Executives lay out business, network strategies post T-Mobile, Sprint merger
Coming off a protracted but now-closed merger with Sprint and a decent Q1, T-Mobile executives this week told a story of a new power on the rise–combined with Sprint, the New T-Mobile is a value brand backed up by deep spectrum holdings and a rapid 5G deployment strategy.
The carrier’s EVP and CFO Braxton Carter and VP of Technology Neville Ray virtually joined the MoffettNathanson Media and Communications Summit to provide wide-ranging commentary on the business and network integration that’s ongoing post merger and what to expect in a three-carrier market.
The Sprint deal closed April 1 and Carter said the company would launch a unified, nationwide go-to-market strategy in the third quarter and, on the network side, Ray touted a 1,000-site-per-month pace of redeploying Sprint’s valuable mid-band 2.5 GHz spectrum.
Carter said, “We are the value play in the industry.” Referencing the economic fallout of the ongoing COVID-19 pandemic, “Particularly during tough economic times, people are going to be looking for value. With AT&T and Verizon experiencing the same types of issues that we are, we should actually be in a position that when this country does start opening back up that we should be able to accelerate growth–a much larger switching pool as people look for value during these tougher economic times.”
The other side of the economic times coin is existing subscribers not being able to pay their bills. This is potentially compounded with the FCC’s Keep Americans Connected Pledge, which T-Mo signed along with many other service providers; circulated by Chairman Ajit Pai, the pledge is to waive late fees, push out disconnections and make other concessions to support the huge workforce impact caused by the novel coronavirus.
Carter said he’s watching the whole situation “really, really closely” and T-Mobile is “doing our part but we’re also reducing exposure” and exploring a “multitude of operational mitigations.” At the heart of the issue, he said, is “this bill shock as you have several months worth of payments…You’re looking at a bill four times what you usually pay. And when we have the type of unemployment we have here in the country, that is obviously a problem.”
In the second quarter, Carter is forecasting between $75 million and $125 million in incremental bad debt. “But it’s the right thing to do for our country,” Carter said.
On the network side, the layer-cake visualization Ray has been using its seeing its real-world analog come to life with T-Mobile’s combination of 600 MHz, 2.5 GHz and millimeter wave 5G spectrum. Low-band 5G is available nationwide, millimeter wave deployments are currently limited but will focus on urban cores, and the 2.5 GHz Sprint spectrum is rapidly coming online, having already gone live in Philadelphia and New York City.
Ray said that T-Mobile has a “treasure trove of spectrum” composed of 3-times Verizon’s sub-6 holdings and 2-times AT&T’s equivalent portfolio. He said the 2.5 GHz work is going on “at a furious pace” emboldened by ample planning time to secure leasing, permits and other site-related concurrency needed to add 2.5 GHz radios to existing macro sites. “We’ll be building at a clip of almost 1,000 overlays a month as we move into May and June. We’re moving fast. This year we’re going to see a lot of the major metros light up with 2.5.”
T-Mobile has a clear advantage in mid-band spectrum, which the rest of the world used to initially bring 5G to market whereas AT&T and Verizon launched with millimeter wave due in large part to the FCC’s willingness to make high-band frequencies available. The “big delta” between T-Mobile and its competitors “is in mid-band,” Ray said. “There’s a real problem in the U.S. around mid-band 5G spectrum–not for us now that this transaction has closed.”
On the earnings call in early May, CEO Mike Sievert said that while the Sprint merger “took way longer than anyone could have imagined, we took advantage of every moment during the approval process for this deal to plan for a rapid integration of these companies, and we hit the ground running.
“As we dig into our combined businesses, we see an opportunity to move even faster and potentially to unlock even more synergies from this combination than originally planned, opportunities like the acceleration of our retail rationalization and network integration. And we’ll likely see additional upside from our increased scale in areas like procurement and potentially faster improvements in the churn rate of Sprint subscribers than planned.”
