Q1 2024 Earnings Summary
- T-Mobile is experiencing strong growth in the enterprise segment, delivering their strongest postpaid net additions ever in enterprise and achieving their lowest churn in enterprise. This growth is attributed to their focus on enterprise solutions and strategic partnerships, such as with Delta and the U.S. Coast Guard.
- T-Mobile is expanding into fiber broadband through a joint venture with EQT to acquire Lumos, aiming to pass 3.5 million homes by 2028. This strategic move allows T-Mobile to augment its broadband offerings, relieve pressure on the 5G network, and serve more customers, potentially expanding their total addressable market.
- T-Mobile continues to extend its lead in 5G network performance, with average speeds double that of competitors and 85% of their traffic on tri-band 5G sites. Their advanced network deployment and technologies result in a differentiated customer experience, supporting customer loyalty and competitive advantage.
- 1. Fixed Wireless Access (FWA) growth may be slowing due to capacity constraints*, potentially limiting future broadband customer additions. T-Mobile executives acknowledged that they are not able to meet all the demand for broadband with their fixed wireless network, suggesting capacity limitations.
- 2. Pressure on Average Revenue Per User (ARPU) due to increased focus on lower-ARPU business customers*, which may impact revenue growth. The company has seen ARPU trending down for a couple of quarters due to the mix shift towards business customers who typically have lower ARPU.
- 3. Potential risks from the expected expiration of the Affordable Connectivity Program (ACP) funding*, which could lead to customer churn in the prepaid segment and impact financial performance. T-Mobile expects the ACP funding to end and is preparing for its impact on customers, particularly in the prepaid and wholesale segments.
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Pricing Actions Impact
Q: Will pricing actions affect subscriber performance?
A: We're not announcing any plans now. Any changes won't challenge our value leadership. Costs have risen, and we might adjust older rate plans. All outcomes are within our guidance. -
Fixed Wireless Growth
Q: Can fixed wireless growth continue despite capacity constraints?
A: Our fixed wireless strategy serves excess capacity. We originally saw 7–8 million customers ; we're exploring ways to extend that. Fiber can relieve pressure on 5G and expand our market. We have waiting lists where we lack capacity. -
ACP Program Ending
Q: How will ACP ending affect your business?
A: We expect ACP funding to end, and it's factored into our guidance. We haven't participated in ACP for postpaid and have a small amount in prepaid. Most of our ACP exposure is via wholesale partners. We're helping customers transition to other plans. -
Fiber Strategy
Q: What's your plan for fiber expansion?
A: We're opportunistically partnering to offer fiber that complements our 5G product. We believe we can generate superior returns due to our assets and know-how. We're excited about our partnership with EQT and Lumos. -
Margin Outlook
Q: Can you discuss your margin trajectory?
A: EBITDA grew 8%, with margins up nearly 200 bps year-over-year. We continue to achieve significant run-rate synergies. Outsized profitable share gains drive service revenue growth. We're focused on converting service revenue to free cash flow. -
ARPU Trends
Q: Why is ARPU declining?
A: ARPU is mix-driven; we're focusing on ARPA and expanding accounts. We expect ARPU to be up about 0.5% this year. We're pursuing growth in enterprise and government, which have lower ARPUs but high lifetime values. -
Network Advantage
Q: How are you maintaining network leadership?
A: We continue to extend our 5G lead. Our customers experience double the speeds of competitors. 85% of our traffic is on sites with all three 5G bands. Our grid provides a consistent experience without toggling between bands.