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

Full Transcript

Don Kellogg 0m10s

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

Roger Entner 0m23s

I'm good. How are you?

Don Kellogg 0m24s

I'm good. So, Roger, it's, uh, that time of year again. We finally have the tail of the tape in terms of how the carriers did in q four twenty four.

Roger Entner 0m33s

Yeah.

Don Kellogg 0m33s

And I thought we could talk about it. What do you think?

Roger Entner 0m35s

Let's do it. Like every quarter, right? Right. For all of them, has been a mostly good quarter.

Don Kellogg 0m42s

Yeah. Yeah. Let's start with AT&T. I thought they did well. So they had 482,000 postpaid phone nets, 839,000 postpaid nets in general, Industry leading churn both on prepaid and postpaid.

Roger Entner 0m57s

Yep.

Don Kellogg 0m57s

They added a 158,000 FWA subs even though they're not really trying, and they also had the highest upgrade rate in the industry as well. So q four is always kind of different, so to speak. And they've been doing well, I think, recently, pretty consistently. But I thought this was a solid quarter, you know, probably a double, not a home run. I think they did alright.

Roger Entner 1m20s

Yeah. No. I I completely agree. AT&T doubled down on their best devices and best plans for everyone with their guarantee. That's a big churn inhibitor for them.

Roger Entner 1m33s

Also, it's a driver of the upgrade rate. Every one to three years you're getting a new device. And it's on AT&T, and a lot of people like that, and that's why they're staying, right? Four eighty two post phone net ads. Verizon in a way does it easier for us, they break out consumer versus business.

Roger Entner 1m56s

AT&T makes it a little bit harder. T Mobile makes it really hard. But you know, you always have to take a little haircut off that. So AT&T overall did quite well. Also, we talked about it, and you pointed it out, that AT&T has the highest proportion of phones as part of the net ads with 57%.

Don Kellogg 2m20s

Yeah. So if you think about kind of low calorie, high calorie, net ads, one of the ways you can look at this, you can say out of your total net ads, how many of those were phone? Because we know those are generating higher MRCs and ARPUs and things like that. And they had the least amount of fluff with respect to the relationship between post phone and total postpaid nets.

Roger Entner 2m41s

Yep. And they did pretty well on prepaid too. And they did very well again on fiber. When you listen to the earnings call, it's very clear that John Stankey has a really good time. His strategy is coming together, and it's being rewarded by Wall Street.

Roger Entner 3m0s

2024 was a good year to be John Stankey. AT&T too.

Don Kellogg 3m4s

Yeah. Absolutely. Let's talk about Verizon. I thought Verizon had a better quarter than they've had for a long time. In some respects

Roger Entner 3m11s

paid for it.

Don Kellogg 3m12s

But they paid for it. Right? So five 168,000 postpaid phone net adds, 1,400,000 total postpaid net adds. So about 40% of those nets were phones. Prepaid churn, a little high, 3.78, excluding SafeLink.

Don Kellogg 3m28s

Everybody else excludes their lifeline as well, so I think that's a fair comparison. Slightly edged out T Mobile for post phone churn a little bit higher at point nine three. They did gain accounts. I know we've been historically, we've harped on them about

Roger Entner 3m42s

Yes.

Don Kellogg 3m43s

You know, increasing nets but not accounts, you know, like, so you're selling more tablets to fewer people, that kind of thing, and that's Yep. Or fewer accounts, and that's not the case this time around. So they gained about a 103,000 accounts. F w eight net ads a little bit easier, lower than t mobile, so they had a 157,000 f w eight nets. And their upgrade rate was respectable at 4.1%.

Don Kellogg 4m5s

So a little bit lower than last year, but still still, I think, a credible q four upgrade number. But as you say, they paid for it. Do you wanna talk a little bit about that?

Roger Entner 4m15s

They paid for it because the EBITDA came in lighter than expected. So the Verizon number, a lot of people are looking at net adds and the churn rate. A lot of Verizon management is not compensated on that. They're compensated on wireless revenue, on EBITDA margin, on free cash flow. But they promised that they would be net add positive for 2024.

Roger Entner 4m44s

And so they lived up to that promise that they would be net add positive. But they paid for it in terms of, how should I say, normally they're fiscally very disciplined. And this time, they opened the purse strings, they got the net adds that they needed. So that's a big one. And the churn rates between the three nationwide provider, the highest by Smitschkin.

Roger Entner 5m9s

But surprisingly with FWA, if they missed something, then it was on FWA ads. Because AT&T is very reticent about FWA, and there are a lot of reasons for that. Well, would prefer to

Don Kellogg 5m22s

sell you fiber than FWA, right?

Roger Entner 5m24s

Exactly. But Verizon came in slightly low, which to me means the cable guys lost less than they could have lost on broadband. And Comcast lost, what, a 100 and or no, a 130 something thousand broadband lines, which was a little bit lighter. If I look at the lighter, the reason why, it's Verizon not kicking down enough doors with FWA. The upgrade rate, yes, shows you that they're a little bit easier with the purse string.

Don Kellogg 5m55s

Well, and they they always open up the purse strings a little bit in q four.

Roger Entner 5m58s

In q four, right?

Don Kellogg 5m59s

Yeah. It's kind of a it's a double edged sword. The good news is promotions work, but the bad news is promotions work. Promotions cost money.

Roger Entner 6m6s

They train their customers well. They trained their customers well that on Black Friday, Verizon will, like every year, like every Black Friday will be aggressive with promotions. And we got exactly what we expected. Right?

Don Kellogg 6m21s

Yep. Absolutely. But better results than we've seen in the last three or four q fours, right?

Roger Entner 6m27s

Yeah, because they spent for it. They paid for it, right? Which is fine.

Don Kellogg 6m31s

But if you can turn around and keep those customers, it's not the worst thing in the world. So how about T Mobile? Tell us about T Mobile.

Roger Entner 6m37s

They were, you know, kicking it again, right? 903,000 post phone net ads, 1,933,000.000 total. So that's 47%. So they are like right in the middle when it comes to that. Postpaid phone churn 0.92, which was their best ever, which is just as Mitch can better than Verizon with 0.93.

Roger Entner 7m0s

Oh, by the way, all of the churn rates are really good. Prepaid churn was 2.85. They did well on prepaid too. Added 263,000 accounts. FWA four twenty eight also came in a little light, but you saw it with but Verizon came, as I said, a lot light, and 3.6% upgrade rate.

Roger Entner 7m23s

It's an iPhone year, right? Or iPhone season and that's what happens. So T Mobile came in a little bit lighter than a lot of people expected. It came down year over year and quarter over quarter. It's still an awesome quarter.

Roger Entner 7m39s

Right?

Don Kellogg 7m39s

Yeah. In some ways, they're they're a victim of their own success. Right?

Roger Entner 7m42s

Yeah.

Don Kellogg 7m42s

They have smashed the ball out of the park so often that if it's not a, you know, walk off win,

Roger Entner 7m48s

hopefully, it's win. It's just that

Don Kellogg 7m50s

It's a walk off. But it's not a grand slam. Right? Like, it's very good, but it's not as good, for example, as last year.

Roger Entner 7m55s

Yeah.

Don Kellogg 7m56s

They're a little bit light in relation.

Roger Entner 7m58s

You know, last year, they ran a couple of victory rounds. You know, this time, they only ran one victory round. Overall, all three did very well. Comcast, if we put it in contest, because they're the ones who are nipping here, or more than they've been biting at the lower end, at 3 107,000 phone net adds, which is very strong. I would expect Charter to come in probably at double that.

Roger Entner 8m25s

And Comcast said on the earnings call that, you know, we want to double down on wireless. You know, in the beginning of the voyage of the cable guys in wireless, it was Comcast who was gaining faster than Charter. And Charter really, you know, doubled down, and the team there is very excellent, you know, former Sprint guys. You know, they know the market. And so Comcast is going to step it up a little bit.

Roger Entner 8m53s

By the way, coming back to T Mobile, you know, the other news that was this week is that Sriniv Gopalan is going to come in March to The US as COO. And he's an extremely highly regarded executive, very process oriented. A lot of financial analysts were talking about, you know, we can see T Mobile running out of breath, how much longer can they grow like this? And how much longer can the profit engine And the answer is Srini, right? He ran Deutsche Telekom in Germany, and he's going to bring a lot of improvements here.

Roger Entner 9m31s

What's really funny is there were quite a few articles about him coming and one of them in LinkedIn about him coming and, you know, Tim Hertges getting two years extension. In that article, the only thing that was correct was the spelling of the names of the individuals. Everything else, I know for sure, was not how it was in that article. It's a very interesting story that we're not gonna share on this podcast. But Srini, welcome to America.

Roger Entner 9m59s

You're coming out of very every time is an interesting time for American wireless. And now more and more for T Mobile, for fixed. It's an interesting time.

Don Kellogg 10m9s

By and large, think solid quarter all around. Yeah. You know, the industry gained well over 2,000,000 new postpaid phone nets for the quarter. So good way to close out q four and and looking forward to more more good results moving forward.

Roger Entner 10m24s

Yeah. And one more shout out, Chairman Carr announced his leadership team, and he chose Scott Delacorte from Wiley as his new chief of staff. Scott's awesome, and I couldn't think of a better guy to be the chief of staff of chairman Carr. So congratulations to Scott. It's a good job, and he's gonna have a lot of things to do.

Roger Entner 10m49s

Well deserved. Well deserved.

Don Kellogg 10m51s

Alright, Roger. We'll talk to you next week.

Roger Entner 10m52s

Talk to you next week. Bye bye.