T-Mobile US plans for 2015 show it’s not content to just be No. 3, looks at cable as partners
T-Mobile US this week reported robust first-quarter results with customer growth numbers that are set to lead the industry as well as propel the carrier into the market’s No. 3 position. While the gap to No. 2 is a bit out of reach, T-Mobile US looks set to keep up the competitive pressure.
T-Mobile US upped its postpaid customer growth forecast for the full year from 2.2 million to 3.2 million new connections to between 3 million and 3.5 million net additions. Those numbers look to be supported by management claims of growing postpaid porting ratios compared with its rivals that increased from 1.7 during the fourth quarter of last year to 1.93 during Q1. T-Mobile US CEO John Legere told investors that number has further increased to 2.2 during the first month of Q2.
More specifically, Legere said compared with Verizon Wireless, porting ratios have increased from 1.4 during Q4 last year, to 1.6 during Q1 and are at 1.8 so far in Q2. Compared with AT&T Mobility, porting ratios have increased from 1.8 in Q4, to 1.85 in Q1 and to 2.05 in Q2. And Sprint, which Legere said was doing “some interesting things,” has seen its postpaid porting ratio climb from 2.2 in Q4, to 2.45 in Q1 and is at 2.75 through the first month of Q2.
Another source of postpaid growth for T-Mobile US was its prepaid customer base, with the carrier reporting 195,000 prepaid customers made the switch to a postpaid account. Verizon management noted during its quarterly conference call that it was seeing its prepaid customer base migrate to postpaid accounts at some of its rivals.
T-Mobile US claimed its LTE network had expanded to 275 million potential customers covered at the end of the quarter, with plans on track to hit 300 million pops covered by year-end. That goal will require the carrier to continue focusing on deploying its 700 MHz spectrum assets, which it said have already been turned on in 55 markets.
The carrier was quick to note that plans to hit 300 million pops covered will not require T-Mobile US to acquire any additional spectrum, with CTO Neville Ray saying the progress will rely on building out the 700 MHz licenses and updating current 1.7/2.1 GHz and 1.9 GHz sites.
Network coverage is also being boosted with the refarming of its 1.9 GHz licenses that continue to support its legacy 2G and 3G services. Those moves, along with the continued deployment of 1.7/2.1 GHz spectrum from recent acquisitions and the integration of its MetroPCS assets, are also set to support broader spectrum support of LTE services in more than 200 markets by the end of the year.
Connected with its MetroPCS assets, T-Mobile US said it has decommissioned CDMA networks in eight of the 11 markets in which MetroPCS had offered services, with those spectrum assets now moved over to LTE support and willing customers migrated to T-Mobile US’ network. The carrier said it expects to have the three remaining markets decommissioned by year-end at a cost of between $375 million and $475 million.
Despite a year-over-year dip in capital expenditures for the first quarter, T-Mobile US also said it is maintaining capital expenditure guidance of between $4.4 billion and $4.7 billion for the full year, noting the dip was just a timing issue.
T-Mobile US’ management also said it expects to post a return on investment through the remaining quarters of the year. The carrier trimmed quarterly net losses attributed to shareholders from $151 million last year to $77 million this year.
Cable partnerships?
Legere also stated that T-Mobile US remains open to partnership opportunities with cable telecom providers in light of Comcast’s recent decision to drop its $45 billion acquisition of Time Warner Cable due to regulatory challenges. Th
“I think you need to think about the cable industry and players like us as not competitors but potential partners and alternatives for each other in the future,” Legere said. “When you start to broaden the definition … of content and entertainment and video going to customers on fixed and mobile devices together and you start thinking of that industry is a far more broad set of potential partnerships, integrations and mergers that the United States could be looking at and in that case I think you will see consolidation of a much broader set.”
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