Q3 2023 T-Mobile US Inc Earnings Call

Good morning.

Following opening remarks, the earnings call will open for questions via the conference line by pressing one followed by the four and via Twitter by sending a tweak to at T mobile IR or Mike Sievert, using cash tag T. M U S.

I would now like to turn the conference over to Mr. Jud, Henry Senior Vice President and head of Investor Relations for T.

Mobile please go ahead.

Yes.

Alright, welcome to T Mobile's third quarter 2023 earnings call.

Joining me on the call today are Mike Sievert, our president and CEO.

Peter <unk>, our CFO as well as other members of the senior leadership team.

During this call we will make forward looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review.

Our earnings release, industrial back, but and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the quarterly results section on the Investor Relations website.

That said, let me kick it over to Mike.

Okay. Thanks, Doug Good morning, everybody, if you're watching on our webcast you can see we're coming to you from New York City and I'm here with several members of my senior leadership team and we're looking forward to discussing another quarter of great results our strategy to deliver the best network, coupled with the best value and the best customer experience has.

Aimed remarkably consistent and our Q3 results again show, how well that strategy is working with another quarter of industry, leading customer and financial growth.

I want to thank our amazing team nationwide, we have tackled a lot of change together recently to position our company for success in the future and it hasn't all been easy, but this team showed once again, what loving customers looks like and how that simple philosophy translates into success.

I'm sure you've seen the numbers already so I'm going to spare you the greatest hits album of all the quarterly results and just.

Thanks.

So we can get there.

First as we announced yesterday I am so proud of our network team for reaching our audacious goal of 300 million people covered with dedicated mid band by Jeep over two months ahead of our year end target we announced this goal nearly three years ago and then we got to work.

And got it done and to this day no one else in our industry has stated any plans to match it at any time in the future.

Now it may get confusing with other celebrating their C band deployments, which might have the casual observer I believe our network lead could be narrowing but the opposite is true in fact, even after their C band deployments. According to Uccle T. Mobile's nationwide median speeds were double the next competitor speeds in September.

Double in September and aren't mid band five square mile coverage is also double the next closest competitor, meaning others still have a lot of wood to chop beyond just population dense pockets to ever reach the expansive geography, where T mobile is today.

And we have more spectrum dedicated to five G than anyone else before we've even begun to deploy our C band or three dot four or five gigahertz spectrum or auction 1082, and a half gigahertz licenses, let alone re farming our AWS.

Listen we started the <unk> era two years ahead of the competition and today, we remain two or more years ahead and I predict that two years from now we still will be.

What all this translates to is a superior customer experience, we are rapidly putting our spectrum resources to work for the benefit of consumers and businesses and we're doing it with the best capital efficiency in the industry.

The most exciting part many perspective customers are only just beginning to take notice that T. Mobile is the overall network leader, leaving lots of growth runway ahead.

And we're also expanding on our long held Spain for delivering the best value.

Our latest on carrier move, it's freeing customers' locked into three year contracts and our new go five G rate plans are delivering the most feature rich options and wireless.

Phone freedom has turned out to be one of our most exciting on carrier moves ever and it continues to bring high quality switchers to T. Mobile as you can see in our industry, leading postpaid account growth.

So executing on our ARPA revenue growth strategy, posting another strong quarter, well over plus 1% versus a year ago and revenue per account on the strength of <unk> plus that multiple products.

Some have asked if our new higher value rate plans are most popular with consumers and why isn't ARPA growing faster too and I'll point out that consumer <unk> does continue to grow even after offsets from growing segments like 55, plus and military and consumer overall is being partially offset by profitable growth in the <unk>.

Enterprise space at somewhat lower RPC, but attractive C. L V's.

A development, that's contributing well to our financial growth and.

We're doing all of this within a backdrop of a wireless industry that continues to grow service revenues and cash flows while simultaneously seeing customers win from healthy competition that delivers more value and better networks. In fact, this industry produces cash flow and EBITDA much higher than five years ago.

At the same time customers are enjoying three times more data at four times higher speeds, while paying just a fraction of the price per unit consumed versus before and that's before factoring in the expanded device promotions now routinely offered.

A vibrant profitable business delivering rapidly improving network service and value. That's the win win five G dividend Nobody's talking about and it helps to showcase why T. Mobile spy G leadership is so important.

This is certainly true in T mobile for business, where we had the highest ever account net adds overall and our highest ever postpaid nets in enterprise based on the strength of our <unk> enabled solutions.

Consumers are also choosing T mobile above all others Prime network seekers in the top 100 markets increasingly recognize that T. Mobile offers the best combination of network coverage and capacity to meet their needs.

And for the first time ever T. Mobile also won the highest share of switchers in smaller markets and rural areas.

<unk>.

Broadband also had another strong quarter, we now serve over 4.2 million customers, who are enjoying a great experience with net promoter scores that remain more than 30 points higher than cable with churn improving year over year as well, we remain very much on pace for our longer term goals with fiber broadband.

Sure.

Overall, our customer growth strategy remains differentiated and durable, resulting in industry, leading service revenue growth both at the total company level and at the postpaid service revenue level, where most of the value is created which grew more than 6% or more than one five times the growth rate of peers.

That top line leadership, coupled with our synergy realization and focus on cost efficiencies drove double digit growth in core adjusted EBITDA with the highest free cash flow conversion in the industry.

This allows us to not only raise our guidance for this year again. It also gives us excitement and confidence in the future with our significant growth opportunities continue to continuing to scale with lots of room to run it sets us up for sustained leadership in both customer and service revenue growth as we look ahead.

And we see opportunities amid the rapidly changing technology landscape as well all across our business to drive further revenue growth margin expansion and free cash flow growth that'll allow us to fund our growth investments in our customers and network as well as provide the potential for substantial ongoing shareholder returns.

This amazing customer loving team continues to perform beautifully with so much exciting potential ahead, showing why it's not just a tagline when we say that for customers employees and investors alike, it's better over here at T mobile.

Okay, Peter over to you talk about our key financial highlights and an update on our guidance alright. Thanks, Mike our ongoing delivery of best in class customer and financial growth quarter after quarter enables us to increase our guidance once again, so let's jump into the details.

We now expect total postpaid net customer additions to be between five seven and $5 9 million up 50000 at the midpoint.

This reflects continued progress across all our core growth initiatives, partially offset by the deactivation of a lower RPC postpaid other data devices in the education sector, the largest of which arose during Q3 as.

As you know our ability to uniquely solve customer pain points led to significant connection growth in the educational sector. During the pandemic supporting the rapid need for remote learning solutions.

Things are increasingly returning to normal we had anticipated many of these connections to roll off in 2023 and do not expect the deactivation of these educational connections to have any material impact the service revenue looking forward.

Included in the five seven to $5 9 million as our expectation of approximately 3 million postpaid phone net additions for the full year.

Our focus on profitable growth allows us to fund those higher postpaid phone net adds and still increase our core adjusted EBITDA expectation, which we now expect to be between 29 and $29 2 billion.

This is up over 10% year over year at the midpoint fueled by higher service revenues and synergies and excludes leasing revenues of approximately $300 million as we transition substantially all remaining customers off device leasing by year end.

Our merger synergies are expected to be approximately $7 5 billion in 2023, achieving the full run rate synergy target provided at our analyst day, a year ahead of schedule as we build towards the full run rate synergies of $8 billion in 2024.

Now with the merger integration now substantially behind US, we will discontinue reporting synergies separately from overall business results going forward.

We continue to expect merger related costs, which are not included in adjusted our core adjusted EBITDA to be approximately 1 billion before taxes.

And we now expect cash merger related costs of one seven to $1 9 billion for 2023 as they have underrun the P&L recognition today.

Net cash provided by operating activities, which include payments for merger related costs are now expected to be in the range of $18 three to $18 5 billion.

We now expect cash capex to be between $9 six of $9 8 billion delivering our network milestones ahead of schedule at a capital efficiency unmatched in our industry.

The higher operating cash flows not only fund the increased capex, but also allow for a slight increase the free cash flow now expected to be between $13 four to $13 6 billion, which includes payments for merger related costs.

Not only is this up approximately 75% over last year, thanks to our margin expansion and capital efficiency, but also represents a free cash flow to service revenue margin, which has multiple percentage points higher than peers with further expansion expected next year.

Consistent with the entire year the updated free cash flow guidance does not assume any material net cash inflows from securitization.

Turning to income taxes, we continue to expect our full year effective tax rate to be between 24, and 26% and finally, we continue to expect full year postpaid ARPA to increase slightly more than 1% as we continue to expand our account relationships as part of our land and expand accounts strategy.

Grow service revenue.

In closing, our differentiated and profitable growth strategy continues to deliver industry, leading growth in service revenue core adjusted EBITDA and free cash flow along with the highest free cash flow conversion in the industry to unlock shareholder value.

And with that I'll now turn the call back to Jud to begin the Q&A.

Alright, let's get to your questions you can ask a question via phone by pressing one followed by four.

Or b, a X or Twitter by sending a tweet to T mobile IR or Mike Sievert, using hashtag T. M. U S. We will start with a question on the phone operator first question. Please.

Thank you. Our first question is from the line of John Hodulik with UBS. Please go ahead.

Great. Thanks, two questions. If I can first of all the comments on the the rapid share gains in the rural markets.

We're sort of knew this quarter, Mike anything you could tell us about sort of where you are and sort of how much room you have to go to penetrate these markets and then secondly, maybe for Peter There's a comment in the 10-Q about the workforce reduction.

Operator: Good morning. Following opening remarks, the earnings call will open for questions via the conference line by pressing one followed by the four, and via Twitter by sending a tweet to at T-Mobile IR or at Mike Sievert using cash tag T-MUS.

And the fact that it would drive opex down on a year over year basis in 'twenty four I guess two parts. There. What are are there are any way you could sort of quantify the opex reduction I know there are other factors involved that are potentially allowing you to see that opex reduction on a year over year basis. Thanks.

Jud Henry: I would now like to turn the conference over to Mr. Jud Henry, Senior Vice President and Head of Investor Relations for TS-Mobile. Please go ahead. Alright.

Okay, John let's start with John Fryer, who maybe you can give a little color on what we're seeing in smaller markets in rural areas as you heard in my prepared remarks.

This is a huge milestone because T mobile achieved leadership in its share of switchers for the first time ever across the entirety of what we call smaller markets in rural areas, which is about 40% of the country. Yeah. You bet, Mike. So, yes, just picking up on that 40% of the country everything outside of the top 100 markets is how we define smaller markets in rural areas.

Jud Henry: Welcome to T-Mobile's third quarter, 2023 earnings call. Joining me on the call today are Mike Sievert, our President and CEO, Peter Osvaldik, our CFO, as well as other members of the Senior Leadership Team. During this call, we will make forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our FEC filings, which I encourage you to review.

It's about 140 million people 50 million households that again, 40% of the market and we just could not be more delighted I've been talking to you about this for a couple of years now relative to our ambitions in smaller markets in rural areas and bringing you a real fine G. When you think about a lot of the places that we're playing we're bringing the only five G network into town.

Jud Henry: Our earnings release, investor-facbook, and other documents related to our results, as well as reconcilations between GAP and non-GAP results discussed on this call can be found in the quarter of the results section of the investor relations website. With that said, let me kick it over to Mike. Okay.

And given the announcement that we just made a couple of days ago around <unk> ultra capacity now, bringing that to 300 million people across the entire country. So it's a huge opportunity when we bring the network, we're bringing the distribution, we're bringing our marketing and our special sauce relative to our value proposition and more choice to smaller markets rural areas, it's been fine.

Mike Sievert: Thanks, Judge. Good morning, everybody. If you're watching on our webcast, you can see we're coming to you from New York City, and here were several members of my Senior Leadership Team, and we're looking forward to discussing another quarter of great results. Our strategy to deliver the best network coupled with the best value and the best customer experience has remained remarkably consistent. And our Q3 results again show how well that strategy is working with another quarter of industry-leading customer and financial growth.

Has that gets a huge milestone for us to be across all these markets now the leader of share of Port ins, we're not playing in all the markets just as a reminder, it's about 70% of the markets that we're playing it we're not even playing across all the markets and even with that now we're the share leader in terms of share take or I should say not necessarily share leader, but a share taker.

Mike Sievert: I want to thank our amazing team nationwide. We have tackled a lot of change together recently to position our company for success in the future, and it has been all been easy. But this team showed once again what loving customers look like and how that simple philosophy translates into success. I'm sure you've seen the numbers already.

And you know I've mentioned this a few times we've had a dedicated team that's a big part of our success in smaller markets rural areas really getting after this with a dedicated team that's focused on driving the kind of commercial success that were looking for and our overall ambition is unchanged and we're right on track to have 20% share of households by the end of 2020.

Mike Sievert: So I'm going to spare you the greatest hits album of all the quarterly results and just things that we need to do. First, as we announced yesterday, I am so proud of our network team for reaching our audacious goal of 300 million people covered with dedicated mid-band 5G over two months ahead of our year end target. We announced this goal nearly three years ago, and then we got to work and got it done.

If you take these last couple of quarters and Dragon right will be the share leader soon enough markets and malaria.

Peter any comments on Opex for 2024, and why don't you just gotten rollout the guidance for 'twenty.

That'd be great.

Got up early out I got up to early Rollouts for guidance that's for sure but in your question of Workhorse transformation. Okay. Yeah, I think Mike touched upon it at the beginning and you source comments around this before this is really about a tough set of actions, but as we got through the balance of the integration.

Mike Sievert: And to this day, no one else in our industry has stated any plans to match it at any time in the future. I know it may get confusing with others celebrating their CBAN deployments, which might have the casual observer believe our network lead could be narrowing, but the opposite is true. In fact, even after their CBAN deployment, according to Ucla, T-Mobile's nationwide median speeds were double the next competitor speeds in September, double in September.

We had to make some changes so that's what this team does it looks around corners, and it says we need to make sure we create clarity and the operating of this organization bring that entrepreneurial spirit back and make sure that we're looking at what are the headwinds on what are the tailwind you know as we think about what we laid out at analyst day, which it seems like so long ago with respect.

<unk> to 'twenty 'twenty, four and what we're gonna do there a lot in the world has changed but it's a set of all of these tailwind and actions that we've created that still gives us confidence that we think certainly from our core EBITDA perspective, again, I'm not going to roll out all of the 24 guidance and we're gonna come right in there in the middle of the range and it's these are the kind of actions that are in that.

Mike Sievert: And our mid-band 5G square mile coverage is also double the next closest competitor, meaning others still have a lot of wood to chop beyond just population dense pockets to ever reach the expansive geography where T-Mobile is today, and we have more spectrum dedicated to 5G than anyone else before we've even begun to deploy our C-band, our 3.45 GHz spectrum, or Auction 108 2.5 GHz licenses, let alone refarming our AWS. Listen, we started the 5G era two years ahead of the competition and today we remain two or more years ahead, and I predict the two years from now we still will be.

Sorry to create that opportunity in and keep bringing the ability to invest in customers and the network and the business. That's where you are I was kind of kidding, but you did rollout the guidance.

It is remarkable that.

We did this analyst day years ago I think.

Early in 'twenty, one and laid out several years of expectations as we sit here today knocking on 2024, we're able to outlook a year next year that looks just like we had anticipated right down the middle and.

Mike Sievert: What all this translates to is a superior customer experience. We're rapidly putting our spectrum resources to work for the benefit of consumers and businesses and we're doing it with the best capital efficiency in the industry. The most exciting part, many prospective customers are only just beginning to take notice that T-Mobile is the overall network lever, leaving lots of growth runaway ahead. And we're also expanding on our long held fame for delivering the best value.

That's something that I'm, particularly proud of given the it's not at all like we thought I mean, it's really different than we thought and yet we make course corrections as we go to keep the promises that we made to you front and center, a vibrant growing business developing EBITDA and cash flow and doing breakthrough things for customers and businesses and.

And that's what's happening so we couldn't be more excited about next year.

Great. Thanks, guys operator next question.

Mike Sievert: Our latest uncarrier move is freeing customers locked into three year contracts, and our new go 5G rate plans are delivering the most feature rich options in wireless. Phone freedom has turned out to be one of our most exciting uncarrier moves ever, and it continues to bring high quality switchers to T-Mobile as you could see in our industry leading post paid account growth. We're also executing on our ARPA revenue growth strategy posting another strong quarter well over plus 1% versus year ago in revenue per account on the strength of go 5G plus and multiple products.

Our next question is from the line of Simon Flannery with Morgan Stanley. Please go ahead.

Great. Thank you very much good morning, Mike you talked about some of the additional growth opportunities and perhaps you just revisit the fiber.

And how that's going and how you're thinking about that I can spend a lot of speculation about different assets I think you've talked in the past about asset light and then related to that fixed wireless expansion and analyzing the millimeter waves overlay solutions in other ways to add capacity any updates on that it sounds like you've still got sea bound in three or four or five two.

To bear on that but any color there would be great.

Mike Sievert: Some of us, if our new higher value rate plans are our most popular with consumers, then why isn't ARPA growing faster too? And I'll point out that consumer ARPA does continue to grow even after offsets from growing segments like 55 plus and military. And consumer overall is being partially offset by profitable growth in the enterprise space that somewhat lower ARPAs but attractive CLVs, a development that's contributing well to our financial growth.

Yeah. Thanks Simon.

Nothing's changed in terms of our philosophy and approach as it relates to broadband and just take you back you know what we had said still holds which is we are conducting all kinds of experiments in this space, including observing our national performance in five G home broadband, which if anything that performance and the residents of <unk>.

Our brand and our team's ability to execute in the space along with the trials that we're doing in fiber only bolster our confidence that our brand and our team belong in this market but.

Mike Sievert: And we're doing all of this within a backdrop of a wireless industry that continues to grow service revenues and cash flows while simultaneously seeing customers win from healthy competition that delivers more value and better networks. In fact, this industry produces cash flow and EBITDA much higher than five years ago. Well, at the same time, customers are enjoying three times more data at four times higher speeds while paying just a fraction of the price per unit consumed versus before.

But nothing has changed in terms of our philosophy, we like this business model and to the extent, we make investments or partnerships in the area. Our view is it should be capital light generally off balance sheet et cetera speculation I know is out there I cant clarify we're not the partner to Jana and a transaction that was rumored a couple of weeks ago.

Although we remain interested in partnerships like the kinds, we have rolled out pilots around and other contracts that are generally capital light generally off balance sheet and that's for a reason, we're performing really well and demonstrating through our tests as well as our broad scale performance and five G. A home broadband that our brand.

Mike Sievert: And that's before factoring in the expanded device promotions now routinely offered. A vibrant profitable business delivering rapidly improving network service and value. That's the win-win 5G dividend nobody's talking about and it helps to showcase why T-Mobile 5G leadership is so important. This is certainly true in T-Mobile for business where we had the highest ever account net ads overall and our highest ever post paid net in enterprise based on the strength of our 5G enabled solutions.

Our team belong in this space and we can create value.

As it relates to new ways to do wireless.

Broadband you said at the very end there.

I mentioned in my remarks, you know often team now that they've reached 300 million people with mid band Ultra capacity five G are now setting about the task of deploying all of our spectrum resources to that Ace and we're only just beginning we have the bulk of our two and a half gigahertz now rolling out, but our target is to be at.

Mike Sievert: Consumers are also choosing T-Mobile above all others prime network seekers in the top 100 markets increasingly recognize that T-Mobile offers the best combination of network coverage and capacity to meet their needs, and for the first time ever. T-Mobile also won the highest share of twitchers in smaller markets and rural areas in Paris. Rod Band also had another strong quarter. We now serve over 4.2 million customers who are enjoying a great experience with net promoter scores that remain more than 30 points higher than cable, with churn improving year-over-year as well.

200 <unk>.

Megahertz around the end of this year.

<unk> deployed against the 300 million people and then more room to run next year, because as I said, we have auction 108 proceeds still pending we have C band that we havent deployed three dot four five as well as re farming potential from spectrum being used for LTE right now like AWS and so lots of room to run as it relates to <unk>.

Mike Sievert: We remain very much on pace for our longer-term goals with 5G broadband. Overall, our customer growth strategy remains differentiated and durable. Resolving an industry-leading service revenue growth both at the total company level and at the post-paid service revenue level where most of the value is created, which grew more than 6% or more than 1.5 times the growth rate of peers. That top-line leadership coupled with our synergy realization and focus on cost efficiencies, drove double-digit growth and core adjusted EBITDA with the highest free cash flow conversion in the industry.

Pouring new capacity into this network and that means we right now at a broad scale are not looking at alternatives to that from a wireless standpoint, we use millimeter wave pretty strategically in very dense places and so far that's a great use for it I will say as we said last time, so no change that we remain open minded.

Whether there are techniques that would allow us to deploy capital specifically for five G broadband and make a great return for you, but so far we havent drawn any conclusions so that that's a scalable opportunity for us.

Thanks, Mike.

You bet.

Mike Sievert: This allows us to not only raise our guidance for this year, again, it also gives us excitement and confidence in the future. With our significant growth opportunities continuing to scale, with lots of room to run, it sets us up for sustained leadership in both customer and service revenue growth as we look ahead. And we see opportunities amid the rapidly changing technology landscape as well, all across our business to drive further revenue growth, margin expansion, and free cash flow growth that will allow us to fund our growth investments in our customers and network as well as provide the potential for substantial ongoing shareholder returns.

Next question please.

Our next question is from the line of.

Yeah.

Pardon me, Phil Cusick with J P. Morgan. Please go ahead.

Two if I can one Peter can you talk about potential savings from the layoffs in August and will those hit the fourth quarter or should we think of that all next year and then maybe one for Kelly can you talk about the contribution of business to subscriber growth numbers and what's the typical <unk> of your business. So much. Thank you.

Okay, let's start with Kelly on business and then we'll come back to a another crack at Opex.

So what's going on in business Kelly.

Mike Sievert: This amazing customer-loving team continues to perform beautifully with so much exciting potential ahead, showing why it's not just a tagline when we say that for customers, employees, and investors alike, it's better over here at T-Mobile.

Well thanks for the question and I'll tell you that as a result of Iron network leadership and our solutions that are built for two days unique challenges of the CIO. We continue to deliver highly profitable growth one of our highest postpaid phone net adds and Lois mentioned quarters in history and delivered results.

Peter Osvaldik: Okay, Peter, over to you. Talk about our key financial highlights and update on our guidance. All right. Thanks, Mike. Our ongoing delivery of best-in-class customer and financial growth quarter after quarter enables us to increase our guidance once again.

And once again that outperformed our benchmark competitor. This quarter also we delivered our highest enterprise postpaid net adds ever so we're seeing growth in all segments in small business and and in enterprise and that's where the macro environment. While there is probably a question that are price sensitive we know.

Peter Osvaldik: So let's jump into the details. We now expect total post-paid net customer additions to be between 5.7 and 5.9 million, a 50,000 at the midpoint. This reflects continued progress across all our core growth initiatives partially offset by the deactivation of lower R-POOP post-paid other data devices in the education sector, the largest of which arose during Q3. As you know, our ability to uniquely solve customer pain points, what the significant connection growth in the educational sector during the pandemic, supporting the rapid need for remote learning solutions.

From years of experience that typhoon doesn't determine a win with enterprise and government who are uncompromising when it comes to network deployment and complete solution solutions like we recently deployed at Boston Children's Hospital.

Which is the health care industry first ever hybrid five G network solution for over 18 buildings, which are supporting critical applications not only reliable connectivity, but also with security and Indian solutions for doctors to provide telehealth services to their patients.

Peter Osvaldik: As things are increasingly returning to normal, we had anticipated many of these connections to roll off in 2023, and do not expect the deactivation of these educational connections to have any material impact the service revenue looking forward. Included in the 5.7 to 5.9 million is our expectation of approximately 3 million post-paid phone net additions for the full year. Our focus on profitable growth allows us to fund those higher post-paid phone net ads, and still increase our core Justin EBITDA expectation, which we now expect to be between 29 and 29.2 billion.

So let me, let me pause there and Mike see if there's any yeah.

Specifically on <unk>, we said in our prepared remarks, it's somewhat lower than consumer, but highly accretive from a C. L D and value creation standpoint. These are great customers. You know we are finding as Kelly said that enterprises are not picking us because we're the lowest price, although we compete ambitiously unpriced, they're picking us because of the solutions that calix.

<unk> has brought to the market and that's very helpful from a value creation standpoint for us. So we continually look at the customer lifetime value net of all the cost to serve these customers and find that enterprise customers are highly attractive and therefore contributing to our financial results and that's why Peter always warns you ARPA is that mix driven metric and we're not solving for it we're solving for.

Peter Osvaldik: This is up over 10% year over year at the midpoint, fueled by higher service revenues and synergies, and excludes leasing revenues of approximately 300 million as we transition substantially all remaining customers off device leasing by year. Our merger synergies are expected to be approximately 7.5 billion in 2023, achieving the full run rate synergy to our get provided at our analyst day, a year ahead of schedule, as we build towards the full run rate synergies of 8 billion in 2024.

<unk> creation and return on our effort and investment in enterprise is a great place to put our effort and investment.

And and then fill with regards to the one they got a crack at it opex. So again, but the actions that we took really ways for us to create tailwind and further fuel the growth for the company and so I'm not giving specific line item Opex guys. All of those actions were than contemplated in the updated guide for 2023 that we gave.

Peter Osvaldik: Now with the merger integration now substantially behind us, we will discontinue reporting synergies separately from overall business results going forward. We continue to expect merger related costs which are not included in adjusted or core adjusted EBITDA to be approximately 1 billion before taxes. And we now expect cash merger related costs of 1.7 to 1.9 billion for 2023 as they have underrun the PNL recognition to date. Netcash provided by operating activities which include payments for merger related costs are now expected to be in the range of 18.3 to 18.5 billion.

And he had kind of a teaser we just gave about 2024 and Corey but are there.

Thanks, guys.

You bet.

Alright next question.

Our next question is from the line of Craig Moffett with marketing that Nate.

Please go ahead.

Alright, thank you.

You guys recently.

A price increase for our legacy plans and we've heard a bit about.

It certainly drew some some unwelcome press and we've heard a little bit about pulling back from that a little bit can you just talk about the kind of response, you've had and how you think about industry pricing going forward and the the ability to to to walk some of your RP was higher.

Peter Osvaldik: We now expect cash caps to be between 9.6 and 9.8 billion, delivering our network milestones ahead of schedule at a capital efficiency unmatched in our industry. The higher operating cash flow is not only fund the increased cap ex, but also allow for a slight increase to pre cash flow, now expected to be between 13.4 to 13.6 billion, which includes payments for merger related costs. Not only is this up approximately 75% over last year thanks to our margin expansion and capital efficiency, but also represents a free cash flow to service revenue margin, which is multiple percentage points higher than peers with further expansion expected next year.

Yeah of course, Craig and by the way that that was sort of not very accurately reported. So let me just kind of cleared up as you guys know because you follow us so closely more so than the press, we tend to do tests and pilots of things quite a bit to try to figure out what's the right answer in this case, we had a test cell to try to understand customer interest in and accept.

And job migrating off old legacy rate plans to something that's higher value for them and for US and we had planned to test and did some training around that and then it leaked and at least as if it was a broad national thing and it kind of wasn't.

Now I don't know that we still have to do that test cell because to your point, we did get plenty of feedback thanks to the erroneous context, a belief and I think we've learned that particular test cell isn't something that our customers are going to get a lot now exactly none have rolled out so even to your question that we recently rolled out we didn't you know we we had planned it.

Peter Osvaldik: Consistent with the entire year, the updated free cash flow guidance does not assume any material net cash inflows from securitization. Turning to income taxes, we continue to expect our four year effective tax rate to be between 24 and 26%. And finally, we continue to expect four year post paid ARPA to increase slightly more than 1% as we continue to expand our account relationships as part of our land and expand account strategy for gross service revenue.

We had planned it as a test cell and then we arent doing it.

Because I think we've got plenty of feedback, but maybe Mike you can talk about our philosophy on pricing things. We're interested in what we're hearing from customers and also what we're seeing with <unk> plus our next yeah, maybe like maybe I can start with that Gulf hygiene, plus indexed have been like we've talked about the last couple of cycles incredible successes for us and it really starts with the fact that.

Peter Osvaldik: In closing, our differentiated and profitable growth strategy continues to deliver industry-leading growth and service revenue, core-justed EBITDA, and free cash flow along with the highest free cash flow conversion in the industry to unlock shareholder value.

These are hands down the best value in this industry. If you look at if you look at all the features that come with those plans.

Jud Henry: And with that, I'll now turn the call back to Judd to begin the Q&A. All right, let's get to your questions. You're going to ask a question via phone by pressing 1 followed by 4, or via Twitter by sending a tweet to ATTMobileIR or ATMICSever using hashtag TMUS. We'll start with the question on the phone. Operator, first question please.

<unk> of dollars of value for customers on a monthly basis with the streaming benefits in the in flight Wi Fi roaming benefits around those plans, but in a time when the market and customers are so focused on device value. There is not a plan in the industry that gives customers more flexibility and more value on device than the <unk> plans deal.

Operator: Thank you.

And you really saw that in this in this last iPhone cycle, where are we really differentiated with the flexibility on upgrade when the rest of the market is it three years. We had offers for customers that allow them to upgrade as frequently as one year.

Unknown Attendee: Our first question is from the line of John Hodulik with UBS.

Unknown Attendee: Please go ahead. Great, thanks. Two questions if I can. First of all, the comments on the rapid share gains in the rural markets. We're sort of new this quarter. Mike, anything you could tell us about sort of where you are and sort of how much room you have to go to penetrate these markets.

You know that those those plans really create the platform for our core pricing strategy, which is how can we give customers more and more value and allow them to move up our price card because they feel like they're getting they're getting something additional from us. So that that is the foundation of our core pricing value as Mike said, we conduct.

Unknown Attendee: And then secondly, maybe for Peter, there's a comment in the 10 queue. We're going to give you about the workforce reduction and the fact that it would drive op-ex down on a year of your basis in 24. I guess two parts there, why are there are any way you could sort of quantify the op-ex reduction and other other factors involved that are potentially allowing you to see that that op-ex reduction on a year of your basis. Thanks.

Tests and pilots all the time, all the time and we will continue to do so because we still think there's opportunities both to deliver more value for customers and a bunch of different ways, but also look for opportunities to simplify our overall portfolio.

John Fryer: Okay, John, let's start with John Fryer, who maybe can give a little color on what we're seeing in smaller markets and rural areas as you heard in my prepared remarks. This is a huge milestone because T-Mobile achieved leadership in share of switchers for the first time ever across the entirety of what we call smaller markets in rural areas, which is about 40% of the country. Yeah, you bet, Mike. So yeah, just picking up on that 40% of the country, everything outside of the top 100 markets is how we define smaller markets in rural areas.

I would I would expect to see more of those kinds of tests from us.

Because it's been a consistent practice throughout the entire end carrier journey, so that we get it right for the experience for our customers yeah, although that particular test cell doesn't need to be executed now we remain very interested and rationalizing our legacy rate plans for <unk> purposes simplification purposes revenue realization purposes.

Customer satisfaction and retention purposes, so we're going to stay at it but that particular ideas you know, we'll probably do something different.

John Fryer: It's about 140 million people, 50 million households, and again 40% of the market, and we just could not be more delighted. I've been talking to you about this for a couple of years now, relative to our ambitions in smaller markets in rural areas and bringing your real 5G. When you think about a lot of the places that we're playing, we're bringing the only 5G network into town, and given the announcement that we just made a couple of days ago around 5G ultra-capacity now bringing that to 300 million people across the entire country.

Okay.

Can you just comment on just the industry pricing environment overall, and what your sense is about.

The pricing the competitive intensity on the on the rate plan side.

Yeah, absolutely you know in fact, I'll give a broader picture rate plan and device promotions, which have become a big part of the competitive milieu over the last couple of years.

John Fryer: So it's a huge opportunity when we bring the network, we're bringing the distribution, we're bringing our marketing and our special sauce, relative to our value proposition and more choice to smaller markets in rural areas. It's been fantastic. It's a huge milestone for us to be across all these markets, now the leader of share of port ends. We're not playing in all the markets. This is a reminder, about 70% of the markets that we're playing in, we're not even playing across all the markets, and even with that, now we're the share leader in terms of the share taker, I should say not necessarily share a leader, but share a taker.

It's it's intense it's really competitive.

It was pretty consistent too I mean, I think it's been consistently competitive all year and you saw we delivered an incredible Q2 and Q3 in that context.

Some of the best performance in our history.

The lowest churn ever for a Q2 and for Q3 in our history. We continue to lead in postpaid net additions and delivered EBITDA performance and outlooks on EBITDA that show that we're monetizing that growth as well. So we're really comfortable in this competitive dynamic and it's stable and consistent so you know.

John Fryer: I've mentioned this a few times. We've had a dedicated team as a big part of our success, and small markets, rural areas, and really getting active with our dedicated team that's focused on driving the kind of commercial success that we're looking for. And our overall ambition is unchanged or we're right on track to hit 20% share of households by the end of 2025. We take these last couple quarters and drag them right, we'll be the share leader soon enough for the market in rural areas.

That's what's going on out there its intense.

We like it that way and.

I would say we're entering.

Lee very intense seasonal period around the holidays and I expect it to be a slog out there just like it is every year.

Okay. Thank you.

Alright.

Peter Osvaldik: Peter, any comments on Hopax for 2024? Why don't you just go ahead and roll out the guidance for 2024? Yeah, I mean, you know, that will be great. I've got to roll out the guidance, that's for sure. But in your question of workforce transformation, I think Mike touched upon at the beginning, and you saw us comment around this before. This is really about the tough set of actions, but as we got through the balance of the integration, we have to make some changes.

Alright next question.

Our next question is from the line of Brett Feldman with Goldman Sachs. Please go ahead.

Right.

Thanks for taking the question during your prepared remarks, I think you had mentioned that your fixed wireless churn has come down I was hoping you could maybe give us a little bit of insight into what's driving that and maybe broadly speaking what you've learned about what creates churn and what causes greater levels of retention across that base.

Peter Osvaldik: That's what this team does. It looks around corners, and it says we need to make sure we create clarity and operating of this organization. Bring that entrepreneurial spirit back and make sure that we're looking at what are the headwinds and what are the tailwinds. You know, as we think about what we laid out at analyst day, which seems like so long ago, with respect to 2024, and what we're going to do there.

You're getting to a point, where churn is getting into a mature run rate or is there still opportunity to keep driving that lower.

Yeah, I'd love to take credit for that I think a lot of it is just the math of the aging of our base. So this product was great. When we launched it and that's because we had made sure it would be great before we took it national and so it's generally been pretty consistent in one of the ways. You can look at that as the net promoter scores, which have been pretty consistent.

Peter Osvaldik: A lot in the world has changed, but it's a set of all of these tailwinds and actions that we've created that still gives us confidence that we think, certainly from a quarry, but a perspective, again, I'm not going to roll out all the 24 guidance. We're going to come right in there in the middle of the range, and these are the kind of actions that are necessary to create that opportunity and keep bringing the ability to invest in customers and the network and the business as we are.

<unk>, leading industry of all kinds of different kinds of broadband products.

I think Theres I think Theres two things one is the one that Mike just said and we've talked about this previously that when you have a new broadband business. One that literally has doubled in size year over year that we have many more customers that are brand new customers that churn the churn at a higher rate. That's just the way that the churn curve works on products like these including wireless early 10 year.

Peter Osvaldik: I was kind of kidding, but you did roll out the guidance. It's remarkable that we did this analyst day years ago, you know, thinking early in 21 and laid out several years of expectations. As we sit here today, knocking on 2024, we're able to outlook a year next year that looks just like we had anticipated right down the middle. And that's something that I'm particularly proud of, given that it's not at all as like we thought.

Customer churn at a higher rate and as customers mature and our base matures, we expected to see a decrease in churn, which we in fact have seen. Additionally.

Additionally across all of our 10 year cohorts. We've also seen churn come down in a lot of that is because as we get more mature and our execution as we get more feedback and data from customers about their performance, we've been able to tune our execution.

Peter Osvaldik: I mean, it's really different than we thought, and yet we make course corrections as we go to keep the promises that we made to you front and center of vibrant, growing business, developing EBITDA and cash flow and doing breakthrough things for customers and businesses. And, you know, that's what's happening, so we couldn't be more excited about next year.

We've been able to do things to address things like common things that cause confusion for customers, either with install or with peripheral devices being attached there cpe's, we've created better tools to be able to troubleshoot for customers and those things have had and have had an impact on churn and I do I do expect as we learn more we'll get will get better.

Unknown Attendee: Great, thanks, guys.

Simon Flannery: Operator, next question. Our next question is from the line of Simon Flannery with Morgan Stanley. Please go ahead. Right, thank you very much. Good morning. Mike, you talked about some of the additional growth opportunities. And perhaps you just revisit the fiber pilot and how that's going, how you're thinking about that. I, there's been a lot of speculation about different assets. I think you've talked in the past about asset light. And then related to that fixed wireless expansion, and analyzing millimeter ways, overlay solutions and other ways to add capacity and the updates on that sounds like you still got C-bound and 345 to bring to bear on that. But any color there be great. Yeah, thanks, Simon. Well, nothing's changed in terms of our philosophy and approach as it relates to broadband.

There.

As well so you know our goal with with all of our businesses is always to be the best insurance and that's no different for us than in the HSI business.

Thank you.

Okay Alright.

Next question please.

Our next question is from the line of Jonathan Chaplin with New Street research.

Go ahead.

Thanks.

For Mike when you talk about why your business is so great as always start with a discussion of the <unk>.

Fact that you have the best network and it's built on this incredible spectrum portfolio.

Mike Sievert: And just to take you back, you know, what we had said still holds, which is we are conducting all kinds of experiments in the space, including observing our national performance in 5G home broadband, which if anything, that performance and the resonance of our brand and our team's ability to execute in the space along with the trials that we're doing in fiber, only bolster our confidence that our brand and our team belong in this market. But nothing has changed in terms of our philosophy.

It's unmatched across the industry.

Something about the broadband business.

That means you don't have to own and control.

The underlying asset in order to have the same kind of defensible position in broadband and I'm thinking specifically of fiber here as opposed to fixed wireless access.

Well, it's a great question.

For me in the wireless space you have this national competitive intensity, where brand trust around this intangible value and network is really really important and we have so carefully built that brand trust over so many years and we think it's somewhat transferable.

Mike Sievert: We like this business model. And to the extent we make investments or partnerships in the area, our view is it should be capital light, generally off balance sheet, et cetera. Speculation I know is out there. I can't clarify. We're not the partner to Jana in the transaction that was rumored a couple weeks ago. Although, you know, we remain interested in partnerships like the kinds we have rolled out pilots around and other constructs that are generally capital light, generally off balance sheet.

People believe in this brand being an advocate for them putting them first changing the rules in their favor and in wireless there's a there's a big intangible on network, which is you can't really.

Mike Sievert: And that's for a reason. We're performing really well in demonstrating through our tests as well as our broad scale performance in 5G home broadband that our brand and our team belong in this space and we can create value. As it relates to new ways to do wireless broadband, you said at the very end there. And I mentioned in my remarks, you know, orphan team now that they've reached 300 million people with midband ultra capacity 5G are now setting about the task of deploying all of our spectrum resources to that base.

By three phones, and then traveled the whole country.

There are services that do that and people make advertising claims based on what those services fine, but people don't believe all that stuff. So it really comes down to their own lived experience and the covenant sort of.

The contact and the connection they have with the brand that they use.

And what we're finding in our work is that that brand is highly transferable into adjacent spaces because of that trust.

And so we're interested in the space. So you know, we're finding that our brand really resonates.

Mike Sievert: And we're only just beginning. We have the bulk of our two and a half gigahertz now rolling out, but our target is to be a 200 megahertz around the end of this year deployed against the 300 million people. And then more room to run next year because as I said, we have auction 108 proceeds still pending. We have CBAN that we haven't deployed 3.45 as well as refarming potential from spectrum being used for LTE right now like AWS.

But where we're not interested in changing who we are from sort of a capital structure standpoint, and that's why we've talked about fiber the way we have.

A quick follow up Mike can you just update us on how many homes, you're addressing with fixed wireless access and how that's changed over the course of the quarter.

Yeah and I.

Address it but I will remind you it's a bit of a different metric than homes passed in the broadband and fiber space. We generally talk about marketing to about 50 million homes right now.

Mike Sievert: And so lots of room to run as it relates to pouring new capacity into this network. And that means we right now at a broad scale, you know, are not looking at alternatives to that from a wireless standpoint. We use millimeter wave pretty strategically and very dense places and so far, you know, that's a great use for it. I will say, as we said last time, so no change that we remain open minded to whether there are techniques that would allow us to deploy capital specifically for 5G broadband and make a great return for you. But so far, we haven't drawn any conclusions that that's a scalable opportunity for us. Thanks Mike. You bet, all right.

But it's a dynamic number and it changes based on penetration of given neighborhoods and so what happens I'll remind you is that on every sector of every tower. We have an assessment of capacity not just now but out into the future assuming ongoing wireless smartphone share taking and ongoing rapid increase in wireless.

Inception per smartphone and once we plot all of that out there are sectors of towers, where no normal amount of share taking or wireless smartphone consumption, we'll use up our capacity anytime soon and in those places and all those places are we approving applicants for our home broadband service.

Phil Cusick: Next question please. Our next question is from the line of Part of me, Phil Cusick with JP Morgan, please go ahead. Two if I count one, Peter, can you talk about potential savings from the layoffs in August and will those hit the fourth quarter or should we think of that all next year? And then maybe one for Callie, can you talk about the contribution of business to subscribe a roof, numbers, and what's the typical Arpu of your business phone months? Thank you.

And what that means is we're essentially monetizing and selling excess capacity through this initial five G broadband strategy and so those are the quote homes passed now if three people in your neighborhood sign up.

Four or five people depends on the sector. The whole neighborhood comes off our list until such time as we've got that excess capacity again now as I mentioned earlier off as rapidly rolling out you know.

Callie Field: Okay, let's start with Callie on business and then we'll come back to another crack at OptX. So what's going on in business, Callie? Well, thanks Phil for the question and I'll tell you as a result of our network leadership and the solutions that are built for today's unique challenges of the CIO. We continue to deliver highly profitable growth. One of our highest post-paid phone net ads and lowest phone turn quarters in history and delivered results once again that outperformed our benchmark competitor.

New capacity enhancements and we're only partway into it I think guys. We wrapped up the quarter. We had one off about 155 megahertz deployed against our ultra capacity. That's right. We continue I mean, we have now 70% of the payload is five year on the network as we continue to see more and more of a five year traffic, but it means we can.

Move over frequencies that are used for LTE in two five G and as we said earlier, we have this enormous spectrum assets in mid band, which is where the home internet products are residing that we can that we can continue to leverage we have more spectrum that anyone else has a mid band as a potential by the end of the year, we were approaching two.

Callie Field: This quarter also we delivered our highest enterprise post-paid net ads ever. So we're seeing growth in all segments in small business and in enterprise. As for the macro environment, while there's probably a portion that are price sensitive, we know from years of experience that price alone doesn't determine a win with enterprise and government who are uncompromising when it comes to network performance and complete solutions. Solutions likely recently deployed at Boston Children's Hospital, which is the healthcare industry first ever hybrid 5G network solution for over 18 buildings, which is supporting critical applications not only reliable connectivity but also with security and Indian solutions for doctors to provide telehealth services to their patients.

200 megahertz that we will have dedicated for four or five good products that gives you a sense of how rapidly is changing in terms of how we're deploying capacity it sits.

The high 100, <unk> now it's on its way to 200 around the end of the year against Ultra capacity five G and that's b for broad deployments of C band three four or five most of the auction 108 proceeds, which we don't have yet and ongoing re farming from LTE, so lots of room to run.

Something like that $15 million is about the same as it was last quarter. So the acceleration in net adds much didn't come either from gaining share of decisions within the $50 million or from the reduction of churn that you mentioned earlier that you mentioned.

Mike Sievert: So let me pause there and Mike see if there's anything. Yeah and specifically on our food, we said in our prepared remarks it's somewhat lower than consumer, but highly accretive from a CLV and value creation standpoint. These are great customers. We are finding as Kelly said that enterprises are not picking us because we're the lowest price, although we have compete ambitiously on price. They're picking us because of the solutions that Kelly's team has brought to the market.

Yeah, and net adds have been relatively consistent I mean, I know it was in the high five hundreds. This time every quarter will be a little different but I would say I would say net adds have been pretty consistent.

Awesome. Thank you Yeah, you bet. Thanks Catherine.

Alright, let's go to social and I've got a question from Bill Ho given the three Q iPhone launch and <unk> take rate how does Q4 look for existing subscribers upgrades on devices implants.

Mike Sievert: And that's very helpful from a value creation standpoint for us. So we continually look at the customer lifetime value net of all the costs to serve these customers and find that enterprise customers are highly attractive and therefore contributing to our financial results. And that's why Peter always warns you are who the mixed-driven metric and we're not solving for it, we're solving for value creation and return on our effort and investment and enterprise is a great place to put our effort and investment.

Okay, well, let's start with with John and maybe talk about what we're seeing out there in the consumer space with upgrades and what's driving that yeah. You bet. So given like we said in Q3, we had a great overall quarter. When you look at what's happening with the iPhone first of all the 515 is a fantastic device and it drove a lot of switching in the marketplace.

Peter Osvaldik: And then Phil with regards to the one-day-end crack at off-ex, so again the actions that we took really ways for us to create tailwind and further fuel to grow for the company. And so I'm not giving specific line item off-ex guys all of those actions were then contemplated in the updated guy for 2023 that we gave and kind of the teaser we just gave about 2024 and Corey put it there. Thanks guys, you bet.

You saw relative to our results and not just say iPhone 15 on a differentiated fiber network that I talked about just a few moments ago, but at different iPhone 15 because of some.

Abilities that really working on network versus other so when you think about four carrier aggregation. When you think about voice over new radio 20% download speeds are faster versus.

I find that doesn't have that that's all great customers love, it et cetera, and it drove a lot of switching activity now relative to our existing customer base, what you're finding as you are finding us landing upgrade offers with people who need it and not necessarily with people who don't need it because remember our overall base is about 70% with the <unk> handset that's out there today.

Unknown Attendee: All right next question Our next question is from the line of Craig Moffett with Moffett and that may please go ahead. Hi, thank you. You guys recently took a price increase for legacy plans and we've heard a bit about it. It certainly drew some unwelcome press and we've heard a little bit about pulling back from that a little bit. Can you just talk about the kind of response you've had and how you think about industry pricing going forward and the ability to walk some of your arpeggio.

And when you think about customers that are having a great lift experience today on an incredible five T network they looked at it.

At the upgrades there is an opportunity to am I really going to improve my experience for a lot of customers. So it's not really happening relative to the network that they have out there and relative to our overall positioning with our <unk>.

Devices remember, we had a lot of upgrades back in 2021, and 2022 and the sprint base and we got a lot of that upgrade base happening at that time. So it's like we said you know when you look at the overall iPhone 15 launch I feel fantastic about that when you look at upgrades for little Lord you seem to have crude rate at.

Unknown Attendee: Yeah, of course, Craig. And by the way, that was sort of not very accurately reported. So let me just kind of clear it up. As you guys know, because you follow us so closely, more so than the press, we tend to do tests and pilots of things quite a bit to try to figure out what's the right answer. In this case, we had a test cell to try to understand customer interest in and acceptance of migrating off old legacy rate plans to something that's higher value for them and for us and we had planned a test and did some training around that and then it leaked and at least as if it was a broad national thing and it kind of wasn't.

<unk>, 7%, so a little lower but also with against the backdrop of the lowest Q2 churn we've ever had followed up with the lowest Q3 postpaid phone churn that we've ever had and I'd like to have those dynamics are playing out.

Yeah, I would just add.

Bill to that question I think I'd I'd expect that same dynamic to play out in Q4.

Unknown Attendee: Now, I don't know that we still have to do that test cell because to your point, we did get plenty of feedback. Thanks to the erroneous context of the leak. And I think we've learned that particular test cell isn't something that our customers are going to love. Now exactly none have rolled out. So even to your question that we recently rolled out that we didn't, you know, we had planned it. We had planned it as a test cell and then we aren't doing it.

Same meeting consumer demand exactly as it is that same dynamic of because of the five G device penetration in that book.

How the lived experience on this network actually exist for those customers I feel our equipment revenue, which as you know isn't the value creating elements of the company that service revenue that will continue to have industry leading growth.

The equipment revenue side I would expect it to be in the same kind of below $3 billion range for Q4, as a result of that dynamic.

Unknown Attendee: So I think we got plenty of feedback, but maybe Mike, you can talk about our philosophy on pricing things were interested in what we're hearing from customers and also what we're seeing with go 5G plus a next. Yeah, maybe maybe I can start with that. Go 5G plus and next have been like we've talked about the last couple of cycles, incredible successes for us. And it really starts with the fact that these are hands down the best value in this industry.

It's been a nice tailwind for us to see these upgrade rates.

Low and yet our churn so low at the same time and it really speaks to the everyday experience that T. Mobile customers are having on the most advanced <unk> network and they just don't feel compelled to take action because they have a five G debate and it's working remarkably well and that trend could continue because as John John said, it kind of fast.

Unknown Attendee: If you look at all the features that come with those plans, you know, there's hundreds of dollars of value for customers on a monthly basis with the streaming benefits and the inflite Wi-Fi and roaming benefits are on those plans. But in a time when the market and customers are so focused on device value, there is not a plan in the industry that gives customers more flexibility and more value on device than the go 5G plans do.

But the newest iphones take advantage of four way carrier aggregation on T mobile because our network is so far ahead with Standalone five G and core five G capabilities that are much more advanced now the devices are starting to take advantage of those things, which means theyre very future proof and so it's a great. It's great to be at T mobile.

Unknown Attendee: And you really saw that in this in this last iPhone cycle where we really differentiated with the flexibility on upgrade when the rest of the market is at three years, you know, we had offers for customers that allow them to upgrade as frequently as one year. You know, those plans really create the platform for our core pricing strategy, which is how can we give customers more and more value and allow them to move up our price card because they feel like they're getting something additional from us.

Because these advanced phone features take advantage of advanced network features and May mean that you don't need a new one again as quickly as you might otherwise for some people that's what they want they just want a new one every year I'm one of those people and T mobile reaches that audience as well with our breakthrough plans like go five G. Next so we feel like we are.

Speaking to the right audiences with the right offers here right. Okay, great operator, just to go back to the phones.

Unknown Attendee: So that is the foundation of our core pricing value. As Mike said, we conduct tests and pilots all the time, all the time. And we will continue to do so because we still think there's opportunities both to deliver more value for customers in a bunch of different ways, but also look for opportunities to simplify our overall portfolio. So I would expect to see more of those kinds of tests from us because it's been a consistent practice throughout the entire and care journey so that we get it right for the experience for our customers.

Certainly our next question is from the line of David Barden with Bank of America. Please go ahead.

Hey, guys. Thanks, so much for taking my questions I guess.

Two threads, if I could Mike I, just wanted to follow up on your comments I mean.

You know in the past.

Historically said that kind of environment.

Sure.

Our environments where people thrive.

Because you are bringing your value proposition to the market more frequently but now the upgrade rates and churn has fallen and cross all the telco players does this mean that you're getting just super normal switching here from the telcos or is some of this is now coming to you from cable is that based on the age is in there.

Unknown Attendee: Yeah, although that particular test cell doesn't need to be executed now, we remain very interested in rationalizing our legacy rate plans for IT purposes, simplification purposes, revenue realization purposes, customer satisfaction or retention purposes. So we're going to stay at it, but that particular idea is, you know, we'll probably do something different.

The cable industry and promotions to come on that.

The second question, Peter you kind of talked about how.

These headcount reductions in the summer were part of a larger Atlanta for transformation.

Craig Moffett: Good, okay. Can you just comment on just the industry pricing environment overall and what your sense is about the competitive intensity on the rate plan side? Yeah, absolutely. In fact, I'll give a broader picture, rate plan and device promotions which have become a big part of the competitive milieu over the last couple of years. It's intense, it's really competitive. And it's pretty consistent too. I mean, I think it's been consistently competitive all year.

The business is is there more to come.

The transformation and you know maybe for lack of a better word synergy realization as we look into the 'twenty 'twenty, four 'twenty towards that create or or thereabouts.

Yeah, Thanks, David well, let me comment first on the competitive dynamic you're right I mean, we love a dynamic where there are more jump balls more people who are category in tenders and let me clarify though that devices in upgrade rates are only one input to that you know so devices can be a great catalyst for switching carriers, but there.

Craig Moffett: And you saw we delivered an incredible Q2 and Q3 in that context, some of the best performance in our history, the lowest churn ever for a Q2 and for a Q3 in our history. We continue to lead and post paid net additions and delivered EBITDA performance and outlooks on EBITDA that show that we're monetizing that growth as well. So we're really comfortable in this competitive dynamic. And it's stable. And consistent. So, you know, that's what's going on out there.

By far not the only one and so our job through our offers us to create those moments where people stop and say hey, maybe I'd be better off maybe it's better over there at T mobile and that's something we've consistently done in our on carrier moves have always been a technique. We've used this latest one this year phone freedom and all the related offers around it is really.

Resonating with people.

Looked into it and found that AT&T for example was experiencing really low churn and yet high intention to switch by their base and that told us that people felt trapped and so we released an offer that is about on trapping that but that's been the kind of thing the UN carrier has always done.

Craig Moffett: It's intense. We like it that way. And, you know, I would say we're entering a typically very intense seasonal period around the holidays. And I expect it to be a slog out there just like it is every year. In a second. All right.

So we're out there competing ambitiously and it's working as you can see in our industry, leading postpaid phone net additions and other metrics.

Unknown Attendee: Next question. Our next question is from the line of Brett Fedman with Goldman Sachs. Please go ahead. Thanks. I think in the question, during your prepared remarks, I think you've mentioned that your fixed wireless churn has come down. I also hope that you can maybe give us a little bit of insight into what's driving that. And maybe broadly speaking what you've learned about what creates churn and what causes greater levels of retention across that base. And do you think you're getting to a point where churn is getting into a mature run rate, where is there still opportunity to be driving that lower?

We are also seeing mostly due to the aging of the base as you said.

That switching relative to cable has been improving quarter over quarter for several quarters in a row. That's good to see there's no real new dynamic there with cable they've been pretty consistent since about a year ago.

We expect that to continue and you can see how well we're competing in a dynamic where cable is out there doing what they do relatively consistently.

And then finally, you were asking about our transformation and what's going on there and what we see do we have room to run many ways. We're really just getting started.

Mike Sievert: Thank you. Yeah, I'd love to take credit for that. I think a lot of it's just the math of the aging of our base. So this product was great when we launched it. And that's because we had made sure it would be great before we took it national. And so it's generally been pretty consistent. One of the ways you can look at that has been at promoter scores, which have been pretty consistent.

And you kind of asked it in the context of workforce transformation I know Theres no no broad plans to do any more of that in 2024, but on transformation and efficiency, absolutely and how it will grow.

Core EBITDA and continue to expand that two elements. There one as you know we made significant investments in the last couple of years, whether it's in network and the pull forward that we did there that now we're able to leverage similarly in smaller markets in rural areas, where you have distribution expansion and that investment is things that you can now leverage and beyond that of course.

Mike Sievert: Yeah. In fact, leading industry evolve kinds of different kinds of broadband products. Yeah. I think there's I think there's two things. One is the one that Mike just said. And you know, we talked about this previously that when you have a new broadband business. One that literally is doubled in size year, year over year, that we have many more customers that are brand new customers that turn that turn at a higher rate.

I mean, that's one thing that team does phenomenally well as looking at how do you how do you harness the latest technologies. How are you really looking around corners to create the efficiency. So that we can have that reinvestment into customer acquisition and profitability. So there's more of that on on a runway ahead of us for sure.

Mike Sievert: That's just the way that the churn curve works on products like these, including wireless early tenure customers turned at a higher rate. And as customers mature in our base matures, we expected to see a decrease in churn, which we in fact have seen. Additionally, across all of our tenure cohorts, we've also seen churn come down. And a lot of that is because as we get more mature in our execution, as we get more feedback in data from customers about their performance, we've been able to tune our execution.

Great. Thanks for the comments, obviously, yeah and I'll just add one thing I mean, obviously.

Not the only company that has noticed this but the technology landscape around us is rapidly changing and so that means there is an opportunity for us in our post integration era as we plot. The next chapter to think about re crafting our company taking advantage of the technologies that are now available to us to become much more deeply data in.

Mike Sievert: We've been able to do things and address things like common things that cost confusion for customers either with install or with peripheral devices being attached to their CPEs. We've created better tools to be able to troubleshoot for customers. And those things have had an impact on churn. And I do expect as we learn more, we'll get better there as well. So, you know, our goal with all of our businesses is always to be the best churn, and that's no different for us than in the HSI business.

Unknown Attendee: Thank you.

Operator: Okay, all right.

Farmed much more AI enabled much more digital first those kinds of things and so.

That's taking up a lot of our teams time and attention now to re imagine how can we create a business model that really creates a fantastic experience for each customer individually, but at the same time is more efficient to operate and that's where we have ambitions.

Thank you.

Yeah.

Okay, Jud, where do we go out.

Next question please operator.

Unknown Attendee: Next question please. Our next question is from the line of Jonathan Chaplin with New Street Park Research. Please go ahead. Thanks. When you talk about why your business is so great, it always starts with a discussion of the fact that you have the best network and it's built on this incredible spectrum portfolio. It's unmatched across the industry. Is there something about the broadband business that means you don't have to own and control the underlying asset in order to have the same kind of defensible position in broadband. And I'm thinking specifically of fiber here as opposed to fixed wireless access.

Certainly our next question is from the line of Cana and Venkat. This work with Barclays. Please go ahead.

Thank you.

Mike I just wanted to push you a little bit more on that.

Just.

When do you think about the broadband business in the next couple of years and it's been an EBIT number.

Number four biggest players.

And that could either means even more capacity.

Or you have an opportunity to upgrade the system.

Okay.

And then of course that is the opposite.

And so wanted to maybe expense.

Okay.

Think about it you know.

Mike Sievert: Well, it's a great question. You know, for me, in the wireless space, you have this national competitive intensity where brand trust around this intangible of value and network is really, really important. And we have so carefully built that brand trust over so many years that we think it's somewhat transferable. You know, people believe in this brand being an advocate for them, putting them first changing the rules in their favor. And in wireless, there's a big intangible on network, which is you can't really, you know, buy three phones and then travel the whole country.

And over the next year.

Mike Sievert: There are services to do that and people make advertising claims based on what those services find, but people don't believe all that stuff. So it really comes down to their own lived experience, and the covenant, sort of the contact and the connection they have with the brand that they use. And what we're finding in our work is that that brand is highly transferable into adjacent spaces, because of that trust. And, you know, so we're interested in the space. And, you know, we're finding that our brand really resonates.

Orders, but if we were to go.

Looking at a wider lens over the next few days.

Could you help us think through Uh huh.

How you evaluate some of these.

Longer term in terms of Volkswagen for Venezuela.

Asset disposition opportunities that.

Thanks.

Yes, Thank you and I'm really sorry. Your line is really garbled and so I'm going to paraphrase, what I think youre, asking but we really couldn't hear the words I apologize.

I think you were asking about longer term, how do we think about playing in the broadband space I made comments about wireless over the next year and kind of how we think in the immediate term about fiber, but what do we see as the bigger picture.

Especially given the finite nature of capacity in the wireless space.

And I'd say.

No we havent taken decisions about that.

We are interested in whether or not there are techniques that are capital efficient that could extend the capacity and competitiveness of wireless into the future and we've not yet cracked the code on that but our team is working hard on that to see whether there are techniques that would work.

To do that and that would be.

Unknown Attendee: But we're, you know, we're not interested in changing who we are from sort of a capital structure standpoint. And, you know, that's why we've talked about by for the way we have.

That would support a business model, where we could make a fair return.

So we're hard at work on that we're hard at work executing our current strategy centered around mid band spectrum and competing ambitiously towards that high single digit target that we had talked about.

Mike Sievert: A quick follow up, Mike. Can you update us on how many homes you're addressing with fixed wireless access and how that's changed over the course of the quarter? Yeah, and I'll address it, but I will remind you it's a bit of a different metric than homes past in the broadband and fiber space. We generally talk about marketing to about 50 million homes right now, but it's a dynamic number and it changes based on penetration of given neighborhoods.

And that seems to be very much on track and then as we said we're interested in fiber to the premise of your question. You know fiber is a technology for decades, and that's not lost on us.

We know that fiber will serve households, and businesses a long time from now and we also are rapidly I think gaining confidence that our brand and our team belong in the broadband space that being said, we don't have an interest right now in changing the basic capital structure of this company in or the philosophy.

Mike Sievert: And so what happens, I'll remind you is that on every sector of every tower, we have an assessment of capacity, not just now, but out into the future, assuming ongoing wireless smartphone share-taking and ongoing rapid increase in wireless consumption per smartphone. And once we plot all of that out, there are sectors of towers where no normal amount of share-taking or wireless smartphone consumption will use up our capacity anytime soon. And in those places, and only those places are we approving applicants for our home broadband service.

Of it nor the Centricity, we have around wireless and so we're looking for ways that we can over the next couple of years continue to learn continue to expand bring our brand to fiber through partnerships through capital light methods investments collaborations those kinds of things and they won't all be at small probably is the.

Small pilots, we're doing that we may we may get after it.

More significantly because our confidence is building in the space and then and I know you want a longer term vision for it but I think we go do that for a couple of years and get good at it and execute improve we can give returns and also get through some of that initial capital intensity period, and then kind of see where we are.

Mike Sievert: And what that means is we're essentially monetizing and selling access capacity through this initial 5G broadband strategy. And so those are the quote homes past. Now if three people in your neighborhood sign up or four or five people depends on the sector, the whole neighborhood comes off our list until such time as we've got that access capacity again. Now, as I mentioned earlier, Opus rapidly rolling out new capacity enhancements, and we're only partway into it.

What this team is very focused on is making sure that the efforts that we embark on on your behalf deliver a great return back to you and you know we're in this phase now in wireless what we're starting to realize the benefits of a disciplined strategy that has balanced growth and profitability. So well over the last few years that we are now into a major.

Mike Sievert: I think as we wrapped up the quarter, we had about 155 megahertz deployed against our ultra capacity. That's right. And we continue. I mean, we have now 70% of the payload is 5G on the network. As we continue to see more and more 5G traffic, that means we can move over frequencies that are used for LTE into 5G. And as you said earlier, we have these enormous spectrum assets in midband, which is where the home internet products are residing that we can continue to leverage.

You're a shareholder return phase and we think that's that's a great place to be.

Thank you Mike.

Yep, you bet and I'm, sorry, we couldn't hear your question as well I Hope I got close.

Alright, thank you.

Great next question please.

Our next question is from the line of Michael Rollins with Citigroup. Please go ahead.

Thanks, and good morning first on the capital investment side can you just talk a little bit more over the course of the year, where the activity is.

Mike Sievert: We have more spectrum than anyone else has in midband as potential. And by the end of the year, we are approaching 200 megahertz that we will have dedicated for our 5G products. That gives you a sense of how rapidly is just changing in terms of how we're deploying capacity. It sits in the high 150s now. It's on its way to 200 around the end of the year against ultra capacity 5G. And that's before broad deployments of CBAN 3.45, most of the auction 108 proceeds, which we don't have yet, and ongoing refarming from LTE. So lots of room to run.

Rosie incremental investment.

And maybe you can give us your early read on 2024 looks from an investment perspective, and how those spending activities, maybe similar or different.

Current year and then just one other quick question.

Can you discuss the mix of postpaid phones.

Overall postpaid net adds I think being around 50% for 2023.

Unknown Attendee: So, like that, 15 million is about the same as it was last quarter, so the acceleration in that ads must have come either from gaining share of decisions within the 15 million or from the reduction of charm that you mentioned earlier. Yeah, and that has been relatively consistent. I mean, I know it was in the high 500s this time every quarter will be a little different, but I would say, I would say net ads have been pretty consistent. Awesome.

In the third quarter that percentage ticked up because of the educational sector deactivation.

Just curious if you can give us an update on how youre thinking about.

Mix of postpaid phones within the total postpaid net add guidance.

Okay, let's start with the easy one at the end because I think you gave some specific numbers there Peter but then if you don't mind why don't why don't you talk about our capital philosophy for next year, and then I'll hand, it to <unk> to talk about how he's going to spend all that money.

Unknown Attendee: Thank you. Yeah, you bet. Thanks, Jonathan.

Operator: All right, let's go to social. We've got questions from Bill Ho, given the 3Q iPhone launch and 3Q take rate, how does Q4 look for existing subscriber upgrades on devices and plans? Okay, well, let's start with with John and maybe talk about what we're seeing out there in the consumer space with upgrades and what's driving that. Yeah, you bet. So given, like we said in Q3, we had a great overall quarter.

[laughter] very wisely.

It does yes.

Right.

Q3 was kind of a unique phenomenon, which is why we gave more specific guidance as to the subset of the overall that will be postpaid phone be approximately 3 million total for the year and that's because Q3 in and of itself was kind of a tough period, where we anticipated more of these educational dx to come.

Operator: When you look at what's happening with the iPhone, the first of all, the size of the iPhone 15 is a fantastic device. And it drove a lot of switching in the marketplace as you saw relative to our results. And not just a iPhone 15 on a differentiated 5G network that I talked about just a few moments ago, but a different iPhone 15 because of, you know, some capabilities that really work on our network versus others.

Through and they did so I wouldn't read through Q3's mix of phone to other but it really take it in the context of what we gave with regards to the 3 million overall for the year.

And turning into everybody's teasing out 2024 guidance from me, but you know as we hand it over to off to talk about how the investments have been made and how the shift is really into this customer driven coverage are very data driven and formed a bill to make sure that we're focused on where the best ROI is where the.

Operator: When you think about four carrier aggregation, you think about voice over new radio, 20% download speeds that are faster versus an iPhone that doesn't have that. That's all great customers, a lot of it, et cetera. And it drove a lot of switch and activity. Now, relapse of to our existing customer base, what you're finding is you're finding us landing, you know, upgrade offers with people who need it. And not necessarily with people who don't need it, because remember, our overall base is about 70% with the 5G handset that's out there today.

Best customer experience benefits will come and we've seen a lot of benefit from that you know the way we're able to deliver you decide with 300 million Pops delivered and yet we are the most capital efficient company in the industry and so when you turn to 2024, we continue to believe that that's really the mechanism that's going to drive capital investment, particularly.

Operator: And when you think about customers that are having a great lived experience today on an incredible 5G network, they look at, you know, at upgrades as an opportunity to, you know, am I really going to improve my experience for a lot of customers that's not really happy relative to the network they have out there and relative to our overall positioning with our 5G devices. Remember, we have a lot of upgrades back in 2021 and 2022 in the sprint base.

With regards to the network and so I could see US maybe you know we gave a nine to 10 is a range for 'twenty four previously I could see as probably being on the lower end of that we'll see what transpires in the longer term, but that's kind of the early read on where we think 24 could land yeah.

I want to hand it to.

So often team and a level before him yeah, we are.

Really built.

Operator: And we got a lot of that upgrade, you know, based happening at that time. So, you know, like we said, you know, when you look at the overall iPhone 15 launch, I feel fantastic about that. When you look at upgrades, the little lower, you see the upgraded 2.7% the little lower. But also, with against the backdrop of the lowest 2.2 trim we've ever had, followed up with the lowest 2.3 post-state phone trim that we've ever had. And I like how those dynamics are playing out. Yeah, I would just down, you know, build to that question.

So after your leadership, a really different approach on how to deploy capital and it is lean is sufficient.

It's planned for and.

We're realizing real benefits from that right now and we can see it in all of our diagnostics, how we're getting more for less and.

So I'm, just really really proud of that and maybe you can talk about what the priorities are for 2024 and as a part of that we can also hit.

<unk> channel at Tech like 32, congrats on the $300 million, what's the progress on the new site builds 10-K, we had talked about in the merger plan will that complete this year or will that run into 2024 and tell us about the capital priorities for the network next year, yeah, Thanks, Mike and and I couldn't be more delighted that we were able to pull into the station.

John Fryer: I think I'd expect the same dynamic to play out in Q4. You know, that same meeting consumer demand exactly as it is, that same dynamic of because of the 5G device penetration and how the lived experience on this network actually exists for those customers. I feel equipment revenue, which as you know, isn't the value creating element of the company that service revenue that will continue to have industry leading growth on the equipment revenue side.

Months ahead on these 300 million pop coverage unless you said, Mike is very much attributed to how we do this we do this is different from other operators in the world I would say with our lean just in time process, which is focused on lead times and deliveries.

John Fryer: I'd expect it to be in the same kind of low 3 billion range for Q4 as a result of that dynamic. It's been a nice tailwind for us to see these upgrades so low and yet our turn so low at the same time. And it really speaks to the everyday experience that T-Mobile customers are having on the most advanced 5G network. And they just don't feel as compelled to take action because they have a 5G device.

Size upgrades, where we need them on the ground and that's why we were able to pull in on that.

We'll continue to refine this process and now it's becoming with.

With the teams much more of having input from our AI from from all the data we have from the from the markets on precisely what the biggest and best returns on investments are as we continued to build and upgrade the network.

John Fryer: And it's working remarkably well. And that trend could continue because as John said, it kind of fast, but the newest iPhones take advantage to four-way carrier aggregation on T-Mobile because our network is so far ahead with standalone 5G and core 5G capabilities that are much more advanced. Now the devices are starting to take advantage of those things, which means they're very future-proofed. And so it's great to be at T-Mobile because these advanced phone features take advantage of advanced network features and may mean that you don't need a new one again as quickly as you might otherwise.

Have lots of room to run that was said earlier here in terms of.

Putting frequencies to work in our mid band mid band that actually creates this enormous experienced.

Carrier, sorry, ultra capacity on the phone that you see whether you see them.

That.

That experience, we will continue to enhance let me remind everybody that we got our C band left and we got a 345 left for example, those will we'll need capital next year and we're looking into a precise deployment of those but we also have more LTE spectrum, that's what I said earlier to put at work more.

John Fryer: For some people, that's what they want. They just want a new one every year. I'm one of those people. And T-Mobile reaches that audience as well with our breakthrough plans like go 5G next. So we feel like we're speaking to the right audiences what the right offers. Thank you.

Unknown Attendee: Okay. Great.

600, with a current or a newly announced lease with Comcast that we are putting to work.

David Barden: Operator, let's go back to the phones. Certainly. Our next question is from the line of David Barden with Bank of America. Let's go ahead. Hey guys, thanks for taking the questions. Two threads, like so much. I mean, you know, in the past, you historically said that we're environments where we're in the past, because you were bringing your value proposition to the market more frequently.

As well, but those actually don't need capital because we have smartly built this network in a way that we can just with commands upgrade the network to make use of those into next year. So a very effective year in terms of staying very competitive being staying ahead of others couple of years as we are on RFID.

Vantage.

With capital efficiency, that's fantastic and I know every company is being asked how are you taking advantage of emerging AI technologies and it's really exciting that this is one of the areas where our business can benefit because the team has already begun making capital deployment decisions as al just said base.

Mike Sievert: But now that upgrade rates and in turn is falling across all the telco players, does this mean that you're getting just super normal switcher share from the telco, or is some of this now coming to you from cable as that base kind of ages in their experience, the cable industry and promotions come on. Then I have the second question, like Peter, you kind of talked about how these[inaudible] Great. Thanks for the conversation.

On an AI analysis of network usage, and how it correlates to individual churn and satisfaction patterns at a person by person level its very exciting stuff.

And that and many other things, including the breadth of our portfolio lead to a capital efficiency profile. So we'll see I know Peter teased you I, we don't know.

At that time to guide on next year, yet, but our hope is that because of that capital efficiency and what we're now seeing we may be able to accomplish everything we set out to accomplish next year at the lower end of that capital range. So, we'll we'll see and we'll we'll give you an updated view as we get into next year.

Thanks.

You bet alright, yeah lots of congratulatory on social and 300 million so great job loss.

Alright, operator, let's take our last question from the phone.

Our next question is from the line of Greg Williams with TD Cowen. Please go ahead.

Yes.

Great. Thanks for squeezing me in.

No. The industry has asked for especially for quite some time, but you just said 850000 thrown at you the third carrier kind of solid phone growth cables announced their numbers in the next 48 hours, but just getting your latest thoughts on where these additional phones are coming from and how you see industry phone growth playing out in 2024.

Second question is just on the private networks one of your competitors spoke yesterday.

Saying that perhaps private networks can move the needle in 2005, we've been down this road before but.

You've talked constructively on advanced Science unit, So curious to hear Youre seeing similar views on 2025 for private networks.

I mean, well first of all let's start there I mean for some competitors with Standalone five G capabilities private networks are here now we're just start managing it through press release and vapor where we're just quietly serving customers maybe I don't know if you want to talk about any of those Kelly that we're doing.

A lot of exciting examples nationwide customers, who are benefiting from this two day at T. Mobile and then we'll get to your second question well it wasn't a failure.

Mike and when we think about the challenges ahead of Cio's today, they're looking for ways to take a campus like Boston Children's Hospital that I mentioned before.

And thank the millions of connections with Wifi and so he's got to have something that meets the needs of the data and the connectivity in our business. So we have a very real time example, I'm the health care industry and several more that.

We're building out that are allowing our doctors and nurses and their patients to have reliable connectivity, but also with security in Indiana solution. Another thing that we is real for US today is the first commercial offering of a network slice that will deliver an incremental layer of security and control for our customers combine.

With T cell secure which is the Sim based assay solution and we just need to flex if I could administration, we're able to take these solutions and pair that with a hybrid network solution, sometimes in parts of the campus private some parts.

Utilizing incredible public network that we have some very real deployments today that have significant pull through on other types of connectivity that we offer and really meet the challenges and it's probably.

Mike Sievert: Obviously. Yeah, and you know, I'll just add one thing. I mean, obviously, we're not the only company that has noticed this, but the technology landscape around us is rapidly changing. And you know, so that means there's an opportunity for us in our post integration era as we plot the next chapter to think about recrafting our company, taking advantage of the technologies that are now available to us to become much more deeply data informed, much more AI enabled, much more digital first of those kinds of things.

A couple of dollars on a phone connection but to really look at our entire solution for data and connectivity and that's what we're playing because pfizer standalone quite weak.

I mean, it's well times, because <unk> are interested in secure connections more than ever before and they're interested in saving money not necessarily on a per smartphone subscription, but broadly in their system of connectivity and our solutions do that and so it's great to see and obviously, an all time record quarter for enterprise for us.

Mike Sievert: And so we're, you know, that's that's taking up a lot of our teams time and attention now that reimagine, you know, how can we create a business model that really create a fantastic experience for each customer individually, but at the same time is more efficient to operate. And you know, that's where we have ambitions. Thanks. Okay. Judd, where do we go now?

And then you asked about the overall pool.

<unk> paid phone growth rate and yeah, it's turned out to be more resilient in a lot of people predicted.

We didn't predict we call. We told you when you asked us last year that we weren't going to predict the whole category.

But overall postpaid phone growth continues to roll on although at a slightly more modest rates and there's a lot of things driving that.

Operator: Next question, please operator.

Kannan Venkateshwar: Fairly our next question is from the line of Canaan Vincatiswar with Barclays. Please go ahead. Thank you. The mic. I just wanted to push you a little bit more on the application. If you think about the broad band, the next question is probably either the number four biggest players in the audience. And that could even mean that people are capacity or yet an opportunity to achieve a cyber game. And then of course, that is the object giving from to a few of the ones who want to maybe expand.

You see enterprises carrying two line sometimes on the same phone sometimes on separate funds you see postpaid growing at the expense of prepaid that trend continues although T. Mobile continues to grow our prepaid base across all types of connections. So we continue to lead in that space. All the donations are coming from someplace.

And then what I called in the past kind of low calorie net ads that you see principally at some of our competitors, including newer competitors and thank you for giving me the opportunity to go ahead and pre announce cable's results for them as I, usually do I'm kidding.

Kannan Venkateshwar: So, you know, make it up over the next few quarters, but if you were to look at a wider lens over the next few years. Would you help us think through, you know, how you evaluate some of these are longer than in terms of both different as well as. Yeah, thank you. And I'm really sorry. Your line is really garbled. And so I'm going to paraphrase what I think you're asking, but we really couldn't hear the words I apologize.

We do we do have telemetry that tries to show us all quarter long, what's happening with our competitors and I think it's a remarkably consistent trend.

So so you see intense competition out there probably not a lot of big surprises and you saw us perform it yet again with a market leading very high quality, mostly prime 850000 postpaid phone net additions in a quarter, where we experienced an all time.

Record Q3 churn so just really proud of how we're competing in are in our ongoing competitive dynamic.

Kannan Venkateshwar: I think you're asking about longer term. How do we think about a playing in the broadband space. I made comments about wireless over the next year and kind of how we think in the immediate term about cyber, but what do we see as the bigger picture. Especially given the finite nature of capacity in the wireless space. And I say, you know, we haven't taken decisions about that. We are interested in whether or not there are techniques that are capital efficient that could extend the capacity and competitiveness of wireless into the future.

Yeah.

Great all right that's a good place to wrap it up you bet.

Alright, thanks, everybody for joining us really appreciate all your support and if you have any further questions. Please feel free to reach out to both the Investor relations or the media Relations Department again, thanks again for joining us today.

Ladies and gentlemen, this concludes the T mobile third quarter earnings call.

You for your participation you may now disconnect and have a pleasant day.

Kannan Venkateshwar: And we've not yet cracked the code on that, but our team's working hard on that to see whether there are techniques that would work to do that. And that would be that would support a business model where we could make a fair return. So we're hard to work on that. We're hard to work executing our current strategy centered around midband spectrum and competing ambitiously towards that high single digit target that we had talked about.

Uh huh.

Yeah.

Yeah.

Right.

Yeah.

[music].

Kannan Venkateshwar: And that seems to be very much on track. And then as we said, we're interested in fiber into the premise of your question. You know, fiber is a technology for the decades. And you know, that's not lost on us. We know that fiber will serve households and businesses a long time from now. And we also are rapidly, I think, gaining confidence that our brand and our team belong in the broadband space.

Okay.

Okay.

Okay.

Uh huh.

Okay.

Uh huh.

[music].

Kannan Venkateshwar: That being said, you know, we don't have an interest right now in changing the basic capital structure of this company, nor the philosophy of it, nor the centricity we have around wireless. And so we're looking for ways that we can over the next couple of years continue to learn, continue to expand, bring our brand of fiber through partnerships, through capital light methods, investments, collaborations, those kinds of things. And they won't all be as small probably as the, you know, small pilots we're doing now. We make it after a little more significantly because our confidence is building in the space.

Mike Sievert: And then I know you want a longer term vision for it, but I think we go do that for a couple of years and get good at it and execute and prove we can give returns and also get through some of that initial capital intensity period and then kind of see where we are. What this team is very focused on is making sure that the efforts that we embark on on your behalf deliver a great return back to you.

Mike Sievert: And you know, we're in this phase now in wireless, where we're starting to realize the benefits of a discipline strategy that has balanced growth and profitability so well over the last few years that we are now into a major shareholder return phase. And you know, we think that's, that's a great place to be. Thank you, me. Yep, you bet, and I'm sorry we couldn't hear your question as well.

Unknown Attendee: I hope I got close. All right, thank you.

Michael Rollins: I'll operate our next question, please. Our next question is from the line of Michael Rollins with City Group. Please go ahead. Thanks in the morning. First on the capital investment side, we just put a little bit more over the course of the year, what were the activities that drove the incremental investment. And maybe you can give us an early release on early 2024, looking from the investment perspective, and how those spending activities may be similar or different to a current year.

Peter Osvaldik: And then just one other question. In the past, it stuck to the mix of post-page phones of a overall post-pated ad. I think being around 50% for 2020, right? But in the third quarter, that percentage picked up because of the educational sector deactivation. So just curious if you can give us an update on how you're thinking about the mix of post-pate phones within the total post-pated ad guide stage at a time.

Peter Osvaldik: Okay. Let's start with the easy one at the end, because I think you gave some specific numbers there, Peter. But then if you don't mind, why don't you talk about our capital philosophy for next year? And then I'll hand it to all to talk about how we've got to spend all that money. Very wisely at the all we have done. Yeah, you're right. Like the Q3 was kind of a unique phenomenon, which is why we gave more specific guidance as to the subset of the overall that will be post-pate phone.

Peter Osvaldik: The approximately 3 million total for the year. And that's because Q3 and then of itself was kind of the period where we anticipated more of these educational D.A, to come through and they did. So I wouldn't read through Q3's mix of phones other, but it really taken in the context of what we gave with regards to the 3 million overall for the year. You know, in turning into everybody's piezing out 2024 guidance from me.

Peter Osvaldik: But you know, as we hand it over to Alt to talk about how the investments have been made and how the shift is really into this customer driven coverage. Very data driven informed bill to make sure that we're focused on where the best ROI is, where the best customer experience benefits will come. You know, we've seen a lot of benefit from that. You know, the way we're able to deliver you decide with 300 million pops delivered.

Peter Osvaldik: And yet we are the most capital efficient company in the industry. And so when you turn to 2024, we continue to believe that's really the mechanism that's going to drive capital investment, particularly with regards to the network. And so I could see us maybe, you know, we gave a nine to ten as a range for 24 previously. I could see us probably being on the lower end of that. We'll see what, you know, what transpires in the long term. But that's kind of the early read on where we think 24 could land.

Mike Sievert: Yeah, I want to hand it to, you know, to Alt and team and level before him. You know, we have really built, uh, thanks, old to your leadership, a really different approach on how to deploy capital. And it is lean, it's efficient, um, it's planful. And it, we're, we're realizing real benefits from that right now. And, you know, we can see it in all of our diagnostics, how we're getting more for less. And, um, you know, so I'm just really, really proud of that.

Unknown Attendee: And maybe we can talk about what, what the priorities are for 2024. And as a part of that, we can also hit, uh, tech like channel at tech like 32, congrats on the 300 million, what's the progress on the new site builds 10K. We had talked about in the merger plan, uh, we'll back complete this year with that run into 2024 and tell us about the capital priorities for the network next year.

Unknown Attendee: Yeah, thanks, Mike. And, um, and I couldn't be more delighted that we were able to pull into this station months ahead on these 300 million pop coverage. And as you said, Mike, it's very much attributed to how we do this. We do this different from other operators in the world. I would say with our lean, just in time process, which is focused on lead times and deliveries of precise upgrades where we need them on the ground.

Unknown Attendee: And that's why we were able to pull in on that. Uh, we will continue to refine this process. And now it's becoming, uh, with the teams much more of, uh, having input from, uh, AI from all the data we have from the, from the, from the markets on precisely what the biggest and best returns on investments or, uh, as we continue to build and upgrade the network. Um, we have a lot of rooms around that was said earlier here, uh, in terms of putting frequencies to work in our mid band, the mid band that actually creates this enormous experience.

Unknown Attendee: The, the uncary, uh, sorry, ultra capacity on the phone that you see with the UC. Um, that, um, that experience we will continue to enhance. Let me remind everybody that we got our C band left. And we got, uh, three, four, five left, for example. Those will, will need capital next year. And we're looking into a precise deployment of those. But we also have more LT spectrum, as we said earlier, to put at work, more, uh, 600, uh, with a, uh, a current, uh, or a new Lyon House lease, with Comcat that we are putting to work, um, as well.

Unknown Attendee: But those actually don't need capital because we have smartly built this network in a way that we can just with command upgrade the network to make use of those interconnects here. So a very effective year in terms of staying very competitive being staying ahead of others couple of years as we are on our 5D, uh, advantage, uh, uh, with capital efficiency. That's fantastic.

Mike Sievert: And, um, I know every company is being asked, you know, how are you taking advantage of emerging AI technologies? And, you know, it's really exciting that this is one of the areas where our business can benefit because the team has already begun, uh, making capital deployment decisions as old, just said, uh, based on an AI analysis of network usage and how it correlates to individual churn and satisfaction patterns at a person by person level.

Mike Sievert: It's very exciting stuff. Um, and that, and many other things, including the breadth of our portfolio, lead to a capital efficiency profile. So we'll see. I know Peter T's do. I, we don't know. Um, it's not time to guide on next year yet, but our, our hope is that because of that capital efficiency and what we're now seeing, we may be able to accomplish everything. We set out to accomplish next year at the lower end of that capital range. So we'll, we'll, we'll, we'll give you an updated view as we get into next year.

Unknown Attendee: Thanks. You bet, all right. Yeah, lots of congratatory on social and 300 millions of great job both.

Gregory Williams: All right, let's take our last question from the phone. Our next question is from the line of Greg Williams with Titi Cowan. Please go ahead. Great. Thanks for squeezing me in. I know the industry's asked those questions quite some time but you just hit 850,000 phone ads. The third carrier has been a solid phone growth. You know, cable's going to announce the numbers in the next 48 hours.

Mike Sievert: But just getting your latest thoughts on where these additional phones are coming from and how is the industry's phone growth playing out in 2024.

Callie Field: Second question is just on private networks. One of your competitors spoke yesterday saying that, you know, perhaps private networks could move the needle in 2025. You know, we've been down this road before but you've talked constructively on advanced strategy in the past and here. We're seeing similar views on 2025. We'll first start there. I mean, for some competitors with standalone 5G capabilities, private networks are here now. We're just not managing it through press release and, you know, vaporware.

Callie Field: We're just quietly serving customers. Maybe I don't know if you want to talk about any of those Kelly that we're doing. You know, there's a lot of exciting examples nationwide. Customers who are benefiting from this today at T-Mobile, then we'll get to your second question. Well, I mentioned this earlier, Mike. When we think about the challenges ahead of CIOs today, they're looking for ways to take a campus like Boston Children's Hospital that I mentioned before and take the millions of connections with Wi-Fi and say, he's got to have something that meets the needs of the data and the connectivity in our business.

Callie Field: And so we have a very real time example in the healthcare industry and several more that we're building out that are allowing doctors and nurses and their patients to have reliable connectivity, but also with security and Indian solutions. Another thing that we is real for us today is the first commercial offering of a network slice that will deliver an incremental layer of security and control for our customers, combined with T-SIM secure, which is a SIM-DESASTY solution, reducing complexity for IT administrators.

Callie Field: We're able to take these solutions and pair that with a hybrid 5G network solution. Sometimes in part to the campus private, some parts, utilizing the incredible public network that we have. So these are very real deployments today that have significant pull through on other types of connectivity that we offer and really meet the challenges that CIOs are looking for, not to cut off a couple of dollars on a phone connection, but to really look at their entire solution for data and connectivity and that's when we're playing because of the 5G standalone core that we have.

Callie Field: I mean it's well-timed because CIOs are interested in secure connections more than ever before and they're interested in saving money, not necessarily on a per smartphone subscription, but broadly in their system of connectivity and our solutions do that.

Mike Sievert: And so it's great to see in obviously an all-time record quarter enterprise for us. And then you asked about the overall post-paid phone growth rate. And yeah, it turned out to be more resilient than a lot of people predicted. We didn't predict, we told you when you asked us last year that we weren't going to predict the whole category, but overall post-paid phone growth continues to roll on, although slightly more modest rates.

Mike Sievert: And there's a lot of things driving that. You see enterprises carrying two lines sometimes on the same phone, sometimes on separate phones. You see post-paid growing at the expense of prepaid. That trend continues, although T-mobile continues to grow our prepaid base across all types of connections. So we continue to lead in that space. All the donations are coming from someplace else. And then what I called in the past kind of low calorie net ad that you see principally at some of our competitors, including newer competitors.

Mike Sievert: And thank you for giving me the opportunity to go ahead and pre-announce cables results for them as I usually do. We do have telemetry that tries to show us all a quarter along what's happening with our competitors. And I think it's a remarkably consistent trend. So you see intense competition out there, probably not a lot of big surprises. And you saw us perform yet again with a market leading very high quality, mostly prime 850,000 post-paid phone net additions in a quarter where we experienced an all-time record Q3 chart. So just really proud of how we're competing in an ongoing competitive Great.

Mike Sievert: All right. That's a good place to wrap it up. You're back. All right. Thanks everybody for joining us. Really appreciate all your support. And if you have any further questions, please feel free to reach out to both the investor relations or the media relations department. Again, thanks again for joining us today.

Operator: Ladies and gentlemen, this concludes the T-Mobile third quarter earnings call. Thank you for your participation. You may now disconnect and have a pleasant day.

Operator: Thank you.