Q2 '25 Earnings & T-Mobile's Deal with Comcast & Charter

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and fifty fourth episode of the week with Roger, conversation between analysts on all things telecom, media, and technology. I'm Jay Cockridge. I'm filling in for Don Kellogg this week. And with us, as always, is Roger Entner. Roger, how are we doing?

Roger Entner 0m27s

I'm good. Good to have you.

Don Kellogg 0m29s

It's good to be here. I always love being on. We've got a lot to talk about this week. It's earning season. Right?

Don Kellogg 0m35s

The q two earnings results have started to come in. As of today, on Thursday, the twenty fourth, Verizon, AT&T, and T Mobile have all reported. Also, this week, Comcast and Charter struck an industry redefining agreement with T Mobile. Let's start on that new network deal.

Roger Entner 0m54s

Sure. So I wrote an article about that on Light Reading, our friends. Don wrote an article on Trump Mobile. I wrote this thing. I didn't see it coming.

Roger Entner 1m5s

Well, no, I did see it coming. On this agreement between cable or CNC and T Mobile, and XJ put out an article on foldable devices with some of our data. Anyway, yeah, this is a big deal. Cable has an MVNO agreement with Verizon. They are providing customer connectivity, mobile connectivity.

Roger Entner 1m29s

They're extremely successful with that. On business, Comcast offers up to 20 lines. Charter, I think, creeped up now to about 20 lines. So I think they're not providing a limited number of lines without a reason. So they struck a deal with T Mobile for up to a thousand lines.

Roger Entner 1m52s

So that basically covers now the entire business market up to what's called medium sized businesses. Medium sized businesses is a thousand thousand employees.

Don Kellogg 2m3s

It's a really big job.

Roger Entner 2m4s

It's a really big thing, right? And as I laid out, when you look at it, I think Verizon put the restrictions on or I think they put restrictions on to defend their business market, which is very, very successful in the midsize. The smaller a company, the stronger T Mobile gets. The larger a company, the stronger AT&T gets. And Verizon has been really, really strong on the midsize, you know, 10 to a thousand people or so.

Roger Entner 2m34s

That's where their sweet spot is. And when you look at it over the years, and we've done this earnings season over and over again, In many of these seasons, Verizon's business wireless net adds were their beacon of light. And so I thought they defended that quite well. And, you know, it's like defending a dam. As long as it holds, it's great.

Roger Entner 3m0s

When it breaks, water is coming, right? And it looks like water is coming in 2026. And we'll see. We will find out. And cable has been not very successful, to put it very nicely, with wireless.

Roger Entner 3m14s

Extremely successful on wireline. They have like 40%, 50% share within their footprint. In business, they didn't even run, right? Now, that was cable in its various joint ventures with Sprint. And then they got the joint venture with Verizon and they became a force to reckon with.

Roger Entner 3m34s

So right now they're a no show in wireless for business. We'll see if they show up and fight. I thought it was very interesting for T Mobile, and I think the TFB team really took here one for the team because small and medium size was their growth vector.

Don Kellogg 3m50s

Right.

Roger Entner 3m51s

And now their growth vector got a little bit more crowded. It will be very interesting to see how they will differentiate against the cable guys and how much fun and humor they will put on them. My favorite line about cable is from Mike Sievert, who basically said, the problem with cable is that they work at the speed of cable. He has corrected that statement. But that was the score and he heaped on them in the beginning.

Roger Entner 4m16s

Yeah, in consumer wireless, they're together with, and we talk about it with T Mobile, the boogeyman of the industry. But yeah, we'll see how it plays out. Read the article. Ask me questions. No problem.

Don Kellogg 4m26s

The biggest fear, right, for Verizon is, you know, it hurts their leverage in the consumer conversation. Right?

Roger Entner 4m34s

If and when yeah.

Don Kellogg 4m35s

It's a ton of free cash flow. And, you know, if they go somewhere else, they don't lose cable wireless as a competitor, right? But they lose the wholesale money that they get from it.

Roger Entner 4m44s

Yeah. And so we'll see what happens on the consumer. I think they're negotiating. Cable has now a much stronger bargaining position because it's now no longer an idle threat. We'll see.

Roger Entner 4m57s

We'll see.

Don Kellogg 4m57s

We will see. Shall we jump over to the earnings?

Roger Entner 5m0s

Yeah.

Don Kellogg 5m1s

Let's talk about postpaid phone net adds first. And we can talk about each of the carriers by category here. We'll start with postpaid phone net ads. Verizon reported first. They came in just negative at, you know, I think 9,000 negative.

Don Kellogg 5m21s

And AT&T came in 401,000. And T Mobile was 830,000 in the positive. Another huge quarter from them bounced right back from q one.

Roger Entner 5m34s

Well, you get the results, you incentivize, right? Right. When we unpack the net ad number, net ads is gross ads minus churn, right, or disconnect, which is expressed through the churn rate. And Verizon had very strong gross adds like everybody else, but also higher churn. And Verizon being the largest carrier, higher churn hurts them more.

Roger Entner 5m58s

0.1% more on 100,000,000 is more people than 0.9 on say 80,000,000. By the way, business was actually positive in that number. And so highlighting the importance of Verizon Business Wireless. And so I thought, you know, on the gross add side they did a good job in a very competitive environment. On the churn side they still have a lot to do.

Roger Entner 6m24s

Project six twenty four I think is aimed at that. Also I think what we should look at is the importance of Verizon launching the AT&T offer of best plans for everybody. And I'm surprised it didn't impact churn more. It certainly helped them on gross ads. Certainly helped them sell more devices, right?

Roger Entner 6m46s

They had a very strong bounce on device sales, which actually means that they had a very strong bounce on device subsidies.

Don Kellogg 6m54s

The Project six twenty four stuff that you bring up, I mean, it's directly aimed at customer experience. It just launched at the end of Q2 here, so we'll see. But I would think they expect to see some improvement in churn from that focus on customer experience in the second half of the year.

Roger Entner 7m11s

Well, happy customers are leaving less often than unhappy customers. Exactly. And there have been complaints about it. We run sentiment analysis on that everything runs what people say on the internet on social media, and it shows up, right? And then we have AT&T.

Roger Entner 7m28s

AT&T, 401,000 PhoneNet adds, very respectable number. But we always have to subtract out of this the FirstNet numbers. They added 400,000 FirstNet connections. How many of these 400,000 FirstNet connections are postpaid phones and how many are connected devices? Is it 100,000, 200,000?

Roger Entner 7m51s

It then sheds a much more interesting light on the remainder. And by the way, that FirstNet comes out of their business revenue line. That one was relatively flat. So it looks like business wireless didn't do too well. Consumer did Okay.

Roger Entner 8m9s

But I think the star here was really the fiber business. All the EBITDA increase, all the increase in profitability, basically from fiber. And that really validates John Stankey's strategy. You know, as Jen Robertson likes to say, where we have fiber, we win. Absolutely true because the fiber is spectacularly good.

Don Kellogg 8m30s

And I will point out over 200,000 FWA net adds as well. Right? The air business, think we have a proper third player in the FWA market right now as AT&T Air keeps growing.

Roger Entner 8m46s

Yeah. And we can talk about later about T Mobile. T Mobile is now the fifth or the sixth largest ISP in the country. We'll talk about it when we come to T Mobile. And so I thought they did well.

Roger Entner 8m59s

Business, still suffering, right? But it's a market that's still in transition. You know, I describe it as, you know, and everybody in business, it's like they're falling down in dark elevator shaft and they don't know when the bungee cord that they tied to their legs, when that will get taunted. Maybe it will never, right? And they will go hit straight the bottom.

Roger Entner 9m24s

But I think there is slowly more light or visibility where that bottom is. It can't go on forever. But it's a tough, tough market and everybody slugs it out. It just got harder with that announcement.

Don Kellogg 9m37s

Right. Moving down market for AT&T only gets harder now.

Roger Entner 9m40s

Yeah. You know, when I saw the T Mobile numbers, I posted it on Twitter. You know, the thing from Kendall Roy, you know, bangers all the time, all day, you know. They just had a fantastic, fantastic quarter. Knocked the thing out of ballpark in every metric, which is extremely hard.

Roger Entner 9m59s

Usually, you do two out of three, but in every metric, they surprised. And we know that T Mobile and the cable guys are particularly strong in the Hispanic segment. And they're particularly strong in the, how should we say, less than a year in The United States Hispanic segment, right? And that segment has disappeared and it had no impact in net ads. I honestly thought we would see it and we're not seeing that yet.

Roger Entner 10m27s

It's like baffling. Where are these people coming from, right?

Don Kellogg 10m31s

Right. It'll be interesting to see when Comcast and Charter report as well because, yeah, I think we both expected to see, you know Because

Roger Entner 10m39s

they're strong.

Don Kellogg 10m40s

Slowdown to impact these numbers, and they seemingly haven't so far.

Roger Entner 10m44s

Yeah. And so we'll see if if they because the other heavy players in Hispanic are Comcast and Charter. Right? We survey now, what, 3,000 Spanish speakers every week. You know, I was telling our our Hispanic lead, only the Census Bureau interviews more Hispanics in The United States than us.

Roger Entner 11m6s

And we ask a lot deeper questions. And it's mind blowing, the things we find. But anyway, they did really, really well. They also had like, what, 500 and change thousand FWA?

Don Kellogg 11m18s

Four fifty four, but still.

Roger Entner 11m19s

Close enough.

Don Kellogg 11m20s

Close enough. Leading the way on that front.

Roger Entner 11m22s

Leading the way. Where were they not leading away? Well, maybe they were not didn't have leading churn, but they still had a spectacular churn number for them.

Don Kellogg 11m31s

Yeah. And honestly, their churn is it is. I mean, it's like the shade over AT&T. I mean, they really outperform in every metric.

Roger Entner 11m38s

Yeah. So if and when Mike Sievert is riding into the sunset, Srini Gopalan will take over an extremely well run company, and he will take that company to make it even more efficient than Mike has done already. Because before Mike worked on it and with John Ledger, you know, I always say, like, John Ledger gets credit for so many things. But the efficiency gains that happened under him with Mike and that continued with Mike are just breathtaking. And they now have network leadership.

Roger Entner 12m13s

So they had like a banging quarter. Right?

Don Kellogg 12m15s

Yes. They did. It'll be very interesting to see how the cable guys come in. We'll obviously get to them next week once they report it.

Roger Entner 12m23s

I think they will be strong. We'll see.

Don Kellogg 12m25s

We will see.

Roger Entner 12m26s

What else are we looking at here? Churn inched up.

Don Kellogg 12m29s

Churn inched up.

Roger Entner 12m30s

The temperature in the room has become hotter and it exacerbates flows. So it will be very interesting to see that. I look at T Mobile's offers with like $800 and you don't have to trade in. I'm like, woah. Typically, people don't throw around offers like this without need, right?

Roger Entner 12m54s

Unless you wanna blow away numbers like this. But that's like when you're playing football and you're up 48 nothing and you just keep running.

Don Kellogg 13m2s

Right.

Roger Entner 13m3s

You know, when I look at T Mobile, they're very successful. By the way, T Mobile also was industry leading on business wireless numbers. You know, we always triangulate with what they say in correlation to Verizon. And even in business, they are outperforming. We'll see how that will work out in 'twenty six.

Roger Entner 13m23s

But at least they have an excuse now if the numbers are not that great. Not that they're reporting it. But in a way, we will find out because when people go quiet, it's usually not because of good news. When there's good news, people keep telling it. So when Kelly stops telling us about how well business goes, we know it's not.

Roger Entner 13m43s

But there's so much upside for both of them, for both the cable guys and T Mobile. Think it was a very astute calculation. For them as cable MVNO host, they have now the choice between winning big and winning small, but it still means winning. And it's going to create hurt on the side of their competition. Because we've been playing through here the repercussions of what will happen and what impact would it have on the competitive environment if Verizon loses the consumer contract and it goes to T Mobile?

Roger Entner 14m20s

So we'll see.

Don Kellogg 14m21s

Great.

Roger Entner 14m22s

I'll see you next week.

Don Kellogg 14m24s

I will see you next week, Roger. And I'll be hosting once more before we have Don back. So thank you, and talk to then.