T-Mo surpasses the 5 million broadband subs milestone, makes a deal for a fiber JV
T-Mobile US reported postpaid phone net customer additions of more than half a million in the quarter and added more than 400,000 high-speed internet customers, while striking a deal with private equity firm EQT to get into the fiber game.
The company increased its full-year guidance based on its Q1 performance.
T-Mobile US reported strong customer numbers that nonetheless weren’t quite as blockbuster as its performance in the year-ago period. Postpaid net customer additions were 1.2 million (down 73,000 from a year ago), postpaid phone net adds of 532,000 (down 6,000 YoY) and postpaid net account additions of 218,000 (down 69,000). The carrier also noted that its postpaid phone churn was 0.86% and matches a record low churn rate for the first quarter. The company continued to rack up high-speed internet customers as well, gaining 405,000 net new adds compared to more than 510,000 in the first quarter of last year.
Service revenues were up 4% year-on-year to $16.1 billion, with postpaid service revenues rising 6% to $12.6 billion. Company profits for the first quarter rose 22% YoY to $2.4 billion.
The carrier reported that nearly 95% of its 5G traffic is carried on midband spectrum and 85% of its 5G traffic comes via sites with three spectrum bands (600 MHz, 1.9 GHz, and 2.5 GHz), which the company said contributes to an “incredibly consistent network experience.”
“T-Mobile’s 5G leadership has translated into overall network leadership, while 5G is increasingly becoming the overall network experience for customers,” the carrier said in a release.
“The network is an increasingly powerful part of our customers loyalty, as three-quarters of our postpaid phone customers already have a 5G smartphone and they’re having a differentiated experience on the T-Mobile network,” President and CEO Mike Sievert said on the company’s quarterly call with investors.
In terms of the deal with EQP to form a JV and acquire fiber provider Lumos as a basis on which T-Mo will launch a fiber-to-the-premise business, Sievert told investors: “I’ve been saying for a while that smart fiber partnerships would allow us to profitably serve even more broadband customers.”
Lumos currently reaches 320,000 households in Virginia and the Carolinas, providing internet service and home Wi-Fi; it has more than 7,500 route-miles of fiber. The company will transition to a wholesale model with T-Mobile US as the anchor tenant; T-Mo will take over the customer relationships and its brand will be used. “The JV will focus on market identification and selection, network engineering and design, network deployment, and customer installation,” T-Mo said in a release.
T-Mobile US plans to make a major investment in expanding the reach of Lumos’ fiber, but Sievert said that it would still be a “capital-light model” for fiber. According to Sievert, T-Mobile US is planning to invest about $950 million at close and another $500 million between 2027-2028, with a goal of having 3.5 million homes passed with fiber by 2028.
Sievert added: “This JV is the latest example of a capital-light model, and we’re excited to have such great and experienced partners. EQT is one of the leading infrastructure investors across the U.S. and Europe and brings a wealth of knowledge to the table. The Lumos management team under Brian Stading is outstanding and has years of experience building fiber in an efficient, cost-effective and targeted-build model. We’re really excited to be able to accelerate what Lumos has already been doing to reach more and more households in the years ahead.”
As part of its result reporting, T-Mobile US also raised its guidance on a number of metrics for the full-year 2024—including postpaid net customer numbers, which it bumped up from a range of 5.0-5.5 million to 5.2-5.6 million.
Additionally, Sievert said on the call that T-Mobile US has received regulatory approval of its pending acquisition of Mint and Ultra Mobile, which is now expected to close on May 1.
