterprises were not incomes and our teams have just done an incredible job.

I find funding that's meant from customers in that matches.

But at the end of the day like Mike said, it really is about the network and the network that we have in the ground today in the things that we're doing that nickel and my talks about a second ago really are going to be the did the difference maker for us because business is in government agencies first look at the network. They look at our technical compliance relative to their standards and then.

They pick then they pick us based on all the other things that we do and right now we're able to meet all of those demands from customers and and we're now differentiating in network not not just that need to proposition like Mike or so.

Oh, good wells had caused.

<unk> caused customers to maybe look to switch carriers more aggressively to.

Got it better price performance.

Yeah, I think I think weve and we've seen some signs of that.

Many companies out there looking at their long term on cost model, they're going through their own cost transformation programs as they prepare to maybe whether the current the coast Covance storm.

We see lots of examples of companies on government.

Mark drops kinda hiding the dynamic going on in American companies, which is everybody is looking for dollars and looking under every rock kit to find them and here. We are at just that moment with the best value in the highest capacity service. So that's that's really exciting last the last word I will say on this which is also a little bit cobot related is.

You know the C.L. corporate level part of our market is kind of been flat line for a long time and I actually think that toast coveted there's an opportunity that app. The changing work styles look were caused us to see growth again in that sector. Just at the time, we're riding with hyper competitive.

And you know able to lead the pack. So the reason for that simple you know some form of home work and and home office thing is going to consume and some amount of that will carry on and companies will feel more of a need than in the past it take responsibility for some of the home connectivity and personal connectivity of their employees that means enterprise.

Corporate libel lines, maybe positively responses to this environment, that's always been a castle of 80 and Tees and brightened.

But it's ours to take and we're scaling the walls.

Right. Thank you.

Thanks.

Oh, well go to Craig Moffett from market, making your line is open.

Hi, Thanks.

You reported in the release that that you converted about 10% of customers over to the the T mobile sprint customers over the T Mobile network in it that's really sort of brings back memories of of the way you had the metro Pts mergers seven years ago, what did you get the contract.

To add maybe particularly with level and talk about what's different this time.

And trying to integrate particularly the 2.5 gigahertz spectrum versus what we said and Metro PCF merger, which was effectively running off and network and then moving over the spectrum.

And then how that how that can inform the way we think about the cadence of.

Of the synergy realization here.

Number one stuff.

So I could say correct.

So the situation so comparable.

They all different unfavorably. So I think the biggest you know delta or is that as we look to its you know I'm not sure piece, yes, I mean that was primarily a CD my customer base. So we have differing technologies and we knew we have to retire removed.

All of those custom zone to the CD microphone effectively.

Hey, we all with you know combining a traffic from a customer bases across from two bubble.

Play today, Mike mentioned it in your opening remarks 85 cents.

Sprint customer base topic compatible foam with T mobile network, so that 10% traffic number which is remarkable in a very short period of time, it's not because we can start to open the network not just on LTV sprint customers have access to that great nationwide fiveg email to.

It comes and we have compatible LT you time, such an weve activated and we're moving through bulky very quickly, which is the primary voice fair enough for us it's not.

Competing on different technology.

Most with Metro we can move us customers at a much faster pace.

So I'm always hopeful I'm confident now, but we can move through you know the migration of traffic and ultimately spectrum and then move to de commissioning of the faster pace, we announced the going from so there will be wrong with fiercely building out the network capability.

How's that spectrum 2.5, gigahertz, but we have huge volume off as you know right as we do that we can support more and more traffic and start to ultimately migrate these customers across both very Simona playbook in many ways in terms of how we approach it but we're in a much better place to me.

So you can sometimes to compatibility.

Hi, My questions for me and my follow up to the previous and about I Enterprise segment. What do you plan to continue with the wireline network from spread.

Hi, Jason.

Competition and post integration are there any strategic acquisition areas your interests and accelerate growth.

[music].

Obviously I know you do this and ask you know, it's not something I can address directly but I can tell you this and I said, it a little bit earlier, I like being a pure play.

I like being we're focused and we're disciplined and that's going to be one of the ways that we win wireless is where things are though you've heard us say John Rogers said for years, you've heard us say over and over all content and communications of all kind or leaving their linear farms going to the internet. The internet's going mobile mobile is eating the internet and so as a mode.

Oh pure play that's a great placed.

Now on the other side of it I'll, just say Wow, we're focused and disciplined we have a fantastic balance sheet.

And I had an incredible source of strength and so we won't we won't be a two strategic opportunities if they make sense in our business model, but I think you're investing in this company because you see that we have an opportunity to win in this huge market and we intend to focus and to do just that.

And operator, why we do a better.

Thank you and it looks like our next when it's from Jonathan Chaplin from Midstream Your line is open.

Hi, Thanks, guys great quarter.

One like for like the one for level for Mike.

Or maybe it's Peter.

Were there any synergies captured in to Q or is it too early and then how much of the hub what are you assuming for synergy capture in the second half guidance.

And this one Stephanie Formica's the $43 billion, you said a few times the expected to be higher is that just from acceleration over the.

The GE number will the EBITDA number would be larger than you initially for it and then can never when you get to full pins on the.

Oh Gee deployment, what how many how many what does that 700 per week go too. Thanks.

You heard I'll have that Peter comment on the first when you heard in my remarks that we moved faster than expected on so many elements of of integration in the second quarter and you saw a slow the costs through for some of those things.

Yes that does allow us to start to see some run rate synergy impacts from those moves I also said that that sets us up well to invest in the next route. So you have to kind of keep an imbalance because the bigger pieces to the earlier discussion are still in front of us the actual operational integration spending was pretty light in Q2, you'll see benefit of it flow in but that.

Benefit is really allowing us to move to the next stop basin in and around to bases and swing again and so in 20 and 21. These are big investment years, and it's important we start to get some of that run rate to flow and because that actually helps fund us as we go along so I think I kind of captured that in my remarks that Peter why don't you Tech data Multek Leo.

Yes.

Little bit Mike So.

Theres no doubt right.

The long tendency of a deal as well as cobot 19, right, that's a differential versus what out there almost two years ago, but we do remain I had the comp and our ability to exceed it and to your point my count the moves that we made in Q2, you saw us accelerating diligently do things it came out there both from the organizational design acceleration before.

A rationalization of acceleration see what the pace of the two and a half rollout, which is which is again first step of the three but ultimately it leads to the decommissioning, which is the biggest part of the synergies you saw avoided site built already that's already something that we're capturing so yes in the second half of the year, we're already going to be capturing synergies and.

Thats been only build them through investment periods and again as Mike said I think we're quarter into this journey multiyear journey where quarter in we're already seeing optimistic signed term are moving quickly where it's prudent to do so and we do all you an update on that so as soon as we can we will hopefully you hear a saying well, we you know and we're laying down some facts to back it up now.

That you know our aspiration is to go faster and big.

And look I I think ultimately you're going to measure our team based on three simple things did we outgrow the competition through this this first planning cycle as a new company did we unlock the synergies bigger and faster than we promised and translate that to enterprise value and degree set up the company for long term success and.

Management team is laser focused on off.

[noise] almost done on the back end of your question there on the run rate, obviously, we're going to do better than the 700 per week.

Hi, I'm delighted with that ramp during the time that Mike. So great News is we've got great resources that were working very safely and live with health and safety Paramount our supply chain is actually really robust you know we got a few skus in the early days of the pandemic the things are moving really well and.

I want to get into a nice robust steady state go build this not one count as we sit up on next you know two years I really want to break the back of the two point Fiveg deployment over the next 18 months and that's the plan and we have a run rate in the production right. Its network factory now is rolling out.

Grades and incremental sales activity on a very very strong cadence tough spot.

You guys I'm going to step out right now, but we are going to take one final question and then Peter will wrap us up so on for Mike part. Thank you for this great discussion. This was a phenomenal quarter an operator the last question.

Oh, that's when it comes from that Peter Subpoena from Bernstein. Your line is open.

Hi, Thank you I was wondering if you had any insights on spread subscriber churn and I know that covert 19 makes it hard to separate the driver some changes in churn, but you seem to think about the way spread subscribers are interacting with the network that gives you the quantitative sense of how the experience.

It might be changing.

Thanks.

Yeah, Hi, Peter It's Matt I'll start and then if not a wants to jump in on any other other factors there so.

We haven't seen anything that surprised us and we feel great about that was off after Q2.

Terms.

Subscriber churn for sprint.

We've seen lots of positive sites, we've we've been able to rapidly.

Enable roaming and the ability from sprint customers access to the T Mobile network.

We've seen noticeable declines in churn rates from those customers, who have button on the network, which is partly why we are going very fast hitting the buildout done by we're very happy about the handset compatibility and why we're aggressively moving fast or at bringing goes you know enhance coverage experience has since been customers. We've also seen great participate.

Haitian on this front customer base into some of the offers and programs that T. Mobile traditionally had like chemical Tuesday's you know our our we've had that for a number of years. It's a massive it's a great platform for customers just get thank every day for being a customer for example, if something we've rolled out since front customer base, we've seen great adoption of that cost.

That's a very positive sign that we have engaged customer base.

We are excited about being a part of the T Mobile mobile company in what we have in front of us.

So we're feeling very positive about where things are at it all that said you know we don't know how that's going to look when we come out of the suppression in Q2 from covets, we're watching that and as Mike said earlier, you know we're planning for a highly competitive.

Yeah.

With gene pool getting back to normal Oh, we need devices.

So we can really take share in the marketplace.

You know times, especially for the.

This access to the two mobile network for the sprint customer base is absolutely key me we know.

A richer and was a major concern and didn't place you've heard on numbers today, I mean 10 million customers every day no accessing the T mobile network and that's everywhere, it's not so some kind of a roaming thing where it's just geographic expansion into rural environments. This is something in building in.

In Manhattan in Seattle, it's not big enough pools, it's not being in suburban environments as well as Roland only about.

35, 40 cents about traffic is actually run bombs sprint customers are already saying, hey dramatic improvement in the coverage. We did not to do you have close we opened up you know them network for sprint customers would double handsets, which is the vast majority of it.

So big improvement.

Coverage experience has been a key ready starting to move towards looking customers on the completely.

She with T Mobile network experience, we've been very targeted with up to make sure. The customers on sprint side have you know very difficult challenging situations Weve moved some of those already complete you know the Q3 mobile network they'll be more obviously as we ramp up build spectrum migration.

I don't have the activities.

So very pleased with the progress there I'm very positive signs in terms of the uptake from sprint customers using the T Mobile network.

Without I'm going to it was helpful. Thanks, very much or.

Thank you Peter for the Great question. Thank you everybody for tuna, yet and we're really looking forward to continuing on this journey and speaking with you again next quarter.

Operator.

Thank you ladies and gentlemen, this concludes the T mobile U.S. second quarter 2020 earnings call. If you have any further questions you may contact Investor relations or maybe a department. Thank you for your participation you may now disconnect have a president though.

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Oh.

Oh.

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Hmm.

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