Q2 2025 T-Mobile US Inc Earnings Call

Good afternoon. All participants will be in a listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then 1 to withdraw your question. Please. Press star then 2

You may also submit a question via X by sending a post to at T-Mobile IR or at Mike severt using cash TM us.

I would now like to turn the conference over to Kathy Yao, senior vice president of investor relations for T-Mobile us. Please. Go ahead.

During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We encourage you, to review the risk factors set forth in our SEC filings

And other documents related to our results as well as reconciliations between gaap and non-gaap results. Discussed on this, call can be found on our investor relations website with that. Let me now turn it over to Mike, okay, Kathy. Thank you. Thanks for keeping us out of trouble over there. Great job. Um, welcome everybody. Thanks for being with us. Good afternoon. Uh, we're coming to you live from Belleview today. I've got the whole team here and we are excited to talk to you about our Q2 results and more importantly to take your questions and what a quarter. It was our results were in 1 Word. If I had to pick 1, fantastic, this team right here, did it again? Delivering the consistent differentiated profitable growth that we are known for. We led the industry in both customer growth and in financial growth across multiple metrics. And more importantly, we smashed our own records. This was the greatest Q2 for growth. Ever in T-Mobile's story.

History with the best Q2 post-paid phone that's ever. The best Q2 for total post-paid, net additions ever. And our best ever Q2 on Gross editions too, with both gross and total post-paid and both both crows. And net total post-paid adds up double digits year-over-year against a very strong, 2024 comp,

Equally as exciting, our postpaid account Nets. Also accelerated year-over-year and we saw our post-paid share of households grow in every single cohort within the top 100. And of course also in smaller markets in rural areas and the momentum is continuing with share of port in leadership and overall customer momentum right where we want it.

Now, you may have heard others say that this is a highly competitive environment and it is but we love it that way and we thrive in a dynamic environment. Like this 1, our results, including our value creation results and this Dynamic environment simply speak for themselves.

The quality of our customers continues to improve at a rapid Pace with arpa growth up over 5%, our highest growth in 8 years, our customers are continuing to self-select up the rate card. Here's a new stat for you. After launching our new rate plans in April. Within that premium segment we've been talking to you about customers are loving our most premium tier within it more than ever selecting. Our new experience Beyond plan at more than double the rate of go 5G. Next just a year ago and up over 50% in just 1 quarter.

Our business group continues to break growth records as well leading the industry once again in net additions. And we are not standing still just yesterday, we announced a new multi-year partnership with cable to provide mobile service to small and mid-market businesses to supercharge our growth in an area where we have little exposure today in a true win-win. The deal focuses, our partners in the exact areas that would drive incremental Revenue because our strongest T-Mobile branded growth. Comes on the 1 hand from the very smallest businesses transacting at retail, where we already compete with cable and on the other hand, from large Enterprises above a thousand lines, which are not included in the deal. So while it's going to take some time for this to grow into something meaningful. I'm super excited about their capabilities to generate growth in the SMB sector in a way that will be truly incremental for T-Mobile.

Okay, I want to spend a moment on something that I'm very passionate about our Network.

America's best network.

Over the last couple of years. We've seen a significant increase in the number of customer sighting, our Network, as the reason for switching to T-Mobile and that's a great start. But the reality is most of our prospects, don't yet know, we have the best network. In fact, only about 20,

20% of switchers in the broader Market, believe we do this represents an enormous runway for us Network. Perception has now become a major Focus for us for a simple reason. There's a massive opportunity from all of those tens of millions of customers who went elsewhere in the 4G, era deliberately choosing what was then the best network? Well, there's a new best network in America and you'll be seeing us bring that message to Consumers and businesses in really innovative ways until every person in America has heard why there has never been a better time to join T-Mobile.

Nearly 4,000 sites this year alone.

That's why we were the first carrier to roll out. Things like Nationwide 5G. Advanced automated slicing capabilities and higher order carrier. Aggregation and we won't stop. It's all about getting more and more performance for our customers from every Capital dollar and every piece of radio spectrum. The result our Network lead continues to widen

We're also Shoring up our Network in smaller market and rural areas with US, Cellular with all required approvals. Now, in place, I'm pleased to say that we plan to close the transaction and become 1 team next week on August 1st. We can't wait to welcome US Cellular customers to the T-Mobile family. The combination gives us an expected, 50% or more increase in capacity. In the combined footprint, and our site coverage will expand by a third from 9,000 to 12,000 sites taken together with the Greenfield builds. I mentioned earlier, the network experience in smaller, markets in rural areas is being fundamentally transformed. Just further fueling our ability to compete and grow in this space.

And just this morning, we launched our groundbreaking tea, satellite service. Commercially further, extending our Network to connect customers, in the 500,000 square, miles of this country that are not covered terrestrial by anyone. And with a truly differentiated service.

Okay.

Now, let me turn over to 5G broadband. No, surprise, given the strength of this product. We delivered yet another Stellar quarter. In fact for the 14th straight quarter, we led the overall Broadband industry in net additions double clicking into it, T-Mobile for business. Also led the industry this quarter achieving our highest ever business 5G Broadband net additions overall both speeds and usage continue to rapidly grow demonstrating the mainstream nature of this product while satisfaction is as high or higher than ever as seen in our record low churn

Let's talk fiber last month, we launched T fiber, after completing our JV, acquisition of lumos and April and tomorrow, we plan to close our JV acquisition of Metronet with both up and running under the T fiber Banner in the second half. We're poised to deliver 100,000 or more fiber Nets on top of our planned 5G Broadband Nets. This year, we are off to the races.

Let me spend a moment right now on our ongoing digital transformation.

At Capital markets day, we shared an audacious transformation plan designed to meet customers where they are with breakthrough, enabled sales and services experience. Break break through AI enabled, sales and services experiences and a step change improvement in our business model. At the same time, I'm here to tell you that we are more than on track. Look at how far we've come in such a short time. A year ago, T life was just getting started, our t Life app now has over 75 million installs and it's 1 of the most downloaded apps in the App Store. And it's a destination for tens of millions of customers to transact and access the incredible magenta status benefits that they love.

As an example a year ago, very few of our phone upgrades occurred. Digitally today. We've checked that box about 2/3 of our consumer upgrades now occur via our app.

And we're exiting Q2 with significant new momentum in digital adalines, and turning next.

To new customer acquisition. I have never been more excited about the potential here for our customers and also, for our business model.

Speaking of, let's talk financials our best-in-class customer results continued to drive industry-leading Financial growth across key metrics yet again in Q2.

Post-paid service revenues grew 9% year-over-year and acceleration from q1. And Total Service revenues grew 6% a rate. Well over double that of our closest competitors.

Our industry-leading core adjusted. EA growth was 6% year-over-year. We delivered 4.6 billion dollars in adjusted free cash flow, a new Q2 record translating to once again. Industry-leading adjusted free cash flow conversion from service revenues of 26%.

And it has tons of room to run. Not only do we see opportunity to deliver outsized growth in underpenetrated areas, like smaller, markets, T-Mobile for business and Broadband, alongside smart new adjacencies. But as we solidify our Network lead, we're also demonstrating that there's room to run among Network seekers in the top markets, where we're most established, there are growth opportunities. Everywhere we look.

We have built these differentiated and durable advantages over time and with unwavering Focus, this team sitting here in front of you, looks around corners and we show up every single day, ready to win to win today and to win tomorrow and we won't stop. We won't stop doing what's right by customers. We won't stop shattering. The very records we set and we won't stop delivering against the lofty. Long-term Ambitions. That continue to set T-Mobile apart.

Okay, Peter over to you to provide a quick update on our key financials and our guidance. Perfect. Thanks Mike. Hey, as you can see, we had a fabulous Q2, which underpins the confidence in our increased guidance. Before we jump into those updated fully your expectations. I'll note that now. Reflect the inclusion of Metronet but exclude US, Cellular for, which we will provide an update later after the close.

Okay, starting with customers, we are raising our total post-paid net additions. Expectations to be between 6.1 to 6.4 million, an increase of 500,000 at the midpoint.

Approximately 100,000 of the total will be fiber. Net additions.

We are also increasing our expectation for postpaid bone, net additions. Now, expected to be between 2.95 and 3.1 million highlighting, the great momentum. We're seeing in the business,

Both of these represent our highest ever customer guidance. At this point in the year,

We also continue to expect strong post-paid arpa growth of at least 3 and a half percent for the full year as we see continued, deepening of customer relationships and we now expect 2025 service, Revenue growth of at least 6% for the full year.

We now expect core adjusted ibida to be between 33.3 and 33.7 billion for the full year. An increase of a 100 million at the lower end of the range which includes funding our significantly increased total post-paid net additions expectation.

As part of that, we expect Q3 core adjusted ibida to be approximately 8.5 billion. As we accelerate investments into our business.

Okay, turning the cash capex. We continue to expect cash. Capex to be approximately 9.5 billion for the full year.

We also expect adjusted free cash flow including payments for merger related costs in the range of 17.6 to 18 billion. Also representing an increase of a 100 million at the lower end of the range.

I also wanted to touch on the upcoming close of the joint venture transaction, which is acquiring Metronet.

As with the lumos joint venture the consumer experience, and residential business will be fully owned by us and we will also share in 50% of the joint venture economics. We will treat the acquired customers as a base adjustment in our third quarter results. And as we Fuel customer growth, we expect the retail business to be slightly, accretive to service revenues while remaining neutral to adjust the IBA and adjusted free cash flow this year.

Additionally, our 50% Equity stake. In the joint. Venture will be reported below the line as an equity method investment and is expected to be immaterial to net income this year.

Next quarter, we will provide a more comprehensive update regarding the contribution of both of our fiber joint ventures.

Okay, let me also spend a moment on the benefits from the recent legislation coming out of DC.

While this won't meaningfully impact our 2025 cash tax expectations. We do expect an approximately 1.5 billion benefit to cash taxes in 2026, which will be deployed thoughtfully, Guided by our Capital, allocation philosophy.

And finally, I want to provide an update on the sale of our 800. MHz licenses. We have reached an agreement with grain management to divest our entire portfolio of 800 megahertz licenses in exchange, for a combination of 2.9 billion in cash.

All of grains, 600 megahertz licenses and have additional potential upside via participation in future proceeds grain. Receives from monetizing the licenses after a minimum return to Green

As a reminder, all of the net proceeds, are incremental upside to the guidance. We laid out for you at Capital markets Day last year.

We expect this transaction to close in the fourth quarter of 25 or the first quarter of 2026.

Okay, to sum it all up, not only did our results, continue to demonstrate our ability to consistently execute and deliver outsized and profitable growth, but we cannot be more excited to carry our strong momentum far into the future.

All right and with that I will now turn the call back to Kathy to begin the Q&A. Thank you. Thank you Peter. Okay 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 at my receiver using cash tag TM us. We will start with a question on the phone operator. First question, please.

Speaker Change: And your first question today, will come from John hodduk with UBS. Please go ahead.

Speaker Change: Great. Thank you guys and uh, 2. If I met uh, first you guys saw strong sub growth uh in the quarter uh, despite slightly higher churn. Could you just give us an idea of Mike what you're seeing in the market today? How you expect churn to sort of Trend in the second half? And what you're seeing just from a competitive standpoint. And then, um, number 2 thanks for the disclosure on on the fiber side. Uh, you know, 100,000 for the year can you give us a little more color on that? Is that sort of 50,000 run rate for the next 2 quarters or is that does that include some of that we saw here in the second quarter and just any other color you can give us on the sort of

John hodduk: Growth of that business is either today or over time and and do you anticipate other opportunities to, to, for some inorganic growth in that in that business? Thanks.

Speaker Change: Okay, terrific, thanks for the questions. Um, let me start with cerini on the competitive environment, although I'll invite anybody to jump in and then, uh, we'll turn to Mike on fiber and what we can expect for the second half. So 3, what are we seeing out there?

Thanks John. So quick sense of the competitive environment. Firstly, we like the fact that it's a dynamic competitive market. As Natural share, takers. We enjoy these moments when there's more movement and more switching in the market. And part of that is our conviction that the fact that we win in these moments has far less to do with promotions, it has far more to do with the compelling proposition we have. Now I've worked in a few different Telco markets and seldom. Do you see the kind of unicorn position where 1 tell or 1 provider is able to provide not just the best network but also the best value and best experience. And that unique proposition is what really Powers our ability to win in situations like this.

Speaker Change: Talking about the market itself. Look, this is a market where the Dynamics of competition changes and evolves. So we go through periods, where the focus is on rate plans. Currently, we're in a period where the focus is on device promotions. Uh, the reality is even in a for even as the focus shifts to device promotions, uh, there's kind of more spend up front, but the clvs were generating are robust and pretty consistent with our history of clvs. Uh, so this feels like a

Speaker Change: Really good, uh, economic investment. And we feel very, very comfortable making that investment. I mean, the driver to that is. Yes, you have more outflow upfront in the device promotion, but you get longer lifetimes, you get higher, RPS, all of that, comes together to make a solid and robust, uh, and dynamic environment and we liked the dynamic bit of it. Uh, I think the last point I'd make on that is if we just lift out of kind of, you know, the Dynamics of competition shifting Sands how we compete in the rest of it. Uh, the reality is, this is a great time to be in the US Wireless industry as a customer and as a participant as customers. In the last 3 to 4 years, we've seen customer speeds, grow 3 to 4 times data consumption goes 3 to 4 times and at the same time customers have paid less in real terms for the product.

Speaker Change: And as an industry, we've seen a 50.

Speaker Change: Growth in free cash flow which is the 1 really matters from a value creation perspective uh for the industry as a whole. So it's a really good time to be in Wireless and we're enjoying the dynamic nature of the competition.

Speaker Change: Okay. Yeah, I mean, the only thing I'd add around, uh, John, your question around churn is much as we foreshadowed. We anticipated Q2, uh, to be up given the finalization of our weight plan optimizations, what we're anticipating going forward, if I think about Q3 sequentially, we anticipated being down and year-over-year, probably flat to potentially slightly up, but we're through that heightened area of churn for us.

Speaker Change: We're seeing great Dynamics now, so that's probably the color around Q3.

And, you know, uh, the thesis that we, uh, that we were excited about, as we got into the fiber business that, you know, our unique assets could help us penetrate markets. There's uh, everything we've seen so far, has reinforced that to us. Um, the 100,000 that Mike Mike spoke about a second ago is, uh, is coming both through the the 2 JVL as well as the wholesale markets. Um, the Metronet. Uh, deal of course closes tomorrow um, and we will commercially launched T fiber in those markets late later this year. Um, and so that the 100,000 contemplates, the combination of both the JVS, uh, as well as the wholesale markets, uh, in terms of the the question about other other inorganic, obviously we can continue to keep an open mind as you would expect us to about that. Um, but the 100,000 is, is with the, uh, organic or the deals that we've closed. Uh, that will all be closed as of tomorrow, as well, as the markets that we've already been operating with in wholesale 1 of the things. We haven't talked about much, is our overall go to market approach and I just, I love it so much, you know, so we are obviously, we're leaders in Broadband. We've been the

Speaker Change: The share taking leaders in Broadband for 14 quarters and now we're able to add in many places across the country T fiber to that. But it's on an infrastructure that already exists from a go to market standpoint and we've been able to engineer an IT platform for T fiber that I think is just fantastically elegant because this will be a model that involves wholesale Partners, as Mike just mentioned, uh, JVS like lumos and Metronet and possibly future JVS all of whom can plug into a unified.

Speaker Change: T fiber platform, incredibly easily. So it, it took us a while to get it done. Uh, but this thing's fantastic and it really gives us terrific flexibility when it when it comes to our ability to do what we do best go to market and serve customers. So I'm really excited about it.

Speaker Change: Thanks, Mike. Thanks John. Operator, next question.

Speaker Change: And your next question today will come from Benjamin swinburne with Morgan Stanley. Please go ahead.

Benjamin Swinburne: Thank you, good afternoon. Um, just reflecting back on your Capital markets day, last, uh, September to now, uh, you know, 1 1 metric that really jumps out is the arpa growth. I think you talked about 2% growth or 2% plus last year over the kind of the 3 year planning period, you you're you're up almost 5% year to date. Could you guys unpack a little bit of the the drivers there and whether you're more optimistic about growth in that line and and service Revenue over the course of the next couple years just giving the strength that you've seen and then

Speaker Change: Like, I didn't I didn't think of you having, uh, doing a, a deal with the cable operators as a possible outcome on this call. But I wanted to ask you, if you could spend a little more time on on your strategy there and why you think it makes sense for T-Mobile and and, and, but the opportunity is long term around partnering with uh with with that industry going forward.

Speaker Change: I love it. Well, we'll start with Peter on arpa and I think Ben's trying to be played, are you sandbagging us over here or what's going on? Right? Right. Yeah. And the multi-year arc and what do you do? Look uh much. Like we said at Capital markets day our job and that is to put together a set of rational aggressive assumptions and then go try to beat them and I'm not here to start you know, updating 26 or 2027. That's not the job. They'll come a time. We'll have to layer in US Cellular as well, as I mentioned in the prepared remarks, but arpa growth is definitely going fabulously. Well, this year and that's the underpinnings for both the service Revenue increase. Now, at least 6% but also the strength there of 3 and a half percent this year. And of course that does have to do in part with the rate plan optimizations that we executed on. And that's why you see a little bit of year to date versus year to date. You know, um, difference versus the second half because remember we began those late in Q2 of last year. So you're kind of lapping right now the periods where we have this year, the benefit of 2 rate, plan optimizations the finalization.

Speaker Change: Of the first 1 uh and the very first 1. And now we'll have the real true organic growth in the second half and what really is exciting, what underpins that is my highlighted and is prepared to Marx is just what we're seeing from a rate plan perspective. Customers are really appreciating the value that we're packing into the plans combined, with, of course, the best networking experience proposition, and their self- selecting up the tiers to our most premium team here at very exciting.

Speaker Change: We've doubled it, what we've done, is we've taken it from 10 to 20 of the 60, not as a denominator, so 10 to 20 and then another, uh, 40 and 40 more to make 60 so of the total Pi. It's fantastic. And that we didn't really see it coming, you know, to be honest. So people are moving up even within premium to more premium because they want more of what T-Mobile has to offer. And I, you know, I love that um you know, and obviously the second half were round-tripping last year's rate plan changes. So it'll, you know, be a little harder to deliver the same percentage gain, but nominally we feel really great, uh, with where we are so good. Oh, you asked about cable? Okay, quickly on cable. I had a lot to say about it in my prepared remarks, so I'll try not to repeat it. But look, I think this is just incremental and we've chosen a segment business SMB, where we really don't have a lot of exposure, you know, as I said, we're kind of have a barbell business, we're way down in very small business where we already compete with cable, um, and we tend to be growing way up in Enterprise, 1,000 and above, but we

Speaker Change: don't have a lot of market share nor wind share in between, so it's just a great win-win or I think, most of those, uh, revenues will come in and be completely incremental. And that's just, that's where we want to be. Um, you know, it's not the start of something. I mean, this is a multi-year thing. I hope it grows over time to become something, really big and special, but the Dynamics are different. You know, people are asking us. Well, does this mean you're stepping into consumer or something like that? And no, we're not interested in that because the Dynamics are different in terms of the incrementality.

Speaker Change: In our mass and what we love about these business segments, that we focus. The partners on is it's almost entirely incremental so it's great for what it is. It'll grow over time, I think be really productive but it's not the start of something that will open up new segments after that.

Speaker Change: Thanks so much.

Speaker Change: Thanks Ben. Operator. Next question, please.

And your next question today will come from Sam McHugh with BNP. Please go ahead.

Sam Mchugh: And often you guys, um, you talked about only 20% of switches this evening team is having the best network.

Sam Mchugh: And I guess that's increased over time, but what do you think you need to do to uh, improve that? Is it leaning on Advertising? You know what, what can um shift that up even further and then secondly, on the cable end, you know, just to clarify. So they restricted from selling to certain subsets of the Enterprise Community. Then they can't sell to the super large Enterprises. Is that the right read? Thank you very much.

Yeah, I'll start with this with the easy 1. That is correct. So the the deal limits our partners to a thousand lines and Below or below a thousand lines to be specific. But let's go over, uh, let's talk. Do the first question and talk about brand. Maybe ask for both Mike and John to talk about what it takes to convince people.

Sam Mchugh: Yeah. I mean I here's here's the great news. Um our own customers are convinced and 1. 1 of the things that we've seen happen over the last couple of years is T-Mobile. Customers already believe that they're on the best network. And the 20% staff that you just referred to are perspective customers, you know, looking at T-Mobile and the other providers and how they how they feel about us. Uh and and we look at 20% as a huge opportunity.

Sam Mchugh: Opportunity. You know across every every single Geographic Market in the in the US. And I think it's a combination of things um, to to make that to make them aware of this. Yeah. Advertising certainly will be a part of it and you saw after our announcement last month, we did kick off a. A pretty significant campaign that was, you know, kind of multifaceted with both TV advertising and you see it across our events like at the all-star weekend, and, and Major League Baseball, last weekend. Um, so advertising certainly will be a big piece of it. Um, experience will be a big piece of it when you when you walk into the store or or, um, you know, you go into the Tea Life app because customers will be able to see what kinds of experiences are are derived using using our Network, um, but I think another huge piece of this is the network leadership that we have is not a moment in time. You know, this, this is, uh, you know, we've known that we've had the best network for a long time. It was great to have third parties, uh, widely recognized that. Uh, but this is a lead that we intend to keep and and to widen. So I think a bit, a big part of, uh, changing how customers perceive this is,

Speaker Change: Uh continuing to stay in the lead and and expand our lead. And you know perhaps you know through this and can talk a little bit more about that too. Well, I just say 1 thing which is you know, Calli and team keep Landing. Some of the most high-profile large Enterprise and government customers in this country and they choose T-Mobile. After they give everybody a try, you know, and they're choosing us because we're the best. And a lot of them now are standing up as third parties to talk about why they

Chose T-Mobile. And when you have some of the most respected Brands and government organizations, and First Responders,

Sam Mchugh: Talking about their choice of T-Mobile that kind of third party endorsements really, really powerful.

Sam Mchugh: And you had the city of New York, who shared the stage with us to talk about why they chose the best network. Um, but we've also seen the city of Miami Police Department the, um, LA County Police or fire department, the city of El Paso. We're starting to see like the top 10 cities in First Responders. Say, hey, this is a network that performs on the nation's first 5G. Advanced May truly Nationwide 5G slice in a way that there's just no other option for us. So I think that really speaks to the strength of what uh what we've built.

Sam Mchugh: Terrific.

Sam Mchugh: Did we cover that 1? Okay. All right. Thanks Sam, operator. Next question, please.

Speaker Change: And your next question today will come from Craig Moffat with Moffett Nathanson. Please go ahead.

Craig Moffat: Hi. Um Mike, you just talked about a moment ago. Um T satellite, I wonder if you could just dig into that a little bit.

Craig Moffat: Uh and the contribution that it had uh to uh your arpu growth and and but also um how it sort of changes the way you think about serving rural markets, and, uh, and customer segments. Uh, it sounds like it surprised even you with, um, with the kind of impact that it had on the market.

Craig Moffat: Well, Craig, I I I just love you. I can just count on you to ask it, we launched this thing at 8:00 this morning and you're wanting a business update. Um, I love it and um, but you're right, I mean in the run-up to it, which is, I think what you're to be fair to you, what you're talking about. I think people have been choosing our higher-end rate plans, anticipating this launched during the beta period. Unfortunately, I can't unpack that for you, but our highest end rate plans. As I mentioned, in my prepared, remarks are more popular than they've ever been. I, I do think an awful lot of how we will wind up monetizing. This strategy will be through that kind of migration and selection within our rate plans. Um, this is available to everyone at just $10 a month. That's also very appealing, I can't, you know, I could be, I'm willing to be wrong on this, by the way, I mean, I, you know, this is a, this is speculation at this point, but I think it's going to be really a popular Catalyst to bring people into that deeper relationship with T-Mobile, which is just so great for us in so many ways because the more we can have that deep relationship. Not only do they get T satellite

Craig Moffat: But they unlock all kinds of other benefits of membership that are sticky and satisfying. So it has the chance to create this virtuous circle. Um, you're going to have to check in with us later. I mean, once we get a little more than 1 day of experience, but you know, we're optimistic that, uh, we're going to be able to land this as a truly differentiated service that people notice and not just T-Mobile people, but AT&T, and Verizon people too.

Speaker Change: Just based on what you learned in the in the beta period. Does it change your thinking about uh the way you you deploy your network Assets in very rural areas?

No um not at all. And in fact, you know, part of what I mentioned, in my prepared remarks is, we are on, we are on the build a thousand sites on are so far on a plan. We, you know, Green lit late last year with 4,000 total uh, in our plan for this year. And maybe or if you can talk about how we do this because we we actually don't have a market by market methodology. It's informed by our AI algorithms, where we build and maybe talk about this 4,000 Green Field program that we have going on this year. All right, Mike, yeah, we're incredibly proud of our Network and we um, we're not only intend to stay where we are. We think we are about 2 years ahead of competition, on our network. Uh, we actually intend to extend this lead and 1 of them is to make sure that every Tower every Capital. Allocation we do go to the where it matters. Most for our customers. The way we're doing that is something that we internally call uh customer-driven coverage. We talked a little bit about that at our Capital markets day but it's a way where we have.

Speaker Change: Millions and millions and millions of data points on experiences of real customers. Both, when they are on the network, falling off the network, doing things in the in on everything they they do and we combine that with business outcomes and business metrics and we let AI roll around in that and figuring out. So we can stack rank every capital

Rural areas to the premise of your question. Generally, the algorithm right now is spitting out, more rural areas and so that's where most of this 4,000 build is. And by the way, the net incremental keep sites, taking us from 9,000 in the US, Cellular footprint to about 12,000 are also principally mostly in smaller markets in rural areas. And so as I mentioned in my remarks taken together, that's a transformational all-in-1 year. Step change in our footprint of towers covering smaller markets in rural areas and then to your point, you add on the differentiated service of T satellite. It's just about taking a network advantage and just stoking it, you know, part of what I believe deeply in business is that you build a great company, not just by addressing the things that aren't working but figure out what is working and Double Down On It. Stoke it. And right now, what's working for T-Mobile is taking share as the Soapy leader in smaller markets in rural areas and we won't stop.

Very helpful. Thank you.

Okay, great. Um we'll come to Peter for the second 1. Let me let me start with Serena because although I don't know, a little bit of give you the point estimates. I'd love for you to talk about where this all leads us, Serena and the Fiber space because I think it's really important for people to understand. Yeah, let's look the I think the Broadband space as a whole is something. We're hugely excited by we're now, the fifth largest ISP. Uh we will uh, as Mike said, in his prepared remarks, just this year at 100,000 fiber, net adds mostly in the second half of the year. Uh, it's a business as a whole that we like. And it's a combination of fwa uh which continues to be a fallow capacity business as well as investing in fiber, where we like the economics. Now you put those together and we're positioned to be a scale player in Broadband because uh, you know, our number 12 million fwa uh customers. Now, you put that in terms of the equivalent of you were to look at fiber homes, fast, right? Let's look, let's assume a 40% utilization that

Speaker Change: The equivalent of 30 million fiber homes, Mast. Plus we've already said uh, on lumos and Metronet we intend to get to 12 to 15 million households. So we're becoming the equivalent of 40 to 45 million homes passed as a Broadband player. And that's before we go make other Investments, as we've said before, we're very open uh, to looking at investments in fiber, they need to be the right Investments and we are anything. We've showed our hand on this. We like pure play fiber assets. So as a whole, we really like this whole Space of broadband, uh, and we think there's a huge opportunity to drive Equity value in this space. Uh, Mike, I don't know if you want to add any specifics on Metronet, uh, on, uh, Metronet and lumos right now on where we are, given that? It's a minus 1. Yeah, we probably can details of of Metronet, but 1 of the things that really attracted us to both companies, and we certainly have seen this with lumos is the these, these companies are the best in the country at building Greenfield fiber and there's still a lot of places left to cover in this country. Where you

Speaker Change: You can be first to Market to fiber and what we've seen so far from lumos is they continue to be very successful at that and we're very optimistic at that. We'll continue to see that with Metro and after we closed tomorrow and during the pendency of the transaction, Metronet also outperformed their deal expectations, uh, in terms of what they would build. So we're arriving with a better penetration, uh, than we had hoped for when we first signed the deal. So, we'll update you on, uh, actual build expectations after we actually own the assets, Jonathan, but we're we're hopefully you can tell we're excited about the space.

Speaker Change: And, and let me on the last question, I'm going to have to disappoint you. I'm going to resist the urge to give you a pinpoint cash, tax estimate for 2026 and primarily because obviously, there's a lot of other Factor stuff data in there, including US Cellular closing and all the purchase accounting around that the timing of the close of 800 megahertz transaction. So for now I'm going to resist it but they'll definitely be a time to give a more comprehensive. 26 update, the obb B versus the knot. Obb is a 1.5 billion benefit and it's great to see that coming in.

Terrific. Okay. Thanks Jonathan.

Speaker Change: Operator next question, please.

Operator: And your next question today will come from Gregory Williams. With TD Cowen, please go ahead

Taking my questions. Uh, first 1's on your rural market, share, um, a few years back on your analyst day. You noted a goal of reaching 20% I believe of the smaller markets. Um, I think it was right around by 2025 and here we are in 2025. I'm curious what your market share is now. And if it's reached at 20% where it could go, and if US Cellular changes that calculus as well. Um, second question is just on the billion and a half benefit, uh, from the top the tax relief, bill. Uh, you said, you deploy, the capital thoughtfully. So I was wondering if you can add more color to those words thoughtfully, whether we think about m&a, BuyBacks or network investment, thanks.

Operator: Okay, we'll start with John um, smaller markets in rural areas. How are we doing? I'm going to try to like, contain my enthusiasm for this question. Greg, it really appreciate the question. Um, first we're unbelievably excited about smaller markets and rural areas just for, you know, the first time listeners here, the way we Define, this is outside everything outside of our top, 100 markets. So this would be 140 million people, 50 million households, roughly 40% of the us and we're excited about it for 2 Reasons, number 1, we have surpassed 20% share of households in smaller markets in rural areas. So we have beat that goal that we set for you in 2025. We're really excited about that. This is our ninth consecutive quarter where we have been the leader in postpaid switching. And so we've been on a tear on this for a little bit more than a couple of years. Now, we're really excited about that but the thing that excites us more is exactly to the premise of your question.

Operator: Is what the opportunity still is in smaller markets, rural areas, with the addition of US Cellular and all the assets. The complimentary Spectrum, the sell side assets, Etc. That we will be implementing into our Network and the thousands of Greenfield sites that are coming into the network as well. And so, you know, we have this huge opportunity still like we're doing all sorts of things as you would expect, in terms of network investment distribution investment Community investment. We just kicked off Friday night 5G lights for the second year in a row in smaller markets in rural areas. We're having a lot of fun with that as well. And you have a so much more Tailwind that we expect into this business and I I I don't think anybody ever thought that we would hit 20% and pack up our tent and go back home to to New York City, we're going to stay in here and continue to drive this business to, you know, our fair share of, of the market, maybe, even outside fair, share of the market. So, we'll have more to say after we closed the US Cellular transaction and give you a little bit, more of an update in terms of what we're up to. But we're incredibly excited about

Our progress so far and even more progress to come. But you're asking the million-dollar or a billion dollar question, uh, Greg, which is where could it all go. And I, you know, I'd love to be able to answer that for you today and, um, it's something we think a lot about, we don't know. But I'll tell you this, our current wind share without even all the advantages that we believe, we can build to further accelerate in these areas is way higher than that 20% household share and you know, it it. So if nothing improves, you would expect it to Norm.

Normalize over time to a market share way higher. Now, in places, we've been successful for a long time. There are places. We have market shares way way higher than than our national average. And so, it's really about can we deliver the advantages that we think are really going to be required to be long-term, you know, Market leaders and smaller markets in rural areas. Um, will our digital transformation strategy speak, particularly well to people that live further away from retail. Um, will our ongoing improvements in network? Including our merger with US. Cellular make a step change in our competitiveness. Um, will our SAT our T satellite capabilities which really only are a differentiator, if you fall off our network will, they disproportionately benefit people who live closer to the edge of cellular networks. That is people in rural areas. We don't know the answers to all these. But theoretically, there are reasons to believe that over the Long Haul, we could become more successful in this sub-segment of the market than we are today in the top, 100 markets. So when I use

Operator: Phrases like room to run. I'm serious about it.

Operator: Yeah, and on the uh, the benefit again, the the 1 and a half billion dollar question, I guess so to speak is, um, you know, again we're going to be guided by the thoughtful and very consistent Capital, allocation methodology that we have. But let me give you a couple ideas. 1 is the 800 megahertz uh, that I that I projected for you at prepared remarks and when that closes, that generates 850 million of of taxable expense for us, that means about a net.

Operator: Opportunity here for us to accelerate some of that, from 3, to 4 years, pull some of that cost to achieve in and deliver even more value in MPV of those synergies earlier. So those are the kind of things we're investigating now, but it's not time to, you know, break that 2026 spreadsheet open yet and, and, and send it out my way and your way. But um, please. Well, we'll definitely be thoughtful about it, but it's interesting, you give those examples because they follow your long established Capital allocation philosophy, right? Peter's been very clear, we Peg our leverage at 2 and a half. That's our current, you know, board authorized leverage and that's where this management team wants to be. That gives us a capital envelope and within that Capital envelope. We invest first in our Core Business, you just mentioned, you know, maybe highly accretive opportunities in our core that we could move faster on. Then, we invest in smart, adjacencies and potential inorganic investment opportunities. And then we return Capital to shareholders, and we've been following this philosophy. I think very successfully for a while. So you tumble right away to some of these potential things that could allow us to unlock.

Operator: Even more value faster for our shareholders, but it's, you know, it's too early to tell. We'll only put the money in them if they're a better idea, uh, than not. Exactly.

Operator: Great, thank you. Thank you. Greg operator next question, please.

Speaker Change: Your next question today will come from Michael Rowland with City. Please go ahead.

Speaker Change: Thanks and good afternoon, a couple questions on 5G broadband and fwa first, just curious what you're seeing. Uh, that's driving the ongoing momentum. In that volume, how much of that quarterly Vol may be benefiting from greater breadth of coverage versus deeper penetration in some of the existing markets?

And then secondly, um, are you seeing evidence that fwa may move from a fallow capacity model to 1 in which you can invest in specific capacity enhancements for additional growth and returns over time. Thanks.

Speaker Change: Sounds good. Um,

Speaker Change: What's moving at? Most of all, um, Michael is word of mouth. I mean, this is the the satisfaction rates of this product are through the roof. People love it and they're pretty surprised. And delighted at the performance. I mean, the average user is using like 560 gigs. Um that you know, that's up 25% from Just 2 years ago. They're they're getting speeds in the 200, 250 megabits per second national average that's up 50% from 2 years ago. Um they love those sort of the flexibility of this product, the elegance and simplicity of it and they tell everybody when they sign up because they get this great mainstream product and they say money and so that's what's really driving it. Um

I forget the second part of the question. Yeah. Yeah. You want to talk? You want to talk a little bit about the strategy there? Yeah. Uh, so the way I think of it is our center of gravity is very much the faux capacity model. Now we're looking at whether other models work or not but 1 of the reasons, that's our center of gravity is I think 1 myths passing there especially with our 5G sa Network. We're finding more and more opportunities to squeeze more out of our existing Spectrum out of our existing Towers. Uh, now there's a lot of work still to be done but we're constantly challenging every day. Our 12 million number and looking at how much more we can squeeze, uh, from our Network in terms of fallow capacity. I mean, just some of the recent examples, like the introduction of l4s which is lower latency right? Uh innovations that we're bringing in with 5G sa are allowing us to squeeze more or the work. We've done on uh business fwa right, where we're finding newer opportunities.

Speaker Change: To extract more out of our fallow capacity model. So that remains priority 1

Speaker Change: So it's really interesting. I mean, we, you know, we've been pretty clear we have this 12 million customer Target in 2028. It's entirely predicated on the fow capacity model and we have our team's hard at work in a dual strategy number 1. Can we get more out of the fow capacity model through all the tactics that sereni just summarized and number 2 to the very premise of your question, are there? Smart ways to allocate capital and get a fantastic return? Look, we don't have answers to either of those 2 questions.

Speaker Change: But I our our team's thoughtfully working on those things. Absolutely, absolutely.

Speaker Change: Thank you. Mike operator. Next question, please.

And your next question today will come from kuchen morale with evercore isi, please go ahead.

Speaker Change: And then attractive 1, maybe fast forward to today. You know, competition isn't new. But the offers in the marketplace keep getting more and more aggressive and some of your peers are perhaps acting more and more on Carrier like so with all that context,

Speaker Change: Can you update us on where you view T-Mobile as being on the Insurgent versus Steward spectrum? And I guess ultimately, how much more Runway is there to be as disruptive without the tilting competitive. Postures disrupting the balance for the broader industry. Thank you. That's a fantastic question and if you were listening to streaming a few minutes ago, I think what I take away from your comments really is that you know, this this is a highly competitive moment in time. Um, yes. And we like it that way, that's due to the competition that we constantly bring as you know, the fighter brand, the value brand. Um, and at the same time, 1 of the things you've noticed about us as the Insurgent as the net share Taker and value leader. In this industry, is that we have been remarkably consistent in how we've gone about that as the uncarrier. You know, 1 of the things that Peter gets a lot. Um, when he's asked about our performances, you know, why didn't you take more? Could you have taken more, you know, the this you know this all-time record Q2 on.

Postpaid phone, that additions is great, but why not more and what we you know and your answer to that has always been. We thoughtfully keep things in Balance. You know, we compete and compete hard and try to break our own records and we bring the competition to this Marketplace, but at the same time, we're building a company of lasting value, a profitable company. And, you know, that's a tone that's not new for us, that's years old, at this point and, you know, to the premise of your question and that's not going to change. Um, to your, to your question of does this strategy have Runway? Absolutely, because it's not about, um, you know, um, anything other than leveraging long-term, durable, advantages built on a superior notion of what customers are looking for. They want the best network in this industry, they wanted to add a great value. And they want it from a company that treats them right and loves them. That delivers, the best experiences as sereni was saying, and that's what we deliver uniquely. And we've thoughtfully built long-term durable advantages in

Speaker Change: In these areas and keep going. And so, you know, I I've never seen a moment in our history, where the strategy we're employing. Has more room to run than right now and I think we're demonstrating that as we go. The last thing I'll say is I take a little exception with 1 premise of the question. Just for fun, which is, you know, that it's um that we're seeing unprecedented investment in competition from everybody right now. And and look, if you, if you add it all up,

Speaker Change: Right now, um, the financial metrics being delivered in the industry wouldn't support that, you know, T-Mobile as the value leader, for example is delivering 26% conversion of cash against service revenues that that's just a phenomenal number and near the high end of our historic business model. And we think it's, you know, a tremendous, uh, number for us as we continue to progress. And so that, that shows overall, by the way, a Serena mentioned cash flow. Since 2022 are up 50% in our industry, uh, while the customer is experiencing more data at faster speeds than ever before for the same real pricing, that means the customers are huge beneficiaries of the 5G Revolution. But so are the competitors, the nature of competition shifting, you are there. Unprecedented device, promote promotions out there. Absolutely. But on the other hand arpus are also higher than they've ever been and device ownership is longer than it's ever been. So these things offset each other and 1 way to look at it is customer lifetime values which

As a T-Mobile have been remarkably consistent. I hope that context is helpful.

Very helpful. Thanks Mike. Okay great. Thank you. Great question. So we'll switch over to social now and take 1. Final question from the phone queue after, um, but this is from Shane Sharma. Congrats on your continued momentum with new services and network features. I was wondering if you could please provide some commentary on the interest, demand you see are seeing from Enterprises for slicing and tea satellite. What is the profile of such

Speaker Change: Doing, um, operations that require connectivity in places that are in that 500,000 square miles, that are Untouched by any carrier where businesses actually do operate. So we see a lot of, uh, of Runway and potential in that space, in our, in our business. Um, just just to mention in, in Q2 overall, we think about Enterprise, we think about what the, um, capabilities of our network unlock for us. You know, this quarter in Q2 we led the industry in business and post-paid Nets in postpaid phone and 5G Broadband Nets and in post-paid churn. And so it was a really excellent quarter for us to really see the momentum and we still have plenty of room to run. Uh, when I think about 5G. Um,

Uh, broadband. And the use cases for fixed Wireless and Enterprise. We see National retailers that are coming to us and saying, hey, uh, a point of sale system slice, as well as a fixed Wireless solution across the United States is a fantastic, use case. So we welcome. Um, like Casey's General Store as a national retailer that really needed a, a value provider that also, um, was a, an incredible experience for those stores. So, um, and and I'll just mention too, um, these types of solutions are helping us to, um, deliver wind share, that is greater than our market share in every single segment. Um, I'll say 1 more thing. You know, you heard some of our competitors talk about how, um, you know, there were impacted in the government, segment with Doge. And I don't think any of us are surprised to hear that. Because these are the older incumbents that

Speaker Change: Have a majority share, but for us, what drives my business is wind share and our wind share is up year over year and quarter over quarter. And so we're really able to sit down with decision makers, especially in federal agencies, who are perhaps facing some kind of demand to lower cost or maybe have some headcount demand, but when they do a bill review and they look at the value that our Network provides and they look at the best network that they can move to, they're able to, um, come up with efficacy and efficiency as their um, sorting through some of the requirements that they have to manage. We thought John was going to be the most

Speaker Change: While we're on, slicing chat. And 1 thing that I think is interesting, is this is a sort of a classic win-win because, you know, our network doesn't really congest and we're the least congested Network out there. Uh, we have the most capacity, like, by a wide Mile. And so you might think why slicing but Enterprises, nonetheless are highly interested in it because what they want is guaranteed service levels and depending on the criticality of those connections it's worth paying for so that we can guarantee them in an unanticipated situation where in the future something could cause the network to congest that they would be able to have those service levels for Mission critical connectivity, that benefits them but also in the case of First Responders benefits us all and they're willing to pay for that. So that's really interesting learning and if you don't mind um, on a more serious note while I'm on it because we were talking about t satellite, I just do want to, uh, acknowledged that uh,

Speaker Change: It it, once again, played an important role during those horrific floods in Texas. Um, a few, a couple of weeks ago and, um, first of all, I'm so proud of our team on the ground, uh, rushing in to help keeping the network going, it performed beautifully, but also, we were able to transmit emergency, uh, messaging to customers, not just T-Mobile customers, but all customers via satellite that were received. Uh, and also on the ground uh over a quarter of a million text messages, went out over satellite during the most critical moments of this emergency. And people were able to be connected when it mattered. And it was just so proud of that and really thankful for our teams on the ground. So I just wanted to shout out to our wonderful team in Texas and say thank you to them.

Speaker Change: Thanks, Mike. Thanks.

Speaker Change: Um, operator will take our final question from the queue.

And your next question today will come from Kanan VA. Pardon me, V keshwar with Barkley's please go ahead.

Thank you.

Speaker Change: Mike. Maybe just uh, 1 question on the steel Ambitions for Broadband. Um, when you think about fixed Wireless, obviously all your peers offer it. But when you think about the wire line, uh, side of it, uh, your peers have between 40 to 70 million, kind of build Ambitions or, you know, uh, existing scale, if you think about the cable companies in that mix,

Speaker Change: Um, so, when you think about your goals of say 15-inch million and wire line, why is that enough? And I know you want to, you know, look at more fiber opportunities, but

Speaker Change: Given your, you know, the scale of your peers.

Speaker Change: Uh,

Speaker Change: Would this call for maybe, uh, consideration of some bigger transactions or you know uh bigger opportunities to scale up your network faster than you would otherwise, thank you.

Speaker Change: Cable, um, I become decreasingly interested in that over time, you know, I I just feel like the growth is in fixed Wireless uh, where there's value and flexibility and the growth is in fiber because it's a superior product and that, that seems to be where the customer sentiment is going. Um, so we want to be where, you know, where the Puck's going to be. Um, I'm so proud of the choices we've made so far and what's Driven Us in these choices has been our ability to 1 deliver, a fantastic product. Customers will love and 2 deliver a superior return for our shareholders in doing so. And I want to make sure that we don't chase scale for scale sake. That we actually Chase scale because we can deliver a fantastic return, you know, because our premise is a little different than some others, um, who are on a race regardless of consequences. We're in this business to deliver a great product and make money Superior returns by virtue of our know-how and investments in Mobile. And that's because our premise about how this Market is coming. Together is just a little different. Um,

you know, our view is the mobile is the considered sale and we're going to add products to that mobile that makes sense for our customers and that we can make money on. Now as sereni explained a minute ago, our already published plans. Get us to knocking at the door of 45 million homes past equivalent in W line language through this strategies. We've already announced and you know, as we've said we have some ongoing appetite should the right opportunities present themselves at a fair value.

Speaker Change: And the only thing I'd add to that Mike is also culture, right? Which is we're about great returns, but we're also about challenging an industry for the good of the customer and growth, right? And that ethos fits very nicely with fwa. That fits very nicely with fiber. The, the last thing we want to be is be an incumbent, right? We are all about challenging an industry about creating value for customers about smashing customer problems. And that's a big part of this calculus as much as returns us as well. I love that, it's a great place for us to end where I ended in my prepared remarks. Uh, this team right here at this T table sees growth opportunities everywhere. And on your behalf, we're going to be thoughtful, uh, investors in the resources of this company, to go, chase it and Chase it. Ambitiously, and thanks everybody for joining our Q2 call.

Speaker Change: Thanks, Mike. That's all the time we have for questions. Thanks everyone for joining. We're looking forward to connecting with you again. Soon if you have any additional questions, you may contact the investor relations or media departments. Thank you.

Speaker Change: Thanks, I'll be take care.

Speaker Change: Ladies and gentlemen, this concludes my T-Mobile second quarter 2025 earnings call. Thank you for your participation. You may now disconnect and have a pleasant day.

Speaker Change: with the

Speaker Change: use.