Q1 2024 T-Mobile US Inc Earnings Call
Jud Henry: I would now like to turn the conference over to Mr. Jud Henry, Senior Vice President, Strategic Advisor, and Investor Relations for T-Mobile US. Please go ahead, sir.
I would now like to turn the conference over to Mr. Jud, Henry Senior Vice President strategic adviser Investor Relations for T. Mobile U S. Please go ahead Sir.
Jud Henry: Welcome to T Mobile's first quarter 2024 earnings call.
Jud Henry: Welcome to T-Mobile's first quarter 2024 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.
Joining me on the call today are Mike Sievert, our president and CEO Pete.
Speaker Change: Peter Oswald our CFO as well as other members of the senior leadership team.
Jud Henry: During this call, we will make forward-looking statements, which involve 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, Investor Factbook, 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 our quarterly results section of the Investor Relations website. And with that, I will turn it over to Mike.
During this call we will make forward looking statements, which involve 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, Investor Factbook, 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 our quarterly results section of the Investor Relations website.
Speaker Change: With that let me turn it over to Mike.
Mike Sievert: Okay, thanks Jud. Good afternoon, everybody. Welcome. If you're watching online, you can see that I've got a good part of the senior team here. We're coming to you from Bellevue, Washington today, and we're looking forward to a great discussion. And as you can see from our Q1 results, we are off to a great start in 2024. The year is unfolding right in line with what we expected across the board and, in fact, better in some areas, and we're increasing our guidance for the year accordingly. I'll briefly touch on a few highlights, and then we'll get right to your questions.
Mike: Thanks, John and good afternoon, everybody welcome him if youre watching online you can see that I've got a good part of the senior team here, we're coming to you from Bellevue, Washington Today, and we're looking forward to a great discussion.
Mike Sievert: And as you can see from our Q1 results we are off to a great start in 2020 for the year is unfolding right in line with what we expected across the board and in fact, better in some areas and we're increasing our guidance for the year. Accordingly, I'll briefly touch on a few highlights and then we'll get right to your questions.
Mike Sievert: First, a comment on growth. We continued to take share in Q1 just as expected, with post-paid phone net ads that were right in line with Q1 last year, while industry net ads were lower by a double-digit percentage. Our best value, best network proposition continues to resonate in the market, with our post-paid phone gross ads up year over year for the fourth consecutive quarter, even while industry gross ads were down. And we matched our best-ever Q1 post-paid phone churn, showing that customers love the un-carrier value proposition and network. Second, a comment on those lowest-ever post-paid upgrades for phones in Q1.
Mike: First I'll comment on growth, we continued to take share in Q1, just as expected with postpaid phone net adds that were right in line with Q1 last year, while industry net adds were lower by a double digit percentage.
Mike: Our best value Best network proposition continues to resonate in the market with our postpaid phone gross adds up year over year for the fourth consecutive quarter, even while industry gross adds were down and we matched our best ever Q1 postpaid phone churn showing that customers love the uncaring your value.
Mike: Proposition in network.
Mike: Second I'll comment on those lowest ever postpaid upgrades for phones in Q1, I think this metric showcases our ongoing winning formula by demonstrating that customers choose to stay with T. Mobile for the best in class value and network. They enjoy which is the only retention strategy that drives.
Mike Sievert: I think this metric showcases our ongoing winning formula by demonstrating that customers choose to stay with T-Mobile for the best-in-class value and network they enjoy, which is the only retention strategy that drives profitable growth over the long term. The network is an increasingly powerful part of our customers' loyalty. It also demonstrates how we put our investments where they can have the greatest customer impact, letting natural customer demand drive the pace of uptake.
Mike: Growth over the long term the network is an increasingly powerful part of our customers' loyalty is three quarters of our postpaid phone customers already have a five G smartphone and they're having a differentiated experience on the T Mobile network.
Mike: It also demonstrates how we put our investments where they can have the greatest customer impact letting natural customer demand drive the pace of upgrades.
Mike Sievert: Overall, from consumers in major metros to smaller markets, and businesses from large enterprises to SMBs, T-Mobile's durable, differentiated growth momentum continues across the segments. And the most exciting part is that there are still many years of market-leading growth runway ahead for our core business. Okay, let's talk broadband.
Mike: Overall from consumers in major metros to smaller markets and businesses from large enterprises to Smbs T. Mobile's durable differentiated growth momentum continues across the segments and the most exciting part is that there are still many years of market leading growth runway ahead for our core business.
Okay, Let's talk broadband home broadband customers love a great value on our great network too that's been the Formula that's made us the fastest growing broadband provider for the past two years and we did it again in Q1 as our 405000 nets are expected to represent.
Mike Sievert: Home broadband customers love great value on a great network, too. That's been the formula that's made us the fastest-growing broadband provider for the past two years. And we did it again in Q1, as our 405,000 nets are expected to represent a higher share of industry broadband net ads than even a year ago and are expected to be more than half of all nets from the major providers once again. Our broadband strategy is unfolding exactly the way we said it would, and we now proudly serve over 5 million high-speed internet customers.
Mike: Higher share of industry broadband net adds than even a year ago and are expected to be more than half of all nets from the major providers. Once again, our broadband strategy is unfolding exactly the way we said it would and we now proudly serve over 5 million high speed Internet customers and.
Mike Sievert: And as we previously announced, we're also growing the value of that customer base, successfully sunsetting our launch-era promotions and attracting customers at our nominal price point. In addition, our new rate plans for home mesh networks and for on-the-go usage are just the latest ways we intend to continue to enhance the value of this space and find new ways to serve customers better. Okay, let me comment on fiber.
Mike: And as we previously announced we're also growing the value of that customer base successfully sunsetting, our launch era of promotions and attracting customers at our nominal price points. In addition, our new rate plans for home mesh networks and for on the go usage are just the latest ways. We intended we intend to continue to enhance that.
Mike: Now you have this base and find new ways to serve customers better.
Speaker Change: Okay, Let me comment on fiber I've been saying for a while that smart fiber partnerships would allow us to profitably serve even more broadband customers and today, we announced a joint venture with EQT that we'll acquire Lu most consistent with everything we've said for the last year. This JV is the latest example of our capital light model and we're excited to.
Mike Sievert: I've been saying for a while that smart fiber partnerships would allow us to profitably serve even more broadband customers. And today, we announced a joint venture with EQT that will acquire Lumos. Consistent with everything we've said for the last year, this JV is the latest example of a capital light model, and we're excited to have such great and experienced partners. EQT is one of the leading infrastructure investors across the US and Europe and brings a wealth of knowledge to the table.
Speaker Change: Have such great and experienced partners EQT is one of the leading infrastructure investors across the U S and Europe and brings a wealth of knowledge to the table. The Lou most management team under Brian, stating is outstanding and has years of experience building fiber in an efficient cost effective and targeted build model we're really.
Mike Sievert: The Lumos management team under Brian Stading is outstanding and has years of experience building fiber in an efficient, cost-effective, and targeted build model. We're really excited to be able to accelerate what Lumos has already been doing to reach more and more households in the years ahead. T-Mobile will be a 50% owner of Lumos and will own the customer relationships, including their existing fiber customers at close, as Lumos will convert to a wholesale model.
Speaker Change: Excited to be able to accelerate what Lou most has already been doing to reach more and more households in the years ahead together, we target three and a half million homes passed by 2028 and T Mobile T mobile expects to invest about 950 million upon close, which we expect less than a year from now and another $500 million beta.
Speaker Change: 2027, and 28 to get their T mobile will be a 50% owner of <unk> and will own the customer relationships, including their existing fiber customers at close as Lou most will convert to a wholesale model.
Mike Sievert: This is exactly the type of value-creating investment that we had contemplated with our strategic envelope of funds that we set aside back when we shared the current stockholder return program with you last fall. And we expect to remain on track as it relates to our stockholder return ambition. Lastly, I am so happy to report that we have received regulatory approval to acquire Mint and Ultramobile, and we therefore currently expect to close on May 1st.
Speaker Change: This is exactly the type of value, creating investment that we had contemplated with our strategic envelope of funds that we set aside back when we shared the current stockholder return program with you last fall and we expect to remain on track as it relates to our stockholder return ambitions.
Speaker Change: Lastly, I am so happy to report that we have received regulatory approval to acquire men's and ultra mobile and we therefore currently expect to close on May 1st we are really looking forward to welcoming them to the UN carrier family and I know, they're going to fit in because they are hyper focused on offering customers compelling products at a great value we will work to further.
Mike Sievert: We are really looking forward to welcoming them to the Un-Carrier family, and I know they're going to fit in because they are hyper-focused on offering customers compelling products at a great value. We'll work to further fuel their success, while also learning from their team, who are absolute rock stars in the direct-to-consumer and value segment. Financially, in Q1, we again showed how T-Mobile translates profitable growth into market-leading consolidated service revenue growth and core-adjusted EBITDA growth that was double the rate of our principal competitors. And T-Mobile again delivered the highest free cash flow margins in the industry.
Speaker Change: Fuel their success, while also learning from their team who are absolute rock stars in the direct to consumer and value segments.
Speaker Change: Financially in Q1, we again showed how T mobile translates profitable growth into market, leading consolidated service revenue growth and core adjusted EBITDA growth that was double the rate of our principal competitors and T. Mobile again delivered the highest free cash flow margins in the industry.
Speaker Change: So to wrap up our model is working it's consistent and our confidence in it only builds with each passing quarter of success. We remain focused on continuing to take share in wireless and broadband while delivering industry leading growth in service revenue profitability and cash flows I couldn't be more excited about.
Peter Osvaldik: So to wrap up, our model is working, it's consistent, and our confidence in it only grows with each passing quarter of success. We remain focused on continuing to take share in wireless and broadband while delivering industry-leading growth in service revenue, profitability, and cash flows. I couldn't be more excited about what's ahead for T-Mobile, and I want you to know that we plan to have a capital markets day this fall, where we look forward to going deeper with you on topics like the big opportunities that we see coming, how we're seizing them, and how that will translate into enormous value creation for our company in the years ahead.
Speaker Change: What's ahead for T mobile and I want you to know that we plan to have a capital markets day. This fall, where we look forward to going deeper with you on topics like the big opportunities that we see coming how we're seizing them and how that will translate into enormous value creation for our company in the years ahead, and I think youre going to see once again that in many ways. We're just getting started.
Peter Osvaldik: And I think you're going to see once again that, in many ways, we're just getting started. Okay, Peter, over to you to talk about our key financial highlights and an update on our guidance. Well, thank you, Mike.
Speaker Change: Okay, Peter over to you to talk about our key financial highlights and an update on our guidance well. Thank you Mike Alright, as you can see we kicked off 2024, where the great momentum Mike already highlighted our best in class growth in both the top and bottom line and how our industry leading conversion of service revenue.
Peter Osvaldik: All right, as you can see, we kicked off 2024 with great momentum. Mike already highlighted our best-in-class growth in both the top and bottom lines and how our industry-leading conversion of service revenue to adjusted free cash flow continues to differentiate T-Mobile. So let me jump into our updated expectations for how that growth will continue in 2024, starting with customers, where we now expect total postpaid net customer additions to be between $5.2 and $5.6 million, up $150,000 at the midpoint.
Peter: To adjusted free cash flow continues to differentiate T mobile.
Peter: So let me jump into our updated expectations for how that growth will continue in 2024, starting with customers, where we now expect total postpaid net customer additions to be between 5.2, and $5 6 million up 150000 at the midpoint.
Peter Osvaldik: We now expect full-year postpaid ARPA to grow up to 3% in 2024, a further acceleration of the growth we saw in 2023 from both the continued execution of our strategy to win and expand account relationships and, as we anticipate, taking further rate plan optimization actions within the base. There is no change in our expectations for postpaid phone net ads from our original guidance last quarter, with Q1's strong growth coming in as we expected and because we anticipate slight year-over-year headwinds to postpaid phone net ads in Q2 and Q3 related to those rate plan optimizations, which are accretive to the business on an all-in basis.
Peter: We now expect full year postpaid ARPA to grow up to 3% in 2020 for a further acceleration of the growth. We saw in 2023 from both the continued execution of our strategy to win and expand account relationships and as we anticipate taking further rate plan optimization actions within the base.
Peter: There is no change in our expectations for postpaid phone net adds from our original guidance last quarter with Q1 strong growth coming in as we expected and because we anticipate slight year over year headwinds to postpaid phone net adds in Q2 and Q3 related to those rate plan optimizations, which are accretive.
Speaker Change: To the business on an all in basis.
Peter Osvaldik: Core Adjusted EBITDA is now expected to be between $31.4 and $31.9 billion, up 9% year-over-year at the midpoint. And, as I mentioned on the last earnings call, we expect our industry-leading service revenue growth to accelerate at a higher rate in 2024 than we delivered in 2023, even with the discontinuation of the Affordable Connectivity Program that appears imminent at this point in time and is contemplated within the increased guidance. We continue to expect cash capex to be between $8.6 and $9.4 billion as we deliver capital efficiency unmatched in our industry on the back of our network integration and 5G leadership.
Speaker Change: Core adjusted EBITDA is now expected to be between 31.4, and $31 9 billion up 9% year over year at the midpoint.
Speaker Change: And as I mentioned on the last earnings call, we expect our industry, leading service revenue growth to accelerate at a higher rate in 2024 than we delivered in 2023, even with the discontinuation of the affordable connectivity program that appears imminent at this point in time and is contemplated within the increased guide.
Speaker Change: Yes.
Speaker Change: We continue to expect cash capex to be between 8.6, and 9.4 billion as we deliver our capital efficiency unmatched in our industry on the back of our network integration and five G leadership.
Peter Osvaldik: Lastly, we now expect adjusted free cash flow, including payments for merger-related costs, to be in the range of $16.4 to $16.9 billion. This is up 23% over last year at the midpoint and five times the expected growth rate of our next closest competitor thanks to our margin expansion and capital efficiency and does not assume any material net cash inflows from securitization. This also represents an adjusted free cash flow to service revenue margin that is multiple percentage points higher than peers.
Speaker Change: Lastly, we now expect adjusted free cash flow, including payments for merger related costs to be in the range of $16. Four to 16.9 billion. This was up 23% over last year at the midpoint and five times the expected growth rate of our next closest competitor thanks to our margin expansion.
Speaker Change: And capital efficiency and does not assume any material net cash inflows from securitization.
Speaker Change: This also represents an adjusted free cash flow to service revenue margin, which has multiple percentage points higher than peers.
Jud Henry: So in closing, we continue to expect 2024 to be another year of differentiated, profitable growth as we continue to extend our network leadership and further scale our unique growth opportunities. We expect this to continue to translate into industry-leading growth in service revenue, core adjusted EBITDA, and free cash flow, along with the highest adjusted free cash flow margin in the industry, unlocking shareholder value. I couldn't be more excited about the continued enormous value creation opportunity that we have in front of us for years to come.
Speaker Change: So in closing we continue to expect 2024 to be another year of differentiated profitable growth as we continue to extend our network leadership and further scale our unique growth opportunities. We expect this to continue to translate into industry, leading growth in service revenue core adjusted EBITDA and free cash flow.
Speaker Change: Along with the highest adjusted free cash flow margin in the industry unlocking shareholder value.
Speaker Change: I couldn't be more excited about the continued enormous value creation opportunity that we have in front of us for years to come.
Jud Henry: Okay, before we open it up for Q&A, I just want to take a moment to announce a changing of the guard in our Investor Relations leadership. After 11 years and an unbelievable 44 earning cycles in IR, I'm tremendously excited for Jud to take on a broader role within our finance organization. And I'm equally excited to introduce Kathy Au as our new SVP of Investor Relations. Many of you may know Kathy from her time on the sell side at Moffett Nathanson or on the corporate side at Altice USA, among other roles on her fabulous resume. We look forward to Kathy continuing T-Mobile's strong tradition of Investor Relations excellence. And with that, I will now turn the call back to Jud to begin his last Q&A.
Speaker Change: Okay before we open it up for Q&A I, just want to take a moment to announce a changing of the guard in our Investor Relations leadership now.
Speaker Change: After 11 years in an unbelievable 44, earning cycles and I are tremendously excited for Jive to taken on a broader role within our finance organization and I'm equally excited to introduce Kathy O as our new SVP of Investor Relations. Many of you may know Kathy from her time on the sell side of Moffett Nathanson.
Speaker Change: Or on the corporate side at Altice USA among other roles on are Fabulous resume we look forward to Cathay continuing T mobile strong tradition of Investor Relations excellence.
Speaker Change: And with that I will now turn the call back to Jud to begin his last Q&A Jud.
Operator: Oh, thanks, Peter. All right, let's get to your questions. You can ask questions via phone by pressing star, then 1, and via X by sending a post to at T-Mobile IR or to Mike Sievert using the hashtag TMUS. We'll start with a question on the phone. Operator, first question, please.
Jud Henry: Thanks, Peter Alright.
Speaker Change: Alright, let's get to your questions you can ask questions via phone by pressing Star then one and via X by sending a post due at T mobile I R or at Mike Sievert, using cash Tag T. M. U S. We'll start with a question on the phone operator first question. Please.
Operator: And the first question comes from Michael Rollins with Citi. Please go ahead.
Speaker Change: First question comes from Michael Rollins with Citi. Please go ahead.
Michael Ian Rollins: Thanks, and good afternoon, and congratulations, Jud, on the new role. Just a couple of questions, if I could. So first, you mentioned that you may be taking some pricing actions, and that could affect some of the subscriber performance in 2.2.3.2. Can you unpack the plan of how you're approaching those actions and how to think about, you know, the net benefits? And then, just secondly, taking a step back, if you could give us an update on how you're seeing the competitive landscape, how you're seeing the switcher pool, and how, you know, T-Mobile's navigating some of these changes with, you know, the industry seemingly having lower upgrades and lower churn. Thanks.
Michael Ian Rollins: Thanks, and good afternoon, and congrats Chad on the new role.
Michael Ian Rollins: Just a couple of questions. If I could so first you mentioned that you may be taking some pricing actions and that could affect our subscriber performance. In Q2 Q3, Q can you unpack the plan and how you're approaching those actions are and how to think about.
Michael Ian Rollins: Yes.
Michael Ian Rollins: And then just secondly, taking a step back if you can give us an update on how you're seeing the competitive landscape, how youre seeing the switcher pool and how T. Mobile's navigating some of these changes with.
Speaker Change: You know the industry seemingly having lower upgrades lower churn.
Speaker Change: Okay, great well why don't I jump in and I'll give a comment on or a lack of a comment on.
Mike Sievert: Okay, great. Well, why don't I jump in, and I'll give a comment on, or a lack of a comment on, the first question, and then I'll hand it to Jon Fryer for the second one.
Speaker Change: The first question and then I'll hand, it to John Fryer for the second one no.
Mike Sievert: No, we're not really going to announce any particular plans today. But I will tell you that nothing we do is going to question or challenge our long-standing strategy of being the value leader in this market. But surely, over the span of many years, what that means changes over time. Costs have risen, changes have happened in a broader industry context, and we're going to jealously guard that value leadership. And I think customers understand that if there are changes around the margins once every few years in a world where costs change, they'll understand and accept that.
John Fryer: No, we're not really going to announce any particular plans today I will tell you that nothing we do is going to question or challenge, our long standing strategy of being the value leader in this market, but surely over the span of many years, what that means kind of changes over time costs have risen changes have happened in a broader industry context.
Speaker Change: And we're gonna jealously guard that value leadership, and I think customers understand that if there are changes around the margins. Once every many years in a world where cost change.
Speaker Change: Understand and accept that we've actually made changes here and there over the past six months, we've understood what that looks like and what that takes and there may be more changes, particularly with older rate plans, but we're not here to announce anything I will tell you that all of the outcomes that we see from all of that on the customer side as well as on the ARPA side and on the EBITDA and revenue side our.
Mike Sievert: We've actually made changes here and there over the past six months. We understand what that looks like and what that takes, and there may be more changes, particularly with older rate plans, but we're not here to announce anything. I will tell you that all the outcomes that we see from all of this on the customer side as well as on the ARPA side and on the EBITDA and revenue side are contained within the guidance that Peter just shared.
Speaker Change: And within the guidance that Peter just shared you.
Mike Sievert: Do you want to add anything to that first question before we go to the second one? I think you got it. Okay, competitive context. What are we seeing with upgrades? What's driving that? What's happening with the competition, John? Yeah, you bet.
Speaker Change: You want to add anything that first question, probably got a second one I think you've got it okay competitive context on what are we seeing on upgrades, what's driving that what's happening with the competition. John Yeah. You bet. So I will tell you a little bit about whats happening competitively. It's been it's been an intense competitive environment in the marketplace, but it's been generally consistent as you look at this some overall competitive intent.
John Fryer: So, I'll tell you a little bit about what's happening competitively. You know, it's been an intense competitive environment in the marketplace, but it's been generally consistent as you look at this overall competitive intensity. And you know, for our business, we continue to have these differentiated growth opportunities, whether that be smaller markets in rural areas, whether that be within our high-speed internet, or in our overall enterprise and government space, which Callie can talk about in just a few moments as well.
John: City and for our business. We continue to have these differentiated growth opportunities, whether they'd be smaller markets in rural areas, whether that be within our high speed internet or in our overall enterprise and government space that Kelly can talk about in just a few moments as well and so during that overall competitive context, we have these unique.
John Fryer: And so, you know, in that overall competitive context, we have these unique growth vectors that we continue to be under-penetrated in, driving a lot of good success so far, but we continue to have a lot of runway in front of us. So, while that competitive environment is intense, you know, sometimes one competitor is leaning in, and sometimes one competitor is leaning out. We're always navigating that, you know; things are always changing. Sometimes it's a little bit more device-oriented, and sometimes it might be more rate-oriented in terms of how the competitive environment is unfolding.
John: Growth vectors that we continue to be underpenetrated on driving a lot of good success, so far but continue to have a lot of runway in front of us. So while the competitive environment is intense sometimes one competitors leaning in sometimes one competitors leaning out we're always navigating. That's you know things are always changing sometimes it's a little bit more device oriented sometimes it.
Speaker Change: Might be more rate oriented in terms of how the competitive environment is unfolding, but we've navigated that for years and years now and continue to be very comfortable with how that overall competitive environment is playing out with respect to upgrades. We continue to meet the natural demand of upgrades as you can see the upgrade rate is.
John Fryer: But we've navigated that for years and years now and continue to be very comfortable with how that overall competitive environment is playing out. With respect to upgrades, we continue to meet the natural demand for upgrades. As you can see, the upgrade rate is a low 2.4% at the same time when we're matching the best Q1 postpaid phone churn performance in the company's history. We've been more targeted and surgical with some of our upgrade offers, for sure, but the overall natural demand for the upgrade cycle is lengthening.
Speaker Change: <unk> is a low two 4% at the same time when we're matching the best Q1 postpaid phone churn performance in the company's history, we've been more target into the surgical with some of our upgrade offers for sure but the overall natural demand in the upgrade cycles lengthening, it's really kind of the best of both worlds when you have customers that are <unk>.
John Fryer: It's really kind of the best of both worlds when you have customers that are staying at, you know, incredible rates, record low rates, and not staying for free devices exclusively. They're staying for this differentiated value proposition, the network, and the overall experience, something we're very, very pleased with how it's unfolding.
Speaker Change: Stain at incredible rates record low rates and not stained for free devices exclusively they're staying for this differentiated value proposition the network and the overall experience something we're very very pleased with how it's unfolding I'd just add one last thing as I said in my prepared remarks, 75% of our <unk>.
Mike Sievert: I'll just add one last thing. You know, as I said in my prepared remarks, 75% of our customers have 5G devices, and those customers are having a very differentiated experience with T-Mobile's lead in 5G. And we can talk more about that, I hope, during the call. I'm so pleased with what's happened. We continue to extend our lead.
Speaker Change: Customers have five devices and those customers are having a very differentiated experience with T. Mobile's lead and five G and we can talk more about that I hope during the call I'm. So pleased with what's happened we continue to extend our lead and so that the impetus when you're having a fantastic experience on your phone to prematurely swap it out just isn't there.
Mike Sievert: And so the impetus when you're having a fantastic experience on your phone to prematurely swap it out just isn't there. And, you know, they'll do it in a stepwise way. They continue to do so, and you can tell we're upgrading people fast enough by the fact that all those people have 5G phones, which is, you know, right at or even above competitive benchmarks. So our customers continue to upgrade at just the pace that we think is appropriate.
Speaker Change: And you know that they'll do it in a stepwise way they continue to do it and you can tell we're upgrading people you know fast enough by the fact that all of those people have <unk> phones, which as you know right at or even above competitive benchmark. So our customers continue to upgrade it just the pace that we think is appropriate.
Speaker Change: Alright, Great. Operator next question. Please your next question comes from John Hodulik with UBS. Please go ahead.
Operator: All right, great. Operator, next question, please.
Operator: The next question comes from John Hodulik with UBS. Please go ahead.
John Christopher Hodulik: Great. Thanks, guys.
John Christopher Hodulik: Maybe first on the on the luminous transaction.
John Christopher Hodulik: Great. Thanks, guys.
John Christopher Hodulik: Personally shouldn't expect similar deals in other parts of the country.
Mike Sievert: Maybe first on the Lumos transaction. First of all, should we expect similar deals in other parts of the country? And you talked about three and a half million homes passed. Is that about, I mean, that's just in one part of the country? Should we expect something similar from you as we look at the rest of the US? And then, in the release today, you guys had a line about not being able to meet all the demand for broadband with your fixed wireless network? Can you talk a little bit about how much growth there is left there? And if you're seeing capacity constraints in any particular areas? Thanks.
John Christopher Hodulik: And you talked about $3 5 million homes passed is that about I mean, that's just one small part of the country should we expect something similar.
John Christopher Hodulik: We look at the rest of the U S. And then in the release today you guys had a line about not being able to meet all the demand for broadband with your fixed wireless network can you talk a little bit about how much growth. There is less there and if you're seeing capacity constraints in any particular areas. Thanks.
John Christopher Hodulik: What kind of partner ecosystem or your ability to execute on your strategy, but let's go straight to Kelly.
Kelly: Well thanks, Kevin for the question, we saw very strong growth in Q1, outpacing our benchmark benchmark competitor again in postpaid phone nets, and you know to comment a little bit on the question that John was at to answering in the.
Unknown Executive: What kind of partner ecosystem are you building to execute on your strategy?
Callie R. Field: I love it. Let's go straight to Callie.
Callie R. Field: outpacing our benchmark competitor again in postpaid phone nets. And to comment a little bit on the question that John was answering in the business category, if we're seeing pressure in that category, I think it might be us. And one of the interesting things, I think, that's going on in our business right now is that not only are we delivering on top-line growth but also on CLV growth across all segments. And in enterprise, we just delivered our strongest postpaid nets ever in the history of the company. We also delivered our lowest churn rate in enterprise.
Kelly: Business category, if we're seeing pressure in that category.
Kelly: I think it might it might be us.
Kelly: And you know.
Speaker Change: One of the interesting things I think that that's going on in our business right. Now is that not only are we delivering on top line growth, but also on CLG growth across all segments.
Speaker Change: And in enterprise, we just delivered our strongest postpaid nets ever in the history of the company. We also delivered our lowest churn in enterprise and in SMB, we had our highest ever port ratios and we're net positive for seven consecutive quarters and so we're really liking the pace of the of the business. We really graduated.
Callie R. Field: In SMB, we had our highest ever port ratios and were net positive for seven consecutive quarters. So we're really liking the pace of the business. We've really graduated from just being a price comparison to really a solution-oriented sale for customers, and we see that with partnerships with DowPad AI, delivering mission-critical push-to-talk. And I know, Chetan, you also asked who are some of the partners that we're working with to build our ecosystem.
Speaker Change: From.
Speaker Change: Just being a price comp to them really a solution oriented sales for customers and we see that with partnerships.
Speaker Change: Partnerships with Dow Pan AI with them delivering mission critical push to talk and I know Ted you also asked who are some of the partners that we're working with in building our ecosystem.
Callie R. Field: Obviously, we're partnering with the largest OEMs. We're working with Ericsson and Cisco as well as industry segment experts like OCS when it comes to serving our government customers. So, really building out our ecosystem that allows us to really focus on enterprise solutions, enabling them to innovate and to love their customers at scale. I will mention just a couple of key wins in the advanced network solution business. You might have read about our partnership agreement with Delta, where they named us as their preferred wireless provider.
Speaker Change: We're partnering with the largest Oems.
Speaker Change: Working with Ericsson and Cisco as well as industry segment experts like Ocs when it comes to serve our government customers and so really building out our ecosystem that allows us to really focus on enterprise solutions, enabling them to innovate and to let their customers at scale I will mention just a couple of key wins in the advanced networks.
Speaker Change: Solution business and you you might have read about our partnership agreement with Delta, where they named us as their preferred wireless provider.
Callie R. Field: But we're also deploying a 5G hybrid network solution at their Atlanta headquarters, which we're really excited about. Also, the U.S. Coast Guard is working with us to build out a private network to deliver seamless, secure connectivity from ship to shore.
Speaker Change: But we're also deploying a <unk> hybrid network solution at the Atlanta headquarters, which we're really excited about and also the U S. Coast Guard is working with us to build out a private network to deliver seamless secure connectivity from from ship to shore and and then with Ericsson and not only as a strategic partner.
Mike Sievert: And then Ericsson, not only as a strategic partner, but we're also working with them to deploy our first network slice on a SIM-based SASE solution within a 5G-connected laptop. So we're really excited about the kinds of solutions, the sort of enterprises that we're bringing on, and the momentum in the business overall. It's really interesting when you hear us talk about enterprise, how different it is from four or five years ago. I mean, we were trying our best to sell SIMs to companies that would have meetings with us, like the procurement department.
Speaker Change: We're also working with them to deploy our first.
Speaker Change: Networks slice on a Sim based assay solution within our society connected laptop. So we're really excited about the kinds of solutions to sort of enterprises that we're bringing on and the momentum in the business and from its.
Speaker Change: It's really interesting when you hear us talk about enterprise how different it is from four or five years ago. I mean, we were trying our best to sell Sims to companies that would take meetings with us like the procurement department and what's happened in this five year strategy as it unfolded as Kelly and team have built solutions to some of the most pressing connectivity.
Mike Sievert: And what's happened in this 5G strategy as it's unfolded is Callie and her team have built solutions to some of the most pressing connectivity problems that enterprises of all kinds face. And suddenly, we're in strategic conversations because we have capabilities like network slicing, like SIM-based security, and many other emerging 5G capabilities that are way out in front. And that's not just getting us revenues from those advanced 5G services, but it's also winning us all those smartphones that we used to struggle so hard for and, back then, had to price so hard to win.
Speaker Change: The problems that enterprises of all kinds face and suddenly we're in strategic conversations because we have capabilities like network slicing like Sim based security and many other emerging five G capabilities that are way out in front and that's not just getting us revenues in those advanced <unk> services, but it's also winning US all those smartphones that we used to struggle so hard and back then have.
Speaker Change: The price so hard to win so it's been this really nice evolution.
Speaker Change: Make no mistake, we love low prices and we're going to be the value leader here, but today, we're solving some of the most complicated connectivity problems that enterprises and organizations face and that is a great place to compete yeah. Thank you Mike totally agree.
Mike Sievert: So it's been this really nice evolution. Make no mistake, we love low prices, and we're going to be the value leader here. But today we're solving some of the most complicated connectivity problems that enterprises and organizations face, and that is a great place to compete.
Speaker Change: Okay, let's try this again operator.
Speaker Change: Can we get a question.
Speaker Change: Sure. The next question comes from John Hodulik with UBS. Please go ahead okay.
John Christopher Hodulik: Okay, great. Thanks, guys, Hey, how are you guys.
John Christopher Hodulik: So I had a couple questions on that.
John Christopher Hodulik: Hey on the luminous transaction. So so first of all.
John Christopher Hodulik: Should we just stick or is this transaction is sort of a one off or should we expect other deals similar to this in the other regions and then of the $3 5 million homes, you guys were talking about pathing, how big could get back out over the next five years. So that's first and then.
Mike Sievert: Yeah, thank you, Mike. I totally agree. Okay.
Operator: Okay. All right, let's try this again.
Operator: Sure. The next question comes from John Hodulik with UBF. Please go ahead.
John Christopher Hodulik: Okay, great. Thanks, guys. Hey, how are you guys?
John Christopher Hodulik: Second of all in the release, you guys talked about not being able to fulfill the demand that youre seeing in broadband on the fixed wireless side.
John Christopher Hodulik: So I have a couple questions on the Lumos transaction. First of all, should we just think of this transaction as sort of a one-off, or should we expect other deals similar to this in other regions? And then, of the 3.5 million homes you guys are talking about building, how big could that get over the next five years? So that's first.
John Christopher Hodulik: You know how much growth is still locked in fixed wireless and are you seeing areas today, where you can't you're running out of capacity.
Speaker Change: Okay, let's start with the second one all along if I'll remind all of our listeners I know you know this our fixed wireless strategy has always been about selling excess capacity, where we predict normal cell phone usage won't suck up that five G capacity and so this gives us the opportunity to serve broad.
John Christopher Hodulik: And second of all, in the release, you guys talked about not being able to fulfill the demand that you're seeing in broadband on the fixed wireless side. You know, how much growth is still left in fixed wireless? And are you seeing areas today where you're running out of capacity?
Speaker Change: And customers are now at scale, we're serving millions and millions of them under this strategy. We had originally said we saw this strategy leading to about seven to 8 million total customers in terms of opportunity. We don't have any updates on that I've said several times, we're working on thinking about examining ways that we could try to extend that and we havent drawn any conclusions yet we have to.
Mike Sievert: Okay, let's start with the second one. All along, if I remind all of our listeners, I know you know this, our fixed wireless strategy has always been about selling excess capacity, where we predict normal cell phone usage won't suck up that 5G capacity. And so, you know, this gives us the opportunity to serve broadband customers, and now, at scale, we're serving millions and millions of them under this strategy. We had originally said we saw this strategy leading to about seven to 8 million total customers in terms of opportunity, but we don't have any updates on that.
Speaker Change: Make sure it's done in an economic way and we have to make sure. It's done in a way that customers will love and they have a fantastic product experience.
John Christopher Hodulik: That being said, what's interesting about fiber fiber can be a strategy that relieve some pressure on the <unk> network and extend the Tam and if you think about it right because some customers will where we offer fiber in the future, we'll be able to naturally graduate up to fiber, which is really a totally separate category and that obviously opens up.
John Christopher Hodulik: The opportunity for their neighbor to then become a five G customers. So theres. Some Tam expansion there and then to your point even in places where <unk>. Currently operates you know we have a long wait list of people, who applied them. They put their address in our system. They applied to be a fixed wireless customer and we have an accepted them yet because their address isn't one of those places that I described.
Mike Sievert: I've said several times that we're working on thinking about examining ways that we could try to extend, but we haven't drawn any conclusions yet. We have to make sure it's done in an economical way, and we have to make sure it's done in a way that customers will love, and they have a fantastic product experience.
John Christopher Hodulik: Where we have the predicted excess capacity so there's lots of opportunity there.
John Christopher Hodulik: As it relates to your first question around you know is this the first of many et cetera look we don't have anything to say about that other than you know our strategy is to opportunistically find ways that are very capital light very smart to put our brand in this space and we've done that here and we think this will lead to me.
Mike Sievert: That being said, what's interesting about fiber, fiber can be a strategy that relieves some pressure on the 5g network and extends the TAM. And if you think about it, right, because some customers will where we offer fiber in the future, we'll be able to naturally graduate up to fiber, which is really a totally separate category. And that, you know, obviously opens up an opportunity for their neighbor to then become a 5g customer.
John Christopher Hodulik: <unk> of homes passed and you know that's a great place for us to be we're going to continue to learn grow expand and you know we're open minded about this but we're not interested in any wholesale changes that basically changed who we are you know no big on balance sheet acquisitions are currently being examined.
Mike Sievert: So there's some TAM expansion there. And then, to your point, even in places where Lumos currently operates, you know, we have a long waitlist of people who have applied, put their address in our system, and applied to be a fixed wireless customer. And we haven't accepted them yet because their address isn't one of those places that I described where we have the predicted excess capacity. So there's lots of opportunity there. As it relates to your first question around, you know, is this the first of many, et cetera, look, we don't have anything to say about that other than, you know, our strategy is to opportunistically find ways that are very capital light, very smart to put our brand in this space, and we've done that here.
John Christopher Hodulik: That's something that we know our investors like our fast efficient capital of vision High capital return strategy and we have no intentions of changing all of that that being said if we can lay track for the long term in a very capital efficient way, we're open minded and we really like this model that we've struck with EQT and luma us in <unk>.
John Christopher Hodulik: Wait to get started and get this approved through the regulatory bodies in and begin to see this buildout accelerate.
Speaker Change: Thanks, Mike.
Mike Sievert: You bet.
Speaker Change: Great Operator next question please.
Mike Sievert: And we think this will lead to millions of homes being passed, and, you know, that's a great place for us to be. We're going to continue to learn, grow, expand, and, you know, we're open-minded about this, but we're not interested in any wholesale changes that basically change who we are. No big on-balance sheet acquisitions are currently being examined. You know, it's not something that, you know, we know our investors like our fast, efficient, capital-efficient, high-capital return strategy, and we have no intentions of changing all that.
Speaker Change: The next question is from Craig Moffett with Moffett Nathanson. Please go ahead alright.
Craig Eder Moffett: Alright, Thank you and first Chad, Thank you and congratulations but thank you for.
Craig Eder Moffett: Those 40, some odd quarters of [laughter] of of your able support and help.
Craig Eder Moffett: And congratulations to Kathy if she's on the call.
Craig Eder Moffett: A question about ACP, just because thats the obligatory topic. This quarter can you just talk about what you expect with ACP, how you think that might affect your business, especially perhaps your prepaid business, but whether you think it will have an impact on your your postpaid business as well and you just.
Mike Sievert: That being said, if we can lay track for the long term in a very capital-efficient way, we're open-minded, and we really like this model that we've struck with EQT and Lumos and can't wait to get started and, you know, get this approved through the regulatory bodies and begin to see this build out.
Craig Eder Moffett: Introduced it.
Craig Eder Moffett: Plan, where you would no longer do credit checks, which I think is where the head scratcher to me just coming right before the expiry of ACP I Wonder if you could just talk about how you plan to sort of ensure that ACP.
Craig Eder Moffett: ACP customers without government support won't won't up and that kind of a an offer.
Operator: Operator, next question please.
Speaker Change: Well, let's start out with Mike Cats. So we can disentangle. Some of these offers for you because there could be some misunderstanding out there and then we'll go to Peter and talk about the financial.
Operator: The next question is from Craig Moffett with Moffett & Nathanson. Please go ahead.
Craig Eder Moffett: All right, thank you. And first, Jud, thank you and congratulations. But thank you for all those 40-some odd quarters of your able support and help. And congratulations to Cathy if she's on the call.
Peter Oswald: What we see in the financial picture as it relates to the expected turn down of ACP.
Peter Oswald: Yeah. Thanks, Thanks, Craig.
Speaker Change: First to answer the first part of your question on what our expectations are with ACP at the at this point, we're expecting that the program funding is going to end.
Craig Eder Moffett: A question about ACP, just because that's the obligatory topic this quarter. Can you just talk about what you expect from ACP, how you think that might affect your business, especially perhaps your prepaid business, but whether you think it'll have an impact on your postpaid business as well? And you just introduced a plan where you no longer do credit checks, which I think was a head-scratcher to me just coming right before the expiry of ACP. I wonder if you could just talk about how you plan to sort of ensure that ACP customers without government support won't upend that kind of an offer.
Peter Oswald: And the impact of that is fully contemplated in the guidance that Peter talked about in Xi'an shared earlier.
Peter Oswald: And as a reminder, and I think it's important to contextualize like how T. Mobile has participated in the ACP program.
Peter Oswald: First of all we have not participated in it in any form in postpaid across any any products, it's not nonexistent in our postpaid business.
Peter Oswald: We have a small amount. So I think we've said a couple of hundred thousand inside of our prepaid our owned prepay portfolio and the vast amount of our participation is inside wholesale via wholesale partners that we work with so for Adam So just to contextualize, where our participation is that being said we are both in the <unk>.
Michael J. Katz: Well, let's start out with Mike Katz so we can disentangle some of these offers for you because there could be some misunderstandings out there, and then we'll go to Peter and talk about the financial what we see in the financial picture as it relates to the expected turndown of ACP.
Peter Oswald: <unk> amount that we have in our own prepaid business, but also with our wholesale partners working with them on communication and plans to help those customers transition. We think wireless is not a category that customers are going to walk away from so these these customers need another alternative and we're working closely with the partners and what the customers to find them.
Michael J. Katz: Yeah, thanks. Thanks, Craig.
Michael J. Katz: You know, first, to answer the first part of your question on what our expectations are for ACP, at this point, we're expecting that the program funding is going to end. And the impact of that is fully contemplated in the guidance that Peter talked about and shared earlier. And as a reminder, I think it's important to contextualize how T-Mobile has participated in the ACP program. First of all, we have not participated in it in any form in postpaid across any, all products. It's It's not non-existent in our postpaid business. We have a small amount, I think we've said a couple hundred thousand inside of our prepaid, our own prepaid portfolio.
Peter Oswald: Another alternative whether it's other plans or other programs like like lifeline, and so were deepened and doing that and look like we think if you look at T mobile and Mike talked a lot about our passion around and focus around it.
Peter Oswald: <unk>, our value position and the brands in our portfolio like Metro and soon to be meant and these are all value brands that are that are focused on delivering value and we think that's a great opportunity both to help customers inside of our wholesale partners to transition, but honestly customers that also may feel stranded from competitors to come.
Michael J. Katz: And the vast amount of our participation is inside wholesale via wholesale partners that we work with. So, just to contextualize where our participation is. That being said, we are both in the small amount that we have in our own prepaid business but also with our wholesale partners, working with them on communication and plans to help those customers transition. You know, we think wireless is not a category that customers are going to walk away from.
Peter Oswald: To find a value to continue their wireless services. So I hope I hope that's helpful. For the question, you're answering yes, and let me maybe add to that just a little bit on your other questions Craig.
Peter Oswald: Mike.
Peter Oswald: We highlighted our thinking around this well of course, it's in front of us more so than behind US no new activations as of February but its in front of us, but we think it's fully fully baked into the guidance range that we gave you the range of outcomes that we anticipate.
Michael J. Katz: So these customers need another alternative, and we're working closely with the partners and with the customers to find them another alternative, whether it's other plans or other programs like Lifeline. So we're very deep into doing that. And look, we think if you look at T-Mobile, and Mike talked a lot about our passion for and focus on guarding our value position, and the brands in our portfolio, like Metro and soon to be Mint, these are all value brands that are focused on delivering value.
Peter Oswald: And when we think about you asked about the no credit check and I can tell you one that we continue to see very healthy levels of bad debt, we continue to actually be the leader compared to our peers in terms of bad debt as a percentage of total revenue. So we're very happy with what we see there we're always testing and trying new things for example, we have a weigh in on it.
Peter Oswald: Ability for prepaid customers, who have a certain number of on time payments to graduate into postpaid without them incremental credit check and that's because we have data and know exactly how those customers behave over time and what are really data informed credit risk around those consumers are so we're always going to be testing around the edges.
Michael J. Katz: And we think that's a great opportunity both to help customers, you know, inside of our wholesale partners to transition, but also to help customers that may feel stranded from competitors to come to find a value to continue their wireless services. So I hope that's helpful.
Peter Oswald: What is really beneficial for consumers, while being very thoughtful around of course risk protection for the entity and that's why we set up the bad debt rates that we do.
Peter Osvaldik: Yeah, and let me maybe add to that just a little bit on your other questions, Craig. And I think, you know, Mike, really highlighted our thinking around this. Well, of course, it's in front of us more so than behind us. No new activations as of February, but it's in front of us.
Peter Oswald: And that's not new we've had downward.
Peter Oswald: Absolutely.
Speaker Change: Are there any thanks, Greg, though that is there any risk, though that ACP customers who've been essentially getting their bills paid by the government and therefore have good credit histories might be higher credit risk as ACP and.
Peter Osvaldik: But we think it's fully, fully baked into the guidance range that we gave you the range of outcomes that we anticipate. And when we think about you asked about the no credit check, and I can tell you one, we continue to see very healthy levels of bad debt; we continue to actually be the leader compared to our peers in terms of bad debt as a percentage of total revenue. So we're very happy with what we see there.
Greg: Yeah, Yeah, absolutely, yeah, you're absolutely right and that's thoughtful around to remember it is Mike CATT said the amount of ACP customers that are sitting in our prepaid base in metro is very small so that's so that's a very smaller amount in the postpaid base zero postpaid is absolutely zero for us and so it's.
Peter Oswald: Really finding products and you saw us probably launch out there are some ways to help consumers and think about can you get into other programs like T mobile connect or other low cost opportunities or lifeline type of construct so look we're going to be very thoughtful around making sure customers in this critical category stay connected while being.
Peter Osvaldik: We're always testing and trying new things. For example, we have a way and ability for prepaid customers who have a certain number of on-time payments to graduate into postpaid without an incremental credit check. And that's because we have data and know exactly how those customers behave over time and what the really data-informed credit risk around those consumers is. So we're always going to be testing around the edges, what is really beneficial for consumers, while being very thoughtful around, of course, risk protection for the entity.
Peter Oswald: Of course, very thoughtful around the risk profile for T. Mobile you know as Mike pointed out it's not just to our customers that are facing us right and everybody else's, but we've got this incredible portfolio of brands that are famous for value and we're going to make sure that those brands are in front of people because we know we're going to stand up and serve them in a time when they might might find that.
Peter Oswald: They need a new offer and we will be there with incredible offers for them.
Peter Osvaldik: And that's why we sit at the bad debt rates that we do. And that's not new. We've had that program for many years. Absolutely no. Is there any risk, though, that ACP customers who've been essentially getting their bills paid by the government and therefore have good credit histories might be a higher credit risk as ACPN? Yeah, yeah, absolutely. You're absolutely right, and that's thoughtful around the world. Remember, as Mike Katz said, the amount of ACP customers that are sitting in our prepaid base in Metro is very small. So that's so that's very small, and the amount in the post page base is zero post.
Speaker Change: Thank you okay.
Speaker Change: Operator next question please.
Speaker Change: And the next question comes from Jonathan Chaplin with New Street Research. Please go ahead.
Jonathan Chaplin: Thanks, guys, congratulations to John and Cathy that's fantastic news the since it's just last call I've got nine questions to ask.
Speaker Change: Hi.
Jonathan Chaplin: I'll try and consolidate them. So Mike I'm wondering if you can give us a just an update on the sort of the fiber strategies that youre collecting together in aggregate. So you've announced so far pilot the new mask deal I think there are deals out there with tilman Intrepid and SIFI.
Peter Osvaldik: It's not just our customers that are facing this, right? It's everybody else's, too.
Mike Sievert: But we've got this incredible portfolio of brands that are famous for value. And we're going to make sure that those brands are in front of people because we're going to stand up for them and serve them at a time when they might find that they need a new offer, and we will be there with incredible offers for them.
Jonathan Chaplin: When you put all of those together, how many homes passed into the mountain two and for the numerous deal specific need.
Jonathan Chaplin: How much.
Jonathan Chaplin: Cash is EQT, putting in and we're just trying to get a sense of sort of the total the total capitalization here.
Operator: Operator, next question please.
Jonathan Chaplin: And the next question comes from Jonathan Chaplin with New Street Research. Please go ahead.
Jonathan Chaplin: And then how much comes from slope incremental incremental debt and then my last question. On this is how do you fit all of the deals that we've heard about so far seem to be focused on guys.
Jonathan Chaplin: Thanks, guys. Congratulations to Jud and Kathy. That's fantastic news.
Jonathan Chaplin: Since it's Jud's last call, I've got nine questions to ask. I'll try and consolidate them. So, Mike, I'm wondering if you can give us an update on the sort of the fiber strategies that you're collecting together in aggregate. So, you've announced so far pilot, the Lumos deal; I think there are deals out there with Tillman, Intrepid, and Sci-Fi. How many, when you put all of those together, how many past homes does it amount to?
Jonathan Chaplin: Guys building new infrastructure, how about how do you think about those sorts of assets buses partnering with guys who have existing copper infrastructure that they're upgrading thank you.
Speaker Change: You bet.
Speaker Change: I'm going to give you too much on sort of broad strategic here other than the fact that you know we're opportunistic there.
Speaker Change: S strategies, we've employed so far both across wholesale which we got started on in a very small way already as well as this new partnership are about putting the T mobile brand and team to work selling a fiber product that complements our wildly successful five G product.
Jonathan Chaplin: And for the Lumos deal specifically, can you tell us how much cash EQT is putting in? We're just trying to get a sense of sort of the total capitalization here. And then how much comes from sort of incremental debt. And then my last question on this is, how do you think all of the deals that we've heard about so far seem to be focused on guys building new infrastructure? How do you think about those sorts of assets versus partnering with guys who have existing copper infrastructure that they're upgrading?
Speaker Change: And to US that's a great strategy, because we believe we have an opportunity to generate superior returns than a purely disinterested investor could do by virtue of our assets and our Knowhow and we've proven that know how to ourselves through our success with five G home Internet you think about our incredible distribution, our leading brand.
Speaker Change: Tens of millions of customers our incredible team we.
Speaker Change: We have we have very insightful data that our customers give us permission to use to put relevant offers about their T. Mobile experience in front of them. These are all advantages that are purely financial are disinterested investor wouldn't have and so when we look at this area and say can we extract a return that's better than others could we get you know we have some confidence and so we think about.
Mike Sievert: You bet! We won't be able to give you too much on sort of a broad strategy here, other than the fact that, you know, we're opportunistic. The strategies we've employed so far, both across wholesale, which we got started on in a very small way already, as well as this new partnership, are about putting the T-Mobile brand and team to work, selling a fiber product that complements our wildly successful 5G product. And, you know, to us, that's a great strategy because we believe we have an opportunity to generate superior returns than a purely disinterested investor could do by virtue of our assets and our know-how.
Speaker Change: At it from that opportunistic standpoint, not from a convergence.
Speaker Change: Defensive standpoint, we believe that our T. Mobile offers stand tall and stand alone and don't quote unquote need convergence. We just think that this is a place where we can make customers happy and generate superior financial return and it complements our leadership product that we already have out there beyond that I can't say much more about the strategy other than what I said Earth.
Mike Sievert: And we've proven that know-how to ourselves through our success with 5G Home Internet. Think about our incredible distribution, our leading brand, our tens of millions of customers, our incredible team. We have very insightful data that our customers give us permission to use to put relevant offers about their T-Mobile experience in front of them.
Jonathan Chaplin: Earlier.
Jonathan Chaplin: We like this partnership we're very excited about where it could go maybe Peter can comment on the capital structure, but one of the things I do like about it is that we decided as we formed this to fund it and give it the wherewithal with some additional debt to have everything it needs from an equity standpoint to get to the three and a half million homes passed which we think.
Mike Sievert: These are all advantages that a purely financial or disinterested investor wouldn't have. And so when we look at this area and say, can we extract a return that's better than others could, we have some confidence. And so we think about it from that opportunistic standpoint, not from a convergence defensive standpoint.
Peter Oswald: You know a nice threshold for us it'll be a multistate footprint it'll be big enough to matter and of course that will be through a combination of debt and equity and again, Jonathan and can't give you all the details because we have counterparties involved in those first it is a 50 50 joint venture will be unconsolidated for us. So it's from equity method investment for us so.
Mike Sievert: We believe that our T-Mobile offers stand tall and stand alone and don't, quote-unquote, need convergence. We just think that this is a place where we can make customers happy and generate a superior financial return, and that it complements a leadership product that we already have out there. Beyond that, I can't say much more about this strategy other than what I said earlier.
Mike Sievert: Body kind of captures that fine point, and then as Mike said there. It's just given that it's a 50 50, there will be obviously cash infusion from EQT as the partner in this as well and when you think about that incremental 500 million for example that would be an equivalent cash infusion from EQT and there is given those with an infrastructure and a <unk>.
Mike Sievert: You know, we like this partnership, and we're very excited about where it could go. Maybe Peter can comment on the capital structure, but one of the things I do like about it is that we decided as we formed this to fund it and give it the wherewithal with some additional debt to have everything it needs from an equity standpoint to get to the 3.5 million homes passed, which we think is a nice threshold for us. It'll be a multi-state footprint. It'll be big enough to matter, and, of course, that will be through a combination of debt and equity. Yeah,
Peter Oswald: Anchor tenants in the form of T mobile, having the retail customers. There is an ability to also lever the entity pan the overarching thought processes about a maximum of two to one debt to equity ratio, but it'll be based on what the funding needs of the entity actually has to get to that three and a half million dollars.
Speaker Change: One quick follow up Peter if I can you mentioned at the beginning that you.
Peter Oswald: You sort of set.
Peter Oswald: Capital aside for things like this.
Peter Osvaldik: In 2024.
Peter Oswald: You haven't used up that whole sort of reservoir of capital yet if you look at what's left there is it more directed towards fiber transactions like this or spectrum like how do you sort of balance between those two assets.
Peter Osvaldik: And again, John, I can't give you all the details because we have counterparties involved in this. First, it is a 50-50 joint venture. It will be unconsolidated for us. So it's an equity method investment for us. So everybody kind of captures that fine point.
Peter Oswald: It really is looking at what the best return profile for T. Mobile is and sometimes as you know spectrum opportunities may come up they may not come up we could have some of the two and a half gig leased spectrum come up and then we have rights of first refusal around those so there's still a balance we don't have line of sight to how we would use every dollar.
Peter Osvaldik: And then, as Mike said, given that it's a 50-50, there will obviously be a cash infusion from EQT as the partner in this as well. And when you think about that incremental 500 million, for example, that would be an equivalent cash infusion from EQT. And there is, given this as an infrastructure and a great anchor tenant in the form of T-Mobile having the retail customers, an ability to also lever the entity up. And the overarching thought process is about a maximum of a 2-to-1 debt-to-equity ratio. But it'll be based on what the funding needs of the entity actually are to get to that 3.5 million.
Peter Osvaldik: Of what's still remaining in that bucket, but as opportunities come up we're going to tumble it through the normal capital allocation thought process that we have that we've described you know very very many times and that's exactly how you would think or we should be at about and nor should we write so I mean, one of the reasons why we were this transparent maybe unusually transparent with you is that we wanted you to know that we.
Peter Oswald: We could in the normal course pursue opportunities and yet still honor our stockholder return ambitions and we wanted to make it clear that that nothing has changed in that and that's why we put an envelope out there at the beginning so that you would have confidence that weather was spectrum partnerships like this other things that we would see that where we could use our know how.
Jonathan Chaplin: One quick follow-up, Peter, if I can. You mentioned at the beginning that you sort of set... the Capitalist Side for Things Like This in 2024. You haven't used up that whole sort of reservoir of capital yet. If you look at what's left there, is it more directed towards fiber transactions like this or spectrum? Like how do you sort of balance between those two assets?
Jonathan Chaplin: And embedded assets to be able to extract a superior financial return and delight customers that we would have the wherewithal to seize those things within that range. So we're really pleased to have been able to bring this one to fruition and can't wait to get started once we get approval.
Speaker Change: Awesome. Thanks, guys. Thanks, Thank you Jonathan.
Peter Osvaldik: It really is looking at what the best return profile for T-Mobile is. And sometimes, as you know, spectrum opportunities may come up, they may not come up, we could have some of the two and a half gigahertz least spectrum come up, and we have rights of first refusal around those. So it's still a balance; we don't have a line of sight to how we would use every dollar of what's still remaining in that bucket.
Speaker Change: Operator next question.
Peter Oswald: And the next question is from Simon Flannery with Morgan Stanley. Please go ahead.
Simon William Flannery: Great. Thank you good evening and best of luck George Thanks for all the help and welcome Kathy.
Simon William Flannery: Peter I wanted to talk a little bit about margins. If I could you had nice EBITDA growth of 8% margins up nearly 200 basis points year over year I think in the past you'd sort of suggested there.
Peter Osvaldik: But as opportunities come up, we're going to run them through the normal capital allocation thought process that we have that we've described, you know, very many times, and that's exactly how you think we should think about it. And nor should we, right?
Simon William Flannery: The cadence would cut a ramp through the year. So perhaps just talk a little bit about margin trajectory. Both this year and just longer term the opportunity I think Mike you said, we're just getting started here so talk about the cost side. If you could and then maybe on spectrum just any update you can give us on the status of the 800 megahertz spectrum, given where capacity.
Mike Sievert: And nor should we, right? So, one of the reasons why we were so transparent, maybe unusually transparent with you, is that we wanted you to know that we could, in the normal course, pursue opportunities and yet still honor our stockholder return ambitions. And we wanted to make it clear that, you know, nothing has changed in that. And that's why we put an envelope out there at the beginning, so that you would have confidence that whether it was Spectrum, partnerships like this, other things that we would see where we could use, you know, our know-how and embedded assets to be able to extract a superior financial return and delight customers, we would have the wherewithal to seize those things within that range So, you know, we're really pleased to have been able to bring this one to fruition and, you know, can't wait to get started once we get approval.
Peter Oswald: April one deadline.
Peter Oswald: What should we expect in coming months from you in terms of auctioning that off to third parties. Thanks.
Speaker Change: But you take the first one I'll tell you I'm absolutely. Thanks Simon.
Mike Sievert: It's a tremendously exciting story actually one of the reasons as you as we've talked about before is we've now achieved as of Q4 of last year and this tremendously successful merger integration the run rate synergies, which we raised a couple of times during the pendency of the deal and execution itself and so now, though we continue with the sky to see run.
Mike Sievert: Rates EBITDA increases that are significant in fact quite similar to what we had during those synergy unlock days and Theres a couple of things that create that one is continued outsized profitable share taking in of course.
Mike Sievert: Taking those fixed cost and leveraging the fact that we're continuing to take outside share and turning that into outsized service revenue growth. So when you have postpaid service revenue growth like we delivered this quarter of six 5% year over year on a lot of fixed cost nature of the base that obviously gives you leverage besides that we're going to continue in <unk>.
Mike Sievert: Awesome. Thanks guys. Thanks. All right, operator, next question.
Simon William Flannery: And the next question is from Simon Flannery with Morgan Stanley.
Peter Osvaldik: Peter, I wanted to talk a little bit about margins, if I could. You had nice EBITDA growth of 8%, and margins up nearly 200 basis points year over year. I think in the past, you'd sort of suggested the cadence would ramp through the year. So perhaps just talk a little bit about the margin trajectory, both this year and just longer term. I think, Mike, you said we're just getting started here.
Mike Sievert: It's a it's a culture, it's kind of a flow of thinking here that we have around continued optimization efficiencies, where can we extract efficiency out of the business. So that we can plow it back into customer acquisition margin expansion and most importantly, and we've talked about this we tend to think about it as service.
Peter Osvaldik: So talk about the cost side, if you could. And then maybe on spectrum, just any updates you can give us on the status of the 800 megahertz spectrum, given we've passed the DISH April 1 deadline. What should we expect in the coming months from you in terms of auctioning that off to third parties? Thanks.
Mike Sievert: Revenue to free cash flow conversion that free cash flow is what unlocks all the ability for further value, creating investments, whether it's spectrum purchases, whether it's capital returns and so we're hyper focused on how do we make sure that we create efficiencies in our expense profiles and how do we.
Peter Osvaldik: Why don't you take the first one, and I'll take it on the next one? Yeah, absolutely. Thanks, Simon. You know, it's a tremendously exciting story, actually. One of the reasons, as we've talked about before, is that we've now achieved, as of Q4 of last year, in this tremendously successful merger integration, the run rate synergies, which we, you know, raised a couple times during the pendency of the deal and execution itself. And so now, though, we continue with this guide to see run rate EBITDA increases that are significant. In fact, quite, you know, similar to what we had during those synergy unlock days.
Mike Sievert: Make sure that in our Capex profile, we're making every single dollar count and delivering the next best tranche of value for us and I think we have some really bespoke unique ways that we approach that but that's why we continue to see this expansion, particularly in that service revenue to free cash flow play out over.
Mike Sievert: For a period of time I hope it doesn't sound like we're sort of flogging our book when we say look at cash flow margins.
Mike Sievert: We are but.
Speaker Change: But also I think you know cash is king and.
Peter Osvaldik: And there are a couple of things that create that. One is continued outsized profitable share taking. Of course, you know, taking those fixed costs and leveraging the fact that we're continuing to take outsized share and turning that into outsized service revenue growth. So when you have postpaid service revenue growth, like we delivered this quarter of 6.5% year over year, on a lot of the fixed cost nature of the base, that obviously gives you leverage.
Mike Sievert: Our view that doesn't look at cash flow margins would miss the fact that we have we think a durably more capital efficient strategy than our benchmark competitors and therefore from a geography standpoint, EBITDA margins don't tell the whole story, even though I'm pleased we're up 200 bps, almost and we're making great progress there and.
Mike Sievert: But the cash margins are the story because they are inclusive of what we think is a durably superior capital investment profile and we'll talk a lot more about what we think our secret sauces with you at some point when we have more time, but this.
Peter Osvaldik: Besides that, we're going to continue. And really, it's a culture. It's kind of a flow of thinking here that we have around continued optimization, efficiencies, where can we extract efficiency out of the business so that we can plow it back into customer acquisition, margin expansion, and most importantly, and we've talked about this, we tend to think a lot about what we're doing.
Mike Sievert: This is a strategy we have growing confidence in that it's going to be durable.
Speaker Change: Okay understood second question around 801st of all I will just remind you what Peter I know has told people in the past that we chosen our business plan to be pretty conservative as it relates to how to think about the 800 and what I mean by that is we didn't include any proceeds from this auction in our financial plan. So that they would be found money going into that reserve fund we were.
Mike Sievert: Talking about a few minutes ago with Jonathan.
Peter Osvaldik: I hope it doesn't sound like we're sort of flogging our book when we say, look at cash flow margins. You know, we are.
Mike Sievert: But secondly, we also did not put the usage of that spectrum into our network planning and capacity plan and so kind of no matter what happens here with this auction, which has begun we either get found spectrum and capacity that we get to keep and figure out a way to use and this is great spectrum nationwide contiguous low.
Peter Osvaldik: But also, I think, you know, cash is king. A view that doesn't look at cash flow margins would miss the fact that we have, we think, a durably more capital efficient strategy than our benchmark competitors. And therefore, from a geography standpoint, EBITDA margins don't tell the whole story, even though I'm pleased we're up almost 200 bps and we're making great progress there. But the cash margins tell the story because they are inclusive of what we think is a durably superior capital investment profile.
Speaker Change: Dan lots of interesting things, we can do with it, especially with emerging technologies, but also.
Mike Sievert: This option May conclude successfully and if it does we'll have cash on hand that enhances our our profile. So.
Mike Sievert: What's the update we have commenced.
Peter Osvaldik: We have interested parties, we have nonbinding indications of interest there's reason to believe that we will meet the reserve.
Peter Osvaldik: We'll talk a lot more about what we think our secret sauce is with you at some point when we have more time, but this is a strategy we have growing confidence in that it's going to be durable.
Mike Sievert: So it's a little too soon everything is non binding but.
Peter Osvaldik:
Mike Sievert: Okay, so the second question, around 800, well, first...
Speaker Change: We'll have more to say after we get past kind of the binding parts of this so stay tuned but.
Mike Sievert: You know again whichever way it shakes out.
Simon William Flannery: Great. That's very helpful. Thank you.
Operator: Operator, next question, please. The next question is from David Barden.
Simon William Flannery: For us it's a it's a win because of our conservative planning.
David Barden: Great. That's helpful. Thank you.
Speaker Change: You bet.
Mike Sievert: Great.
Operator: Operator next question please.
David Barden: The next question is from David Barden with Bank of America. Please go ahead. Mr. Barden, your line is open on our end. Oh, perfect. Thank you so much. Congratulations to Jud and Kathy.
Operator: Next question is from David Barden with Bank of America. Please go ahead.
David Barden: Mr. Barton Your line is open on our end.
David Barden: Perfect. Thank you so much congrats to John and Cathy.
David Barden: So.
David Barden: I guess my first question would be related to the car.
David Barden: I guess my first question would be related to the comments in the in the in the results about how kind of going after the business market has kind of impacted the ARPU calculation. And that's been trending down for a couple quarters. And so I was wondering if you could kind of maybe unpack, the kind of subscriber number that we're watching evolve here and how it balances between consumer versus business. Obviously, I'm obligated to ask you how Freelines and other things contribute to the reported postpaid number. And the second question, if I could, maybe Mike, just to go back to this Lumos situation,
David Barden: Our comments in the in the in the results about how kind of going after the business market has kind of impacted the arps calculation and that's been trending down for a couple of quarters.
David Barden: So I was wondering if you could kind of maybe unpack.
David Barden: The the kind of subscriber number that we're watching evolve here and how it balances between consumer versus business, obviously I'm obligated to ask you.
David Barden: How free lines and other things contributed to the reported postpaid number.
David Barden: And the second question, if I could maybe Mike.
Speaker Change: Just to go back to this little most situation.
David Barden: You know, you're basically saying that today you're prepared to invest about 1.45 billion between now and 2028 to own 50% of basically two and a half percent of the households in America, and if you got 50% of that, you would have slightly, you know, around under between one and one and a half percent. So what is the point? Like, why? Why is it worth the brain damage to spend the money and the years building an organization? to get something that looks realistically so small in the grand scheme. Thanks.
David Barden:
Mike Sievert: You're basically saying that today you are prepared to invest about 1.45 billion.
Mike Sievert: Now in 2028% to 150%.
David Barden: Of basically 2.5%.
David Barden: Of of the households.
Mike Sievert: In America, and if you've got 50% of that you would you would have.
Mike Sievert: Slightly.
Mike Sievert: Round under between one and one 5%.
Speaker Change: So what is the point like why why is it worth the brain damage to spend the money the years building the organization.
Speaker Change: To get something that looks realistically still small.
David Barden: In the Grand scheme, Thanks, sorry.
Mike Sievert: Yeah, thanks, David. Well, let me start with the second one.
Speaker Change: Yeah. Thanks, David Let me start with the second one and then I'll hand, it to Peter on the first one.
Mike Sievert: And then I'll hand it to Peter on the first one. Look, I'm really excited about this because I think we're getting a lot and enabling this company to accelerate growth. And if you think about, you know, close to one and a half billion spread over time, three and a half million passings being the goal for that funding, you know, from what we the capital we put out, you know, that's less than $500 per passing. And to the premise of the question, that's not sort of like half of it because the other way it works is that T-Mobile is the branded entity for all of those passes.
Mike Sievert: Look I'm really excited about this because I think we're getting a lot.
Mike Sievert: And enabling the company to accelerate growth and if you think about you know close to one 5 billion spread over in time, three and a half million passing as being the Gulf of that funding from the capital. We put out you know that's that's less than $500 per passing and to the premise of the question that's not first sort of like.
Speaker Change: Half of it because the other way. It works is that T. Mobile is the branded entity for all of those passing and it's up to us to make sure that it stays that way and we perform and so on.
Mike Sievert: And, you know, it's up to us to make sure that, you know, it stays that way, and we perform and so on. But, you know, our strategy is to be able to add augmentations to an already nationwide, multi-million customer broadband strategy. And this is a smart way to do that, and I signaled that we're open to constructs like this around the margins. And so, you know, maybe in the end, they'll add up to more than this. And certainly, three and a half million isn't where this probably ends.
Speaker Change: But you know our strategy is to be able to get augmentations to an already nationwide multimillion customer broadband strategy and this is a smart way to do that and I signaled we are open to.
Mike Sievert: To construct like this around the margins and so you know maybe in the endo add up to more than this and certainly three and a half million isn't where there's probably ends you know this is a growth engine that could continue into the future. We're not obligated for it too so I love the strategy and I think it's about getting a better return based on our embed.
Peter Osvaldik: You know, this is a growth engine that could continue into the future; we're not obligated for it to. So I love the strategy. And, you know, I think it's about getting a better return based on our embedded assets and complementing, you know, a complementary product that's already scaled. And that makes it very appealing for us to think about the efficiencies of how we would go to market. And we are the go-to market entity, you know, in this construct as Lumos pivots into a wholesale model.
Peter Osvaldik: Assets and complementing you know E are.
Peter Osvaldik: Our complimentary product that's already scaled and that makes it very appealing for us to think about the efficiencies of how we would go to market and we are the go to market entity in this construct as Lou most pivots into a wholesale model. So hopefully that hopefully that helps to your first question on <unk>, maybe you could unpack it a little bit visa.
Peter Osvaldik: So hopefully that helps. To your first question on ARPU, maybe you could unpack it a little bit vis-a-vis business versus consumer and then answer, once again, the age-old question of, you know, free lines and all that stuff. Yeah, absolutely.
Mike Sievert: The business versus consumer and then answer once again the age old question of free lines and all that stuff, yes, absolutely.
Peter Osvaldik: And, you know, Dave, as we've been saying for a long time, our focus is primarily on ARPA, driving accounts, landing them, expanding them. And, you know, we just gave an updated guide with respect to ARPA, both from that, as well as those continued rate plan optimizations. And we'll probably see more of that unfold in the second half of the year.
Peter Osvaldik: Dave as we've been long, saying our focus is primarily on ARPA drive accounts land them expand on them and we just gave an updated guide with respect to ARPA, both from that as well as those continued freight plant optimizations, and we'll probably see that more unfold in the second half of the year, but that trickles down into <unk> as well.
Peter Osvaldik: But that trickles down into ARPU as well. So I'd say probably this year, we're expecting ARPU to be up, say, maybe half a percent, again, more weighted to the second half of the year. But it is very much, as you say, a mixed-driven metric.
Peter Osvaldik: So I'd say, probably this year, we're expecting our <unk> to be up say, maybe half a percent again more weighted to the second half of the year.
Peter Osvaldik: But it is very much as you say a mixed driven metric and now we don't separately disclose consumer versus business, but there's just so much goodness in terms of ARPA, both accounts and ARPA accretion that you would expect us to go heavily after as Kelly was talking about the enterprise space in the government space where.
Peter Osvaldik: And now we don't separately disclose consumer versus business, but there's just so much goodness in terms of ARPA, both accounts and ARPA accretion, that you would expect us to go heavily after, as Callie was talking about, the enterprise space and the government space, where, naturally, ARPUs are lower. But account and CLVs, and enterprise value creation are really great and strong. So you see success even in the consumer space with segmented consumer offers, like in the 55 plus segment and in the military segment. Once again, you're willing to do lower ARPUs because you have great CLVs with those types of customers for different reasons, each in their own segment. So we're going to continue to pursue this strategy.
Peter Osvaldik: Naturally our pooser lowered but account and C. L V's and enterprise value creation is really great and strong so.
Peter Osvaldik: You'll see a success and even in the consumer space with segmented consumer offers like in the 55 plus segment in the military segment. Once again youre willing to do lower <unk>, because you have great C. L. V's with those types of customers for differential reasons each in their own segments. So we're going to continue to pursue this strategy.
Peter Osvaldik: But again, now we expect about a probably half a percent increase in ARPU. Now, this whole age-old free line question, I understand because there's some stuff that's happening in the industry. As you know, we don't do first free lines. Now, we've long had a construct in our rate plan constructs that encourages higher numbers of lines in terms of our accounts because the higher number of lines gets to be more sticky, generates more ARPA, and has a greater lifetime value.
Peter Osvaldik: But again now we expect about probably half a percent increase in ARPA now this whole age old free line question I understand because theres some stuff that's happening in the industry. As you know we don't do first free lines now we've long had a construct in our rate plan construct that encourages higher number of lines.
Peter Osvaldik: In terms of our accounts because of the higher number of lines get to be more sticky generate more ARPA and the greater lifetime value, but theres really been no trajectory change there at all from a year over year sequential perspective in fact, I would say it contributed less this Q1 than it did last Q1.
Peter Osvaldik: But there's really been no trajectory change there at all from a year over year sequential perspective. In fact, I would say it contributed less this Q1 than it did last Q1. But that, to me, is very much a rate plan construct. And again, we don't do first-free lines. And so that's kind of, it's not really any sort of a contributor to what you see happen year over year in terms of our net ad performance relative to the industry. All right. Thank you, Mike.
Peter Osvaldik: But that to me is very much a rate plan construct and again, we don't do first free lines and so that's that's kind of it's not really any sort of a contributor to what you see have happened year over year in terms of our net add performance relative to the industry.
Speaker Change: Perfect Alright, Thank you, Mike and Peter I appreciate it.
Mike Sievert: All right. Thank you, Mike and Peter. I appreciate it.
Speaker Change: You bet.
Speaker Change: Here from you all.
Mike Sievert: All right, next question.
Speaker Change: Alright next question.
Eric Thomas Luebchow: And the next question comes from Eric Luebchow with Wells Fargo. Please go ahead.
Eric Thomas Luebchow: And the next question comes from Eric <unk> with Wells Fargo. Please go ahead.
Eric Thomas Luebchow: Great, thanks for taking the question. Just to follow up on the fiber to the home strategy at a high level, as you look at potential future opportunities, is the goal to target areas where you might be under penetrated in either fixed wireless or traditional mobile to kind of expand your addressable market, or is it in part to provide an alternative for existing FWA subs to offload to a higher capacity option? Any color there would be would be helpful.
Speaker Change: Great. Thanks for taking the question.
Eric Thomas Luebchow: Just to follow up on the fiber to the home strategy at a high level as you look at potential future opportunities is the goal the target areas, where you might be underpenetrated in either fixed wireless or traditional mobile to kind of expand your addressable market or is it in part to provide an alternative for existing <unk> subs to offload to a higher capacity option.
Eric Thomas Luebchow: Any color there would be would be helpful. And then secondly, just on the on the network positioning today, maybe you could talk about how your sequencing capital to put additional spectrum to work between C band the Dod's spectrum, two and a half gigahertz re farming AWS just anything.
Eric Thomas Luebchow: And then secondly, just on the network positioning today, maybe you could talk about how you're sequencing capital to put additional spectrum to work between C-band, the DOD spectrum, two and a half gigahertz, refarming AWS, just anything, any color you could provide on how you're working to maintain your network advantage, particularly as your two large peers have made further progress in building out mid-band spectrum. Thank you.
Eric Thomas Luebchow: Any color you could provide on how you're working to maintain your network advantage, particularly.
Eric Thomas Luebchow: Your two large peers are made further progress in building out mid band spectrum. Thank you.
Ulf Ewaldsson: Sounds good. Well, let's start with the second one about the network. I mean, I am really pleased with what is happening with Ulf and his team. You know, we continue to actually extend our lead. You know, if you look nationwide, don't look at somebody's favorite denominator, but just look nationwide at all of the customers and all of the experiences that all of the customers are having. We're actually pulling ahead, and our average speeds are double our competitive benchmarks.
Speaker Change: It sounds good but let's start with the second one about network I mean, I am really pleased with what is happening.
Ulf Ewaldsson: With orphan team, we continue to actually extend our lead you know if you look nationwide don't look at a at somebody's favorite denominator, but just look nationwide in all of the customers and all of the experience that all of the customers are having we're actually pulling ahead in our average speeds are double our competitive benchmarks and so and one of the reasons for this is that.
Ulf Ewaldsson: And so – and one of the reasons for this is that it's not just looking underneath the 5G, but it's looking at the availability of that 5G that, for us, is in so many more places, reaching so many more people. And with that full layer cake, which keeps the customers connected to 5G, all that results in a fantastic experience. Maybe you can give a little color on what's been unfolding, talk about Auction 108 and how we're deploying advanced technology.
Ulf Ewaldsson: It's not just looking underneath the five G. But it's looking at the availability of that five G that for US is in so many more places, reaching so many more people and with that full layer cake, which keeps the customers connected to <unk> all of that results in a fantastic experience. Maybe you can give a little color on whats been unfolding talk about auction went away and.
Speaker Change: We are deploying advanced technologies off well, thank you, Mike and yeah, we're very excited about the network and how.
Ulf Ewaldsson: Well, thank you, Mike. And yeah, we're very excited about the network and how it keeps advancing. And you mentioned C-Band. So some of our competitors have launched C-Band and put it out there, and in the areas where they launched it, we do see that the gap between us and them narrowed a little bit, even though we are still way ahead.
Ulf Ewaldsson: How it keeps it keeps advancing.
Ulf Ewaldsson: And you mentioned the C band So some of our competitors have large C band and put it out there in India areas, where they launched it we do see that the gap between us and them narrowed a little bit even though we are still way ahead, but as you said, we also noticed that the overall media and downlink speeds, we are gaining in.
Ulf Ewaldsson: But as you said, we also noticed that the overall median downlink speeds we are gaining another quarter again. And the main reason for us doing that is really the unique way we've built and constructed the network. We are the only one in the country who has three completely dedicated bands toward 5G. We have 2.5, we have 1,900 now, and we have 600.
Ulf Ewaldsson: The quarter again, and the main reason for US doing that is really the unique way we have built and constructed the network. We are the only one in the country was three completely dedicated bands towards Eh.
Ulf Ewaldsson: Towards five G. We have two and a half we have 1900 now and we have 600 and that gives us that big advantage together with the Standalone network and the larger deployment in the footprint that we have in fact, we have now.
Ulf Ewaldsson: And that gives us that big advantage, together with the standalone network and the larger deployment and the footprint that we have. In fact, we now have 90% of our sites capable of 5G. Traffic-wise, about 85% of our traffic goes on these tri-band sites that are all working with stand-alone technology and working with carriers. We'll talk more about that one.
Ulf Ewaldsson: 90% of our sites capable of five G. We have <unk>.
Ulf Ewaldsson: Traffic wise about 85% of our traffic on these tri band sites.
Ulf Ewaldsson: That are all working with the Standalone technology, and working with carriers and I'll talk more about that when somebody so 85% of the time.
Ulf Ewaldsson: So 85% of the time, people are connecting to a site with all three bands of 5G. And how does that affect the quality of the connection and the reliability of the 5G connection? Well, very much so.
Ulf Ewaldsson: Our people are attaching to a site with all three bands of <unk> and how does that affect the quality of the connection and the reliability of the five well very much so because out of that we also have and this is an even more remarkable is that we have 93% of the traffic on mid band, which means that there is no toggling. It just creates a much more consist.
Ulf Ewaldsson: Because out of that, we also have, and this is an even more remarkable stat, we have 93% of the traffic on mid-band, which means that there is no toggling. It just creates a much more consistent experience. There is no toggling between when you're on LTE and 5G. You're staying in 5G the entire time. No toggling between low-band and mid-band, so another factor of no toggling. The other fun thing is that we have a grid, and this is a unique thing for T-Mobile.
Ulf Ewaldsson: <unk> experienced there was no toggling between when you're an L. P. In five years staying in <unk> the entire no toggling between low and mid band. So it's another factor of no toggling. The other one is that we have a grid and this is a unique thing for T. Mobile we have a grid that is based from the beginning on a mid band experience. So when we deploy $2 five.
Ulf Ewaldsson: We have a grid that is based from the beginning on a mid-band experience. So when we deploy 2.5, we get a very consistent experience between our towers. As opposed to some of our competitors who have a low-band grid, and therefore, and a higher band on the C-band, which is higher than 2.5. That creates a less, more sort of interrupted, not so clear, clear, and consistent experience. That's what we're differentiating from.
Ulf Ewaldsson: We get a very consistent experience between our towers as opposed to some of our competitors who has a low band grid.
Ulf Ewaldsson: And therefore in a higher band on the seabed cement is higher than $2 five that creates a less more sort of interrupted not so clear clear and consistent experience. That's why we are differentiating somebody experiencing a cell edge condition of five G right because our grid is tighter and our spectrum reaches further and the net effect of those two things as you're on five G.
Ulf Ewaldsson: Somebody is experiencing a cell edge condition of 5G, right? Because our grid is tighter.
Ulf Ewaldsson: Our high quality <unk> link more of the time and 85% of the time Youre seeing all three bands where a lot of the time, we use advanced carrier aggregation techniques. So that you get the benefit of all of those bands and so in terms of your signal strength like the uplink might be in the low band the downlink might be in the mid band et cetera, et cetera, and these are all advanced techniques.
Mike Sievert: And our spectrum reaches further, so the net effect of those two things is you're on 5G and a high-quality 5G link more of the time. And 85% of the time, you're seeing all three bands, where a lot of the time we use advanced carrier aggregation techniques so that you get the benefit of all those bands in terms of your signal strength. For example, the uplink might be in the low band. The downlink might be in the mid-band, et cetera, et cetera. And these are all advanced.
Mike Sievert: That there.
Speaker Change: There the rollout with our competitors is quite variable, but we're really focused on giving body everybody at consistent experience, that's very right, Mike and it's recognized I mean, we saw in the U K measurements another quarter, where we came in in the overall network leader. We were also recognized by open signal as having the most reliable experience. So I think those are remark.
Mike Sievert: Couple of facts, showing and then you mentioned also a R 108 auction and how quickly we deployed it took us two weeks to get it all lit up in our entire network.
Mike Sievert: You know over a population of about $60 million, we were able to shoot up our five G. Medians link as speeds by about 20% or a little bit more even so really a good good resolved them very quickly and it shows that we can deploy a spectrum very fast well. Thank you all for joining our fireside chat about network.
Mike Sievert: Yeah.
Mike Sievert: But I did I did want to make sure because there is this kind of a misnomer out there that everybody is catching up and the parties over and it's and I've been saying this for years. We remain two years ahead of the party on five <unk> and our customers are having a radically differentiated experience and you can see it in the data not just in the rhetoric. So I'm really glad you asked about that.
Mike Sievert: Well, thank you all for joining our fireside chat about networks.
Mike Sievert: Okay, you bet that was great. I'm sorry. I didn't bring my popcorn for that one. All right. Let's go to the next one.
Mike Sievert: There was another question, though about fiber and where we intend to target look I can't help you much on that because we don't have we're not rolling out a plan that this is the beginning of a big wave of initiatives here, we're really happy about this initiative and how it augments five G broadband and we intend to go put our energy into it.
Operator: And the next question is from Sam McHugh with BNP Paribas. Please go ahead.
Mike Sievert: So, but look I do want to remind people that this isn't a regional thing for five G home Internet, it's really a sector by sector assessment neighborhood by neighborhood as to where what we have excess capacity because that sector gets hung.
Samuel McHugh: Afternoon guys, thanks for the questions. Just two, on Fiverr to begin with, on the existing wholesale agreements you have, can you give us any color on what kind of penetration levels you're seeing, kind of year one, year two, so we can think about the potential in the new JV? And then secondly, I think on FWA, I've seen some reports suggesting you might start sending notifications to people who've moved the products from their home address.
Samuel McHugh: In order to give the kind of competitive experience that we were just coffee talking about but then if mobile usage isn't predicted to soak up all that capacity than individual households get approved for home broadband and so now we're at.
Samuel McHugh: If those neighborhoods are neighborhoods, where we roll out fiber and we can actually have some of those neighbors be added to the five G who wouldn't otherwise be added and that's that's Tam expanding potentially but we're really focused on these things right now very happy to have this initiative out the door.
Samuel McHugh: And nothing further to report about it.
Speaker Change: Hi, Thank you gentlemen.
Speaker Change: Okay, you bet that.
Speaker Change: That was great I'm, sorry, I didn't bring my popcorn for that one.
Speaker Change: Let's go to the next question.
Samuel McHugh: Do you think that will have any impact on net ads going forward? And, more broadly, how should we think about the cadence of FWA through the rest of this year? Thank you very much.
Samuel McHugh: And the next question is from Sam Mchugh with BNP Paribas. Please go ahead.
Speaker Change: Yes afternoon, guys. Thanks for the questions.
Samuel McHugh: Two on fiber to begin with on the existing wholesale agreements you have it can you give us any color on what kind of penetration levels, you're saying kind of year one year two.
Samuel McHugh: So we can think about the potential in the new JV.
Michael J. Katz: Thank you. We'll go to Mike for both questions.
Mike Sievert: And then secondly, I think on <unk> I've seen some reports, suggesting you might start sending notifications to people who can move the product from the home address.
Michael J. Katz: Yeah, so first on the fiber question, remember that a lot of these wholesale markets that we've launched are brand new and haven't even existed for a year. But when you heard Mike talking about the assets that T-Mobile has and how we think that those give us an advantage relative to other investors, that is exactly what we're starting to see play out in these wholesale markets. Remember, at a small scale, you know, we're in parts of about 16 markets spread around the country. But what we're seeing is a pace that would get us over 20% in the first year in those markets.
Michael J. Katz: Do you think that will have any impact on the kind of net adds going forward I guess more broadly how should we think about that cadence.
Michael J. Katz: <unk> through the rest of this year. Thank you very much okay. Thanks.
Speaker Change: Thank you and we'll go to Mike for both questions. So first on the on the fiber question I remember a lot of these wholesale markets that we've launched our brand new and haven't even been existing for a year, but when you heard Mike talking about the assets that T. Mobile has and how we think that those give us advantage relative to relative to other investors that is exactly what we're starting to see play out.
Michael J. Katz: In these wholesale markets remember at small scale, we're in parts of about 16 markets spread around the country.
Michael J. Katz: But what we're seeing is.
Michael J. Katz: A a pace that would get us over 20% in the first year inside those markets. So we're really pleased with the penetration that we're seeing there.
Michael J. Katz: So we're really pleased with the penetration that we're seeing there. Now, on your FWA question, and specifically earlier this week, we launched a couple of new products. And let me just give a little bit of context about those.
Michael J. Katz: Now on your <unk> question.
Michael J. Katz: And specifically there earlier this week, we launched a couple of new products and let me just give a little bit of context to those.
Michael J. Katz: Mike talked about us moving over 5 million customers in our home broadband business this quarter, which obviously is a huge milestone for us. And, you know, we now sit at the center of millions of homes with the most important technology in their house. And we think that gives us an opportunity, and I think I've mentioned this in the last couple of calls, to look at opportunities to expand into other products and services inside the home, as well as give us tons of insight from what we're hearing from customers about additional needs.
Michael J. Katz: Mike talked about us moving over 5 million customers in our home broadband business. This this quarter, which obviously is a huge milestone for us and we now sit at the center of millions of homes with the most important technology in their house and we think that gives us an opportunity and I think I've mentioned this in the last couple of calls to look at opportunities to expand into other products and services inside the home.
Michael J. Katz: <unk> as well as give us tons of insight from Cutler from what we're hearing from customers of additional or additional needs. So earlier. This week, we launched a program called whole home, which gives customers the ability to in addition to the CPE and router that we provide and.
Michael J. Katz: So earlier this week, we launched a program called Whole Home, which gives customers the ability to, in addition to the CPE and router that we provide in our regular HSI package, they can expand that and add mesh that integrates into our CPE. So they can give themselves a much larger Wi-Fi footprint inside their home. We also include some additional support for all the peripheral devices that attach to your network. So if you've got a laptop or a printer that you need support for, we'll offer that as part of this program. And secondly, we offered a new program called Away.
Michael J. Katz: In our regular H HSI package, they can expand that and add mesh and it integrates into into our CPE. So they can give themselves a much larger Wi fi footprint inside their home.
Michael J. Katz: We also include some additional support for all the peripheral devices the attached to your network. So if you've got a laptop or a printer that you need support on we'll offer that as part of this program.
Michael J. Katz: And then secondly, we offered a new program called away and I'm really excited about this one because one of the things we've heard from customers is because this is a product that only requires power we're not running a wire into your house or anything like that it just it just requires power and we see customers that want to use this on their boat or in their RV or while they're camping.
Michael J. Katz: And I'm really excited about this one because one of the things we've heard from customers is that because this is a product that only requires power, you know, we're not running a wire into your house or anything like that, it just requires power. And we have customers that want to use this on their boat or in their RV or while they're camping. And we created a couple of new plans specifically for those use cases that allow customers to move this as their life moves along in their RV.
Michael J. Katz: And we created a couple of new plans, specifically for those use cases and that allow customers to move this as their life move along in their RV. The only thing I'm really excited about in combination with that as we struck a partnership with camping world and camping World. If youre not familiar with them is the largest camping and RV retailer in the country and Theyre going.
Michael J. Katz: The other thing I'm really excited about in combination with that is we struck a partnership with Camping World. And Camping World, if you're not familiar with them, is the largest camping and RV retailer in the country. And they're going to be partnering with us on these Away programs to sell to their customers and to integrate our HSI routers inside RVs that they're using.
Michael J. Katz: To be partnering with us on these away programs to sell to their customers and to integrate our HSI routers inside rvs that they sell.
Michael J. Katz: And you can send your orders for our new Away product to mike.katz. Hey, by the way, you asked one last question, which is about what we're seeing with the wholesale fiber penetration rates. It's all very early, because remember, these are greenfield projects. And so these were – our partners were starting out after the wholesale partnerships were struck. But so far, so good.
Michael J. Katz: And you can send your orders for our new away product and Mike Dot cash.
Michael J. Katz: Hey by the way you ask one last question, which is about.
Michael J. Katz: About what we're seeing with the wholesale fiber penetration rates. It's all very early because remember these are greenfield projects and so these were these were our partners were starting out.
Michael J. Katz: After the wholesale partnerships were struck.
Michael J. Katz: But so far so good on at a small scale, we're seeing year, one penetration rates trending to 20% that's above industry benchmarks. That's a good sign on your way to terminal penetration rates that are much higher than that so everything we're seeing from these small scale. So far anyway, it's going to grow but so far small scale pilots in the wholesale arrangements vary.
Michael J. Katz: At a small scale, we're seeing year one penetration rates trending to 20 percent, which is above industry benchmarks. That's a good sign on your way to terminal penetration rates that are much higher than that. So everything we're seeing from these small scale tests – so far, anyway, it's going to grow. But so far, small-scale pilots in the wholesale range have been very positive, and that's adding, of course, to our confidence to make news like today.
Michael J. Katz: Positive and that's adding of course to our confidence to do news like today. So hopefully that covers your question Sam.
Mike Sievert: So hopefully that covers your question, Sam. Just a cadence on FWA. Cadence, tell me one more time what that part's about.
Mike Sievert: Just the cadence on SWA.
Mike Sievert: Yeah.
Mike Sievert: Cadence on tell me, one more time, what that parts of it.
Samuel McHugh: As in terms of net ad development through the rest of the year, we've obviously seen some moves from T and others, kind of how we should think about growth going forward.
Mike Sievert: And then in terms of kind of net out development through the rest of the year. We've obviously seen some moves from T and how that's kind of how we should think about growth going forward.
Mike Sievert: We don't guide on it, but one thing we did when we made the changes around sunsetting our launch era promotions was we indicated that this quarter would be more like 400,000 instead of the 500,000 we've seen in the past. And that's what happened.
Samuel McHugh: We don't guide on it but one thing we did do when we made the changes around sunsetting, our launch arrow promotions as we indicated that this quarter would be more like 400000, instead of the 500000, we've seen in the past and that's what happened. We delivered 405000, we did we havent guided on there.
Mike Sievert: You know, we delivered 405,000. We haven't given guidance for the rest of the year, but we've said we're well on track to the goal that we have always anticipated being by the end of 2025 in that 7 to 8 million customers range. And, you know, what's interesting is that 405,000 net additions this quarter actually represented, as I said in my prepared remarks, a higher percentage of total broadband net ads than last year's 500 and some thousand.
Mike Sievert: Rest of the year, but we've said we're well on track to the goal that we have always anticipated being by the end of 2025 and that seven to 8 million customers range and.
Mike Sievert: Whats interesting is that 405000 net additions this quarter actually represented as I said in my prepared remarks, a higher percentage of total broadband net adds than last year's 500, and some thousand and so we're you know we're sticking right in there with a very competitive more than half that means more than all the others combined.
Mike Sievert: And so we're, you know, we're sticking right in there with a very competitive more than half. That means more than all the others combined number of net ads in the space. And so we're really happy with where it is because, at the same time, we're seeing the value of this customer base start to appreciate. And that's also important, not just through pricing or promotion sunsets but through the kinds of value-added services that Mike just summarized.
Mike Sievert: Number of net adds in the space and so we're really happy with where it is because at the same time, we're seeing the value of this customer base start to appreciate and that's also important not just through pricing or promotion sunsets about through the kinds of value added services that Mike just summarized.
Mike Sievert: Awesome, Mike. Thanks.
Speaker Change: Awesome. Thanks.
Mike Sievert: Okay, thank you. Thanks, Sam. Operator, let's squeeze in one more question, please.
Speaker Change: Okay. Thank you thanks, Sam operator lets a squeeze in one more question. Please.
Operator: And that question comes from Kannan Venkateshwar with Barclays. Please go ahead.
Speaker Change: And that question comes from cannot invent cause that's why with Barclays. Please go ahead.
Kannan Venkateshwar: Thank you. Congratulations, Jonathan and Kathy once more.
Kannan Venkateshwar: Thank you congratulations Jonathan Kathy once more.
Mike Sievert: Mike, I'll try and maybe nudge you along a little bit more on your prior response to broadband. You now have scale and broadband, and you're already one of the biggest operators in this market through fixed wireless. But you seem to be hedging your comments a little bit on cyber in terms of the scale or the kind of ambitions that you might have here long term. So could you maybe talk about what the ultimate cyber ambitions here are?
Kannan Venkateshwar: Mike I'll try and maybe natural along a little bit more on your prior response on broadband.
Mike Sievert: You now have cable and broadband and you're already one of the biggest operators.
Mike Sievert: In this market.
Mike Sievert: Through fixed wireless, but you seem to be hedging your comments a little bit on fiber.
Mike Sievert: In terms of the scale or the kind of ambitions that you might have had long term. So could you maybe talk about what's the ultimate scale ambitions here are.
Mike Sievert: Are you viewing this as a cheap option at this point and you want to test out the market a little bit to see where it goes? Or is there a longer-term vision behind this in terms of how you see the company as a whole evolving in terms of its business mix?
Mike Sievert: Are you viewing this as a cheap option at this point and you wanted to test the market and living but let's see where it goes or is there a longer term vision behind this in terms of how you see the company as a whole evolving in terms of its business mix.
Mike Sievert: Thank you. Yeah, I can say that.
Mike Sievert: Thank you. Yeah, I can say a couple of things. And one of them, and this will be a little unsatisfactory, but I do plan to lay out a more long-term view on how we think about this space at our Capital Markets Day, which I mentioned would be this fall, because I know that people want a multi-year view. Even that view will include an element that we intend to be patient and opportunistic, and it will also include an element that says we have no interest in fundamentally changing who we are.
Speaker Change: Thank you yeah, I can say a couple of things and one of them out of this there'll be a little unsatisfying, but I do plan to lay out a more long term view on how we think about this space at our capital markets day that I mentioned would be this fall because I know that people want a multi year view even that view will include an element that we intend to be patient opportunistic and.
Mike Sievert: It would also include an element that says we have no interest in fundamentally changing who we are we are a highly successful mobile business. That's mobile first that's generating superior cash flow returns in this industry because of our superior strategy and we are embarked upon a shareholder return program that we think makes a lot of <unk>.
Mike Sievert: We are a highly successful, you know, mobile business that's mobile first, that's generating superior cash flow returns in this industry because of our superior strategy. And we're embarking upon a shareholder return program that we think makes a lot of sense in this part of our life. So look, I you know, we're gonna, we like this area for all the reasons I said on this call, but it's premature for us to lay out, you know, kind of a detailed strategy on where we expect to be.
Mike Sievert: And this piece of our life.
Mike Sievert: So look we're going to.
Mike Sievert: We like this area for all the reasons I said on this call, but it's premature for us to lay out kind of a detailed strategy on where we expect to be and even when I lay it out there will be some element of it that you'll have to be patient with us because we're gonna be patient, we're going to be smart, we're gonna be opportunistic.
Mike Sievert: And even when I lay it out, there will be some element of it where you'll have to be patient with us because we're going to be patient, we're going to be smart, we're going to be opportunistic, you know, because we have so much confidence in our core strategy, and hopefully, you see that patience on our part as a sign of our confidence in our core business.
Mike Sievert: And because we have so much confidence in our core strategy and hopefully you see that patients on our part as a sign of our confidence in our core business.
Speaker Change: Thank you.
Jud Henry: Well, that's all the time we have for questions. And we definitely appreciate everyone joining us today. It's been an absolute privilege working with you. And if you have any additional questions, please reach out to either the investor relations or media relations departments. And with that, have a great day.
Speaker Change: You bet.
Jud Henry: Well, that's all the time, we have for questions and we definitely appreciate everyone joining us today.
Jud Henry: It's been an absolute privilege working with you and if you have any additional questions. Please reach out to either the investor relations or media relations departments and with that have a great day. Thanks everybody.
Operator: Ladies and gentlemen, this concludes the T-Mobile first quarter earnings call. Thank you for your participation. You may now disconnect. Have a pleasant day.
Speaker Change: Ladies and gentlemen, this concludes the T mobile first quarter earnings call. Thank you for your participation.
Operator: May now disconnect and have a pleasant day.