T-Mobile’s Business Push, Technology Advantages, and 5G Slicing with Daryl Schoolar

Full Transcript

0m10s Speaker 0

Hello, and welcome to the two hundred and second episode of the week with Roger, conversation between analysts about all things telecom, media, and technology from Recon Analytics. I'm Don Kellogg, and with me as always is Roger Antner. How are doing, Roger?

0m23s Speaker 1

Hey. I'm okay. How are you?

0m24s Speaker 0

I'm good. So Roger, it's that time of year again. We had earnings last week, a number of carriers reported. So we had Verizon, AT and T, and Comcast. And Charter.

0m34s Speaker 0

And Charter release results for q two. So who do you wanna start with?

0m39s Speaker 1

Well, let's start the way they started. Let's start with Verizon.

0m44s Speaker 0

Alright. Verizon, how'd they do?

0m46s Speaker 1

Well, there is forward momentum. I think the most encouraging thing on the call for me was that business continues to have good momentum on mobile. FWA has good momentum both on consumer and on business. Their gross ads were up like 12%. And then where they were struggling was on the consumer side, they lost customers again.

1m19s Speaker 1

And also they lost prepaid a lot from ACP. If you take SafeLink and ACP out, on prepaid, they lost 12,000. And if you keep it in, they lost 624,000.

1m35s Speaker 0

Right. And those were pretty margin neutral lines. So from a financial perspective, it's probably less less of an impact than the, you know, rock subscriber count numbers, but still a lot of folks lose. Right? I thought it was encouraging that the churn rate crept down a little bit, although it's still relatively high by Verizon standards.

1m54s Speaker 0

The other thing I thought was interesting was that, you know, this is not a blockbuster quarter for phone releases, but the upgrade rate is still quite low on the consumer side at 2.9%.

2m4s Speaker 1

Yeah. And that's I think a theme you see everybody. It's there's no reason right now to buy a phone. You know, the smart people are waiting either for the first quarter for a Samsung device or for the third, fourth quarter for an Apple device. And I think that's what a lot of people are waiting for.

2m23s Speaker 0

Not a bad quarter, hit it out of the park, maybe a solid single or a double, is I think how I would characterize this quarter.

2m31s Speaker 1

Yeah. They are still on the right path. They are adamant that they will gain customers for the year, which I would hope. But you know, financial analysts rightfully pointedly asked like, how are you turning around your postpaid account losses, right? All your net adds are coming from existing customers.

2m55s Speaker 1

And the reason why you surprised with more net adds than what people thought is because you added customers that only pay you 10 or $20. And so I think Verizon is on the right path, but a lot more work to do.

3m8s Speaker 0

Alright. So next AT and T reported. I thought this was a fairly surprising quarter. You wanna tell us about it?

3m15s Speaker 1

I thought it was a solid quarter, and I wasn't too surprised by it.

3m22s Speaker 0

Well, directionally, I think it's where we thought it was gonna go, but I think from a magnitude perspective, they added a little more broadband, a little more wireless than I think I would have anticipated for a q two.

3m32s Speaker 1

Yeah. No, I thought this was in the right direction. You know, their margins are up, their churn went down again. What was very encouraging is that they showed for the first time convergence, and almost 40% of their fiber customers also have AT and T Mobility. And I was also happy, very happy for us, because our internal data shows that they were at 40%, and they released 39.5.

4m5s Speaker 1

So I was very happy. It's always nice when the data matches, right? When the data is like dot on, I'm like, yeah, that was nice. And so things are going in the right direction at AT and T certainly. Even postpaid edged out a win in the second quarter, and second quarter is traditionally, you know, rather weak.

4m28s Speaker 0

Right. So that's why I was saying 419,000 postpaid smartphone net adds is pretty good. They also grew on the prepaid net add side by about 82,000. So the ACP impact that we saw at Verizon wasn't something that, at least this quarter, we're seeing at AT and T.

4m45s Speaker 1

They were a lot lighter. Right? A big topic of conversation both for Comcast and for Charter was ACP, or the lack thereof. When we look at Comcast, they saw a little bit less of it on the fixed side, and they had a more tepid growth on mobile. Yeah, when we look at wireless, they added 322,000.

5m12s Speaker 1

On domestic broadband, they lost about 140,000. But the business services, the relationships were down, but revenues were up. So overall, good quarter.

5m27s Speaker 0

Well, mean, think one of things that's interesting about the MSOs, they continue to grow their wireless lines. There's a lot more room to run-in terms of penetration of the broadband or video base with wireless.

5m40s Speaker 1

Yeah. Absolutely.

5m41s Speaker 0

How far they go with it, think, is, you know, is up for debate based on, you know, competitive pressures and things of that nature, but certainly a lot of headroom there. Yeah. Should they continue to perform as they have for the last three or four years. Right?

5m53s Speaker 1

Well, Charter's CEO Winfrey said at their earnings call that 8% of their fiber customers are mobile customers. And 8% versus 39.5% shows you the potential runway for the cable guys. Right? And it's three lines per account, which is roughly in line what the MNOs have. It's actually ahead of it because the cable guys and Charter, they don't have a lot of attached devices, like it's relatively small.

6m29s Speaker 1

Whereas the MNOs have like half a device basically. But try to knock things out of the ballpark again with MobileNet Lite edition, 557,000, Right? And we have to remember, that's a little bit less than 40% of The United States. So they've done really well. Where it was a lot more challenging for them was they lost 154,000 internet accounts.

6m59s Speaker 1

And that hurt a lot. It was interesting what they said on the call was that they offered every former ACP recipient a free mobile line for a year. And that certainly juiced that 557,000 number.

7m19s Speaker 0

That's one way to generate net ads, right?

7m21s Speaker 1

One way of generating net ads is you give away them. But still, you know, what we've seen is that they've been pretty successful in retaining the lines that they gave away for free more than a year ago. So it's free for a year, but then they're actually pretty good in converting it. Yeah, it's been an interesting quarter. Again, we have like modest growth at the MNOs.

7m47s Speaker 1

The cable guys are pushing into that low cost room that the MNOs are creating by raising prices. And they have like lower cost offers, like $5 for insurance where I don't think Charter makes much money on, especially if you consider that others are charging substantially more. So it's a viable or very strong low cost in the market.

8m14s Speaker 0

I I would I think I would say FWA continues to eat cables lunch and cable continues to eat wireless as lunch. Right? Different battles on different fronts, but, you know, everybody's kind of offensive strategy seems to be kind of working vis a vis, you know, who they're fighting. Yeah. We've talked about convergence for quite some time, and here we are, and it's actually happening.

8m36s Speaker 1

Convergence is real. Right? And convergence is the name of the game. Everybody wants a converged customer where you converge home, internet, and mobile. How these look like depends on what the carrier or the operator has in their tech portfolio, you know, and some solutions are better than others.

8m56s Speaker 1

Right?

8m57s Speaker 0

Alright, Roger. Well, definitely interesting quarter. We'll continue to follow it. Rest of the industry should report this week. They're coming up here pretty soon.

9m4s Speaker 0

So well, I'm sure we'll talk about that as well. Yep. Alright. Talk to you next week.

9m9s Speaker 1

Talk to you next week. Thank you.