T-Mobile(TMUS)2024-04-26 01:00Financial Data and Key Metrics - The company reported strong Q1 2024 results, with postpaid phone net adds in line with Q1 2023, while industry net adds were lower by a double-digit percentage [6] - Postpaid phone gross adds increased year-over-year for the fourth consecutive quarter, even as industry gross adds declined [7] - The company achieved its best-ever Q1 postpaid phone churn rate, indicating strong customer retention [7] - Core adjusted EBITDA is expected to grow by 9% year-over-year, reaching between 31.9 billion [16] - Adjusted free cash flow is projected to be between 16.9 billion, up 23% year-over-year [17] Business Line Performance - The company added 405,000 home broadband customers in Q1, representing a higher share of industry broadband net adds compared to the previous year [9] - T-Mobile now serves over 5 million High-Speed Internet customers, with plans to enhance value through new rate plans for home mesh networks and on-the-go usage [9] - The company announced a joint venture with EQT to acquire Lumos, targeting 3.5 million homes passed by 2028, with T-Mobile investing approximately 500 million between 2027 and 2028 [10][11] Market Performance - T-Mobile continues to take market share in wireless and broadband, with postpaid phone net adds outperforming the industry [6][9] - The company's 5G network is a key differentiator, with 75% of postpaid phone customers already using 5G smartphones [7] - The company expects to close the acquisition of Mint and Ultra Mobile on May 1, further expanding its presence in the value segment [12] Strategic Direction and Industry Competition - T-Mobile's strategy focuses on maintaining its position as the value leader in the market while exploring opportunities for growth in broadband and fiber partnerships [10][11] - The company is leveraging its 5G network leadership to drive growth in both consumer and enterprise markets, with a focus on advanced 5G capabilities like network slicing [33] - The joint venture with EQT and Lumos is part of a capital-light model to expand broadband services without significant balance sheet impact [11] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing consistent performance and strong customer loyalty [13] - The company plans to host a Capital Markets Day in the fall to discuss long-term opportunities and value creation strategies [14] - Management highlighted the potential for further growth in broadband and fiber, with a focus on capital-efficient investments [11][38] Other Important Information - The company received regulatory approval to acquire Mint and Ultra Mobile, with the transaction expected to close on May 1 [12] - T-Mobile's adjusted free cash flow margins are multiple percentage points higher than its peers, driven by margin expansion and capital efficiency [17] - The company is exploring ways to extend its fixed wireless broadband strategy beyond the initial 7-8 million customer target [36] Q&A Session Summary Question: Pricing Actions and Competitive Landscape [21] - The company is considering pricing actions, particularly for older rate plans, but remains committed to its value leadership strategy [22] - The competitive environment remains intense, with T-Mobile focusing on underpenetrated markets and unique growth vectors [24] Question: Lumos Transaction and Broadband Growth [28] - The Lumos transaction is part of a broader strategy to expand broadband services through capital-light partnerships [38] - The company sees significant growth potential in fixed wireless broadband, with a long waitlist of customers in areas where capacity is constrained [37] Question: Impact of ACP Program Expiration [40] - The company expects the Affordable Connectivity Program (ACP) to end, with minimal impact on its postpaid business and a small impact on prepaid and wholesale segments [42] - T-Mobile is working with customers and partners to transition ACP participants to other programs or plans [43] Question: Fiber Strategy and Network Positioning [52] - The company's fiber strategy is opportunistic, focusing on partnerships that complement its 5G broadband offerings [54] - T-Mobile's network continues to lead in 5G, with 85% of traffic on mid-band spectrum and 93% of traffic on 5G, ensuring a consistent and reliable customer experience [86][88] Question: ARPU Trends and Free Lines [73] - ARPU is expected to grow by 0.5% in 2024, driven by rate plan optimizations and a focus on ARPA growth [78] - The company does not offer first free lines, and free line contributions to net adds have decreased year-over-year [80] Question: Fiber Penetration and FWA Growth [94] - Early wholesale fiber penetration rates are trending toward 20%, above industry benchmarks [99] - The company expects to reach its 7-8 million fixed wireless broadband customer target by the end of 2025, with 405,000 net adds in Q1 2024 [102] Question: Long-Term Fiber Ambitions [104] - T-Mobile plans to provide a more detailed long-term view of its fiber strategy at its upcoming Capital Markets Day, emphasizing a patient and opportunistic approach [105]