T-Mobile 1Q16 Earnings Call Notes

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T-Mobile US (TMUS) John J. Legere on Q1 2016 Results

Verizon is trying to buy access to millenials

“It’s definitely an interesting time to be in wireless. Verizon is on a spending spree to try and buy access to Millennials, buy a 1990s internet companies, and they’re spending tens of millions in ads directed at us including their Balls campaign and their Ricky Gervais commercials. When the schoolyard bully starts calling you out, you know you’ve arrived.”

A lot of people still don’t know about our uncarrier moves

” One of the things that’s interesting, not only have we already talked about expanding our retail footprint, but the Un-carrier moves, which are great ways to solve customer pain points, our study suggest that the awareness level around the United States of potential customers of these various Un-carrier moves is in some cases well below 50%. So we’ve now been training our teams for that moment when we get customers that are coming in considering T-Mobile. This portfolio of Un-carrier move is a great selling point to a very unaware at times audience.”

It’s likely that Verizon will take over from AT&T as “dumber”

“So, thank you for giving us a few seconds to vent about Verizon. I would like to preliminarily announce that it’s highly likely over the next two quarters that Verizon will take over the dumber spot of Dumb And Dumber from AT&T. We still have a soft spot for AT&T because they are by far the biggest contributor of postpaid ports into our company.”

J. Braxton Carter – Executive Vice President, Chief Financial Officer

We’ve reached a cash inflection point

“Obviously, the best use of cash is to invest in the operations, but now that we’ve reached a significant inflection point of rapidly growing cash with the only potential use for that cash, excess cash, opportunistic spectrum transactions. It gets really exciting in the not short term, but the midterm, given what we’re seeing with the business. It is a potential that we can start returning cash to our shareholders, which really changes the whole makeup of our company. But that’s not to be expected in the short term. We are taking our leverage up; we’ll have to see what happens with the auction. We’ll organically delever rapidly as we’ve continued to delever over the last couple of years. But the possibility of shareholder returns is viable when you look at in the medium term.”

Neville R. Ray – Chief Technology Officer & Executive VP

Verizon isn’t way out ahead on 5G

“We are running our own 5G trials. We’ve got our lab work underway. We’ll do our field trials this year. There’s nothing there really doing which is way out in front of anybody else. I think they backed away from some of their earlier statements they’re talking now about fixed wireless in the 5G space in 2018. So that’s moved back right now a year or 18 months from some of the early statements they made not even a couple of quarters ago. So I think they’re starting to understand as they get into this the complexity and challenges involved.”

We’re obviously focused on small cells too

“Now to your second question in terms of what happens with small cells? Obviously, we are busy on small sales. We can come back to 1001 other things we’re doing to continue to deliver the fastest network in the U.S. and the great capacity experience. And that workhorse for this industry is LTE and LTE Advanced really over the next 5 to 10 years because it’s the macro layer of LTE that is going to deliver the great broadband experience. Now we are going to be supplementing capacity as will many others in hotspot environments be that in LTE and/or in with 5G capabilities when that comes to bear and that’s the best place for 5G to play. Right. It’s going to be in hotspot locations where the propagation and physics of high banded spectrum are less of a concern.”

Verizon is trying to change the conversation but we’re going to overtake them in the next two to three years on network quality

“And if I’m Verizon, one, I’m pretty frustrated about that. Two, I’m looking over my shoulder because T-Mobile may match my breadth if not exceed it with the largest network in the U.S. before too long. So what do I do? I change the nature of the game. I try and change it anyway and change the discussion to something which is as loose and amorphous as 5G is today in the hope that enables me to maintain some form of view of a superior network experience to come. Good game. But the next two to three years, you will see us push and be the fastest growing, the fastest network and the most advanced network with what we’re doing on LTE.”