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

Full Transcript

0m10s Speaker 0

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?

0m27s Speaker 1

I'm good. Good to have you.

0m29s Speaker 0

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?

0m35s Speaker 0

The q two earnings results have started to come in. As of today, on Thursday, the twenty fourth, Verizon, AT and 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.

0m54s Speaker 1

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.

1m5s Speaker 1

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.

1m29s Speaker 1

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.

1m52s Speaker 1

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.

2m3s Speaker 0

It's a really big job.

2m4s Speaker 1

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 and T gets. And Verizon has been really, really strong on the midsize, you know, 10 to a thousand people or so.

2m34s Speaker 1

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.

3m0s Speaker 1

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.

3m14s Speaker 1

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.

3m34s Speaker 1

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.

3m50s Speaker 0

Right.

3m51s Speaker 1

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.

4m16s Speaker 1

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.

4m26s Speaker 0

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

4m34s Speaker 1

If and when yeah.

4m35s Speaker 0

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.

4m44s Speaker 1

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.

4m57s Speaker 1

We'll see.

4m57s Speaker 0

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

5m0s Speaker 1

Yeah.

5m1s Speaker 0

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.

5m21s Speaker 0

And AT and 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.

5m34s Speaker 1

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.

5m58s Speaker 1

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.

6m24s Speaker 1

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 and 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?

6m46s Speaker 1

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

6m54s Speaker 0

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.

7m11s Speaker 1

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 and T.

7m28s Speaker 1

AT and 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?

7m51s Speaker 1

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.

8m9s Speaker 1

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.

8m30s Speaker 0

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 and T Air keeps growing.

8m46s Speaker 1

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.

8m59s Speaker 1

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.

9m24s Speaker 1

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.

9m37s Speaker 0

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

9m40s Speaker 1

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.

9m59s Speaker 1

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.

10m27s Speaker 1

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

10m31s Speaker 0

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

10m39s Speaker 1

they're strong.

10m40s Speaker 0

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

10m44s Speaker 1

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.

11m6s Speaker 1

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?

11m18s Speaker 0

Four fifty four, but still.

11m19s Speaker 1

Close enough.

11m20s Speaker 0

Close enough. Leading the way on that front.

11m22s Speaker 1

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.

11m31s Speaker 0

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

11m38s Speaker 1

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.

12m13s Speaker 1

So they had like a banging quarter. Right?

12m15s Speaker 0

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.

12m23s Speaker 1

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

12m25s Speaker 0

We will see.

12m26s Speaker 1

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

12m29s Speaker 0

Churn inched up.

12m30s Speaker 1

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?

12m54s Speaker 1

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.

13m2s Speaker 0

Right.

13m3s Speaker 1

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.

13m23s Speaker 1

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.

13m43s Speaker 1

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?

14m20s Speaker 1

So we'll see.

14m21s Speaker 0

Great.

14m22s Speaker 1

I'll see you next week.

14m24s Speaker 0

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.