T-Mobile continued strong wireless subscriber growth in the first quarter, adding 1 million postpaid net subscribers in the quarter as the operator prepares to launch 5G using 600 MHz later this year.
The postpaid net additions included 656,000 phone customers, with the remainder driven by wearables. Verizon and AT&T reported first quarter earnings earlier this week, with postpaid net phone losses of 44,000 and 55,000, respectively.
The nation’s third-largest carrier said it expects to capture approximately 88 percent of industry growth in the period. T-Mobile ended the first quarter with 81.3 million customers.
The operator reported service revenues of $8.3 billion, up 6 percent and total revenues of $11.1 billion, also up 6 percent.
Net income for the quarter was $908 million, up 35 percent, while Adjusted EBITDA was $3.3 billion, up 11 percent. T-Mobile also reported record-low postpaid phone churn of 0.88 percent.
Once again T-Mobile upped its guidance on subscriber additions, now expecting 3.1 to 3.7 million postpaid net additions in 2019 (previously 2.6 to 3.6 million).
On the company’s’ earnings call T-Mobile CTO Neville Ray reiterated that the operator plans to have a nationwide 5G footprint in 2020, and said the company will light up an “enormous footprint” on 600 MHz for 5G in the second half of 2019 as soon as compatible handsets hit the market.
Ray said 600 MHz LTE has already been rolled out over 1 million square miles covering 100 million POPs (points of presence), with 5G-capable radios being used in order to turn on 5G services later this year. He said the launch should be in “stark contrast” to the pockets of 5G being offered by AT&T and Verizon.
Ray commented that T-Mobile believes in millimeter wave spectrum – which Both AT&T and Verizon are for their respective initial 5G launches in select parts of certain cities — but asserted the software is not mature enough and Verizon launched “way too early.”
He said that on a standalone basis when T-Mobile lights up 5G on about 30 MHz of 600 MHz spectrum, speeds will increase into the 60-70 Mbps range, up from the average 30-35 Mbps T-Mobile currently delivers on LTE. He noted that peak speeds would move into “the hundreds” of megabits per second.
Executives continued to promote the benefits of what it could do if its proposed $26 billion merger with Sprint is approved, giving the new T-Mobile a large amount of mid-band 2.5 GHz spectrum. There has been concern in the U.S. around the lack of available mid-band spectrum for 5G, which is needed for broader coverage and are the frequencies most of the rest of the world will use to deliver next-generation services.
“The massive opportunity with our [Sprint] deal is to fill that [mid-band] spectrum gap, especially over the next two to three years and bring material 5G with that breadth and depth of experience that mid-band can deliver that can’t get delivered with the other assets,” Ray said.
When it comes to the Sprint deal, T-Mobile CEO John Legere expressed confidence that U.S. regulators will give it the greenlight in the first half of the year. The comments come amid recent press reports that the merger is on shaky ground, with the DOJ and FCC reportedly unlikely to approve the deal as currently structured.
Analysts too have cast doubt on approval of the deal.
“T-Mobile’s regulatory team has done about as good a job as possible selling the merger,” wrote MoffettNathanson’s Craig Moffett in a Thursday note to investors. “But the politics are the politics, and…well, let’s just say that we’re not optimistic.”
The firm said it’s difficult to imagine any structural deal changes that would be workable or satisfactory to federal regulators, including options like selling off prepaid brands or divesting spectrum.
Even if the deal passed federal and state attorney general reviews, it would still need approval from the California PUC, Moffett noted.
“The CPUC’s Public Advocate’s office made their current position relatively clear earlier this week when they filed a formal statement in opposition to the previous week’s settlement between T-Mobile/Sprint and the California Emerging Technology Fund (which some mistakenly took as a sign that the CPUC was warming to the deal in return for concessions),” Moffett wrote. Proceeding with a merger that would excise certain states might still be doable… but California?”
In response to questions on potential alternative deal structures, Legere remained confident saying as is, the deal is pro-consumer and pro-competition.
“I feel very good about the dal as its structured and as its being reviewed,” Legere commented.