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'Difficult Reality'

T-Mobile Still Gaining Market Share Over Rivals

After AT&T and Verizon took stock market hits last week after disappointing Wall Street with Q2 results (see 2207220061) and (see 2207210059), T-Mobile Wednesday reported 723,000 postpaid phone net adds, 380,000 net new accounts and 560,000 high-speed internet adds. For the first time, postpaid churn for T-Mobile was lower than at Verizon, at 0.80% vs 0.81% for its rival. T-Mobile’s stock rose 5.2% to $140.91 Wednesday.

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CEO Mike Sievert said T-Mobile is two years ahead of its rivals on its deployment of 5G and with its head start expects to maintain that lead for years to come. “We are winning this race, and as I have been telling you, we plan to stay ahead,” Seivert told analysts. T-Mobile covers 235 million POPs with mid-band 5G, compared with 70 million for AT&T and 135 million for Verizon, he said.

T-Mobile also has deployed 235 MHz of spectrum on average nationwide, including 110 MHz of mid-band and 30 of low-band dedicated to the 5G layer, Sievert said: “That’s unique and it will be unique for some time to come.” The depth of T-Mobile’s deployment often doesn’t get the attention it deserves, he said.

As with every business, inflation has affected T-Mobile, Sievert said. “We’ve always been famous for great prices and great value,” he said on Bloomberg TV. “Right now, that’s what consumers and businesses are looking for,” he said. “Over the last quarter, both of our rivals raised prices across the board on some subscribers,” but T-Mobile didn’t, he said. “We just had very different strategies and ours is attuned to the times,” he said. Customer payment issues are at about pre-COVID-19 levels, he said.

Sievert acknowledged his company’s recently announced $500 million settlement tied to last year’s massive data breach (see 2207250030). That was one of the issues, along with Sprint acquisition-related expenses and writing off wireline assets, that contributed to a net loss of $108 million for Q2, on service revenues of $15.3 billion.

Protecting our customers’ data is a top priority for the company, which is why, following the attack, we immediately took additional steps to protect our customers,” Sievert said on the analyst call: “We always knew that there would unfortunately be financial consequences on this attack, and we were pleased to recently reach settlements that will resolve the class actions and most of the consumer claims.” The costs had already been calculated in the company’s financial guidance, he said.

Neville Ray, president-technology, said the provider is “hitting some of the highest production rates in our two-year history rolling out mid-band” with 1,000 sites upgraded on a weekly basis so far in July.

T-Mobile said almost two-thirds of 35,000 targeted sites had been decommissioned as of the end of the quarter following the Sprint buy, with the most of the rest likely to be shuttered in Q3. T-Mobile raised its 2022 guidance in several areas, saying postpaid net customer additions are now expected to be 6.0 million-6.3 million, an increase from prior guidance of 5.3 million-5.8 million.

The weak results at AT&T and Verizon aren’t (just) a function of a bad industry,” MoffettNathanson’s Craig Moffett emailed investors: “They can be attributed to the difficult reality that neither one can communicate a compelling value proposition to compete with T-Mobile. … Today’s results make clear that T-Mobile is still taking share, and at an accelerating rate. And there are signs that the customers they are attracting are from increasingly affluent demos.”

Results were solid, especially compared to peers last week,” said New Street’s Jonathan Chaplin: “Inflation and the slowing economy are impacting results, but these impacts aren’t excuses for missing or lowering expectations at T-Mobile.”