Greetings from snowy Nashville (where I was a technology speaker at the 2020 Country Radio Seminar) and Charlotte, NC. This has been a very busy week for all of us (our Mobile-World-Congress-canceled schedules were quickly filled), and there is a buzz in the telecom industry that I have not heard for some time.
A quick thank you for the dozens of comments on last week’s column. We had our strongest week since the Sunday Brief was relaunched last July, and the depth of questions were substantial. I think I addressed everyone’s questions and am reposting one response as a part of a larger follow-up column this week.
Device transition from Sprint/ Boost to New T-Mobile (better than expected)
Several of you asked that we talk about device compatibility from Boost and Sprint to the new T-Mobile (referred to going forward as just Sprint). As we hinted in the column last week, there’s not as much transition for smartphone customers as existed in the Metro PCS acquisition. The chart below (and attached) summarizes 50+ devices using the categories “Easy,” “Firmware Update,” and “Avoid.”
The best scenario for an existing Sprint customer is to have a device that works well on the existing Sprint and T-Mobile networks – in industry jargon, a “Universal” or “U SKU” device. Ideally, this device would also have T-Mobile’s low-band LTE spectrum available as well (LTE Band 71). All of the devices shown in the chart carry T-Mobile’s 700 MHz spectrum (LTE Band 12), but in-home and rural coverage will significantly improve if the customer has LTE Band 71.
On top of this, all Sprint smartphones sold since 2013 (and perhaps earlier – we only went back seven years) have the Clearwire (2.5 GHz) band (LTE Band 41) which, as we discussed in last week’s column, is going to be more robustly deployed by New T-Mobile in the coming months.
Here’s a summary of the rows in the above chart:
Best case: Sprint device has LTE Bands 2, 4, 12, 41, 66 and 71 (top of page)
Good case: Sprint device has LTE Bands 2, 4, 12, 41, and 66
Base case: Sprint device has LTE Bands 2, 4, 12, and 41
Apple: Good news for current Sprint Apple customers. Starting with the iPhone XS/XR introduction in 2018, all devices were compatible across all US carriers. So the iPhone XS/XR/11/11Pro/11 Pro Max are easy conversions to New T-Mobile (in fact, new activations are likely roaming on some T-Mobile bands already – expect to see roaming changes to incorporate more T-Mobile low-band networks in the near future). All of the above models would be classified as “Best case” using the designation above.
All is not lost, however, for earlier Apple models. The iPhone 8/ 8 Plus and iPhone X models that worked on Sprint also had all of the T-Mobile networks except for the 600 MHz spectrum (Band 71). So iPhone 8 and iPhone X will work really well in the metro areas (and will use T-Mobile’s 700 MHz/ LTE Band 12 if existing device signal degrades and will have T-Mobile’s AWS spectrum for additional data throughput).
It’s important to note that even iPhone SE, 6S/6S Plus and 7/ 7 Plus models that worked on Sprint should have a very smooth transition to the New T-Mobile network. (And, existing T-Mobile customers also have the benefit of having the Clearwire spectrum already on their devices since the iPhone 6S, so when New T-Mobile augments their spectrum, device performance will improve).
Sprint has not announced what percentage of their base is using Apple smartphones, but, if other carriers are any indicator, it’s in the 4X+% range. For a little less than half of all Sprint retail customers (and probably 3X% on Boost), the transition should be a breeze.
Samsung Galaxy: Most Samsung devices made after 2018 (Galaxy S9 series) were built on a single platform (for the S9, it’s the SM-G960U model). These devices can be upgraded from Sprint to T-Mobile with a SIM card change and a firmware upgrade. So the Samsung Galaxy S9, S10, Note 8, Note 9 and Note 10 series (USA Versions, includes all variants) should be able to be upgraded to include the T-Mobile radios and bands. While the S8 (and Note 8) series, like the iPhone 8, does not have T-Mobile’s lowest-band spectrum (600 MHz), the Galaxy S9 (Note 9), S10 (Note 10), and S20 line-ups do (and a new Samsung Galaxy S9 is now $399.99 on Samsung’s site before trade-in value. Note 9 is also attractively priced at $549.99).
Samsung budget Android: Currently, Sprint retail carries one Samsung budget SKU, the Galaxy A20 (note: they previously carried the Galaxy A10e model and the builds/conclusions are the same for the A10 and A20 series). This version has both Band 12 and Band 71 and should be easily transitioned to New T-Mobile. According to the Samsung website, however, this SKU does not have LTE Band 66 so there may be pockets where download improvements are limited. Also, the Unlocked version of the device (popular at places like Best Buy and B&H) does not have LTE Band 71 (but has LTE Band 66 – confusing). While we hope we are incorrect, it does not appear that an Unlocked version of the Galaxy A20 will be able to access T-Mobile’s 600 MHz spectrum. (Note: Owners of the T-Mobile variant of the Galaxy A20 will be able to access Sprint’s LTE Band 41 out of the gate).
Boost still carries the A10e, A20 and A6 models as well as the low-budget J3 Achieve and the J7 Refine. The A6, J3 Achieve, and J7 Refine all have T-Mobile’s legacy bands (including Band 12) but do not have LTE Band 66 or LTE Band 71.
The bottom line for Samsung Budget comes down to these two important questions:
- Did the device start on Sprint (is it the Sprint version as opposed to an Unlocked version)?
- Is the Device two years old (2018 version) or newer?
If the answer to these questions are both “yes” then the device’s performance on the New T-Mobile will be improved and no upgrade will be needed (assuming this is not a power user). If, for example, the device is the 2017 version of the J3, it’s probably worth looking into an upgrade.
Samsung (Galaxy + budget) is likely 35-40% of the Sprint retail base and 30% of the Boost base. For ~ 75% of the Sprint retail base and ~65% of the Boost base, a firmware upgrade should be the biggest change. And, with some changes to how roaming settings are configured, improvements could show up very quickly after close. As we have noted previously, this is greatly needed in states like Florida where Sprint’s network ranking is a distant fourth.
LG: Like Samsung, there’s a compatibility split between the premium and budget models. The following models have all bands and should be fully compatible: LG V40 ThinQ, LG V50 ThinQ 5G, LG G8 ThinQ, LG G8X ThinQ, LG Tribute Royal.
These models do not have either LTE Band 66 or LTE Band 71 but do have LTE Band 12: LG Stylo 4, LG Stylo 4 Plus, LG Tribute Empire.
There was not enough information on the LG Stylo 5 but, since it was launched last June, it’s probably safe to assume the Sprint version it has LTE Band 12 and LTE Band 66 (the T-Mobile version has LTE Band 71).
LG has a lot of brand loyalty and their device performance tends to be consistently good. But LG’s importance in the premium level is diminishing, and the budget device space is becoming crowded. Motorola has been a leader in the budget segment along with the J (and now A) series from Galaxy. And companies such as BLU are eager to integrate LTE Band 41 into their new devices. While Sprint and Boost were important customers for the last decade, in the New T-Mobile world, the future of LG is more uncertain.
Moto/ Google: Moto had strong demand for their G7 series (G7, G7 Play and G7 Power). For $159.99, you can get a fully compatible Moto G7 Play (G7 is $199.99 and G7 Power is $219.99). And, for bargain shoppers, the Moto e6 is on sale for $99.99 and is fully compatible with all New T-Mobile networks (note: the Moto e5 was more of a carrier-specific device so ask about compatibility prior to purchasing). Even the Moto G6 Play and G6 devices (which you can find on Amazon) have LTE Band 12 and LTE Band 66.
Google has had a long-standing policy of making universal devices. The Pixel 3, 3XL, 3a, 4, and 4XL are all fully compatible and should have an easy migration to the New T-Mobile. Even the Google 2 and 2XL have LTE Band 66.
Bottom line: As the chart shows, and as our estimates indicate, the conversion process to New T-Mobile for either Boost or Sprint will be modest. Approximately 70-80% of all devices will deliver a better LTE experience than prior to the merger (or at least the roaming agreement). T-Mobile customers will likely enjoy LTE Band 41 quickly as well. Of the remaining 20-30%, there are universal devices at all price points that can address Android needs.
TSB Follow-Ups
- Apple retail’s 4Q stellar iPhone performance – aided by Apple Card! One overlooked section of the Apple earnings conference call dealt with Apple Store performance following the Apple Card rollout and related fourth quarter promotions (6% discount if purchased in-store). Here’s Apple CEO Tim Cook describing the impact of both trade-ins and monthly payments through the Apple Card:
“Thanks in part to a doubling in iPhone trade-ins versus last year, our retail and online stores set an all-time record and delivered strong double-digit growth in iPhone.”
“So, retail stores did fantastic on iPhone, very strong double-digit growth in iPhone from a year-over-year point of view. And one of the factors that enabled that was … getting to monthly payments on the Apple Card to make it very simple.”
The synchronicity between Card, Care, and iPhone within each store is impressive. With all of the talk about a smartphone super-cycle, one has to think about the headwind Apple is creating for increased carrier store device sales.
2. Verizon’s Pixel relationship – a story appeared in Android Police stating that Verizon would be ending their relationship with Google to sell the Pixel in their stores. Panic ensued. The next day, that story was retracted after Verizon indicated that they would be selling Pixel devices in the future. Everyone calmed down.
Does this mean that there will be less exclusivity and marketing? Maybe less exclusivity, but certainly no less marketing. YouTube TV is now a fixture in the Verizon FiOS lineup, and the Pixel has been a solid seller for Verizon (it’s a very good device, although non-5G).
3. Google Fiber Webpass is the new name of Google Webpass. Starting with the Nashville launch of Webpass on February 11, Google changed their name (and logically extended their reach) to Google Fiber Webpass. As we noted in a popular TSB titled “Fiber Always Wins (Until it Doesn’t),” Google has struggled with their Fiber division. Perhaps Webpass can breathe some new life into it (we are doubtful).
4. Altice raises monthly wireless prices by 50%. To no one’s surprise, Altice rescinded their introductory pricing on their Altice Mobile service and raised all monthly prices for new customers by $10 (from $20 to $30/ mo. for existing Optimum Internet customers, and from $30-$40/ mo. for everyone else in the serving areas). This will put the Altice MVNO on firmer financial ground as they gain access to T-Mobile’s network.
5. Softbank and Deutsche Telekom renegotiate their deal in less than a week. As one of my colleagues posted – “Wow, that was fast!” – the merger deal was renegotiated without fanfare or the need for an additional vote. In summary (SEC document is here), Softbank will give T-Mobile USA 48.8 million shares once the transaction is complete. Softbank can regain these shares, however, if TMUS stock averages more than $150/ share over any 45-day period between 2022 and 2025. At T-Mobile’s current share price ($98.57), that implies an ~9% average annual share price increase from today to reach the $150 trigger price (and, as we noted in a previous TSB, T-Mobile had a 24% price appreciation in 2019). It’s also important to note that to reclaim the shares, the $150 price only needs to be achieved for 45 days. One cable merger rumor could easily trigger that.
As the saying goes “He who laughs last laughs best.” This amended agreement will likely result in the return of the 48.8 million shares to Softbank (which will then have a value of $7.3 billion).
There’s another disclosure in the link, however – Softbank agreed to indemnify T-Mobile from all future liabilities above $200 million related to the ongoing LifeLine overcharging investigation and other third-party claims. T-Mobile and Softbank will share the risk evenly for all amounts up to $200 million. This eliminates nearly all of the financial “gotchas” that started to surface last September.
Next week, we will dive into the future of the incumbent telco after we hear from Frontier (Feb 25) and quickly check in on Samsung Galaxy S20 sales. Until then, if you have friends who would like to be on the email distribution, please have them send an email to sundaybrief@gmail.com and we will include them on the list.
One last pic from the CRS 2020 show – I had the privilege of seeing several “up and comers” on the Universal Music Group label including Mickey Guyton singing “What are You Going to Tell Her” at the Ryman Auditorium in Nashville this week. After several new artists, out came Luke Bryan, then Carrie Underwood, then Keith Urban (who closed his set with a duet with Carrie). Then the big surprise when Reba McIntire came out and brought the house down. The closing picture is of the Queen herself (Carrie Underwood looking on behind curtain). An unbelievable performance.
Have a great week – and Go Davidson Wildcat Baseball (and Wildcat Men’s Basketball)!
