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 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 Antner. How are doing, Roger?

0m23s Speaker 1

I'm good. How are you?

0m24s Speaker 0

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.

0m33s Speaker 1

Yeah.

0m33s Speaker 0

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

0m35s Speaker 1

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

0m42s Speaker 0

Yeah. Yeah. Let's start with AT and 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.

0m57s Speaker 1

Yep.

0m57s Speaker 0

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.

1m20s Speaker 1

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

1m33s Speaker 1

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 and 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.

1m56s Speaker 1

AT and 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 and T overall did quite well. Also, we talked about it, and you pointed it out, that AT and T has the highest proportion of phones as part of the net ads with 57%.

2m20s Speaker 0

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.

2m41s Speaker 1

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.

3m0s Speaker 1

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

3m4s Speaker 0

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

3m11s Speaker 1

paid for it.

3m12s Speaker 0

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.

3m28s Speaker 0

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

3m42s Speaker 1

Yes.

3m43s Speaker 0

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%.

4m5s Speaker 0

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?

4m15s Speaker 1

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.

4m44s Speaker 1

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.

5m9s Speaker 1

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

5m22s Speaker 0

sell you fiber than FWA, right?

5m24s Speaker 1

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.

5m55s Speaker 0

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

5m58s Speaker 1

In q four, right?

5m59s Speaker 0

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.

6m6s Speaker 1

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?

6m21s Speaker 0

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

6m27s Speaker 1

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

6m31s Speaker 0

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.

6m37s Speaker 1

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.

7m0s Speaker 1

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.

7m23s Speaker 1

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.

7m39s Speaker 1

Right?

7m39s Speaker 0

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

7m42s Speaker 1

Yeah.

7m42s Speaker 0

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

7m48s Speaker 1

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

7m50s Speaker 0

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.

7m55s Speaker 1

Yeah.

7m56s Speaker 0

They're a little bit light in relation.

7m58s Speaker 1

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.

8m25s Speaker 1

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.

8m53s Speaker 1

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.

9m31s Speaker 1

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.

9m59s Speaker 1

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.

10m9s Speaker 0

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.

10m24s Speaker 1

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.

10m49s Speaker 1

Well deserved. Well deserved.

10m51s Speaker 0

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

10m52s Speaker 1

Talk to you next week. Bye bye.