T-Mobile 2Q15 Earnings Call Notes

We always listen to our customers

“we always listen in any form of talking to our customers, so we always take action. Now, that’s our philosophy, we never launch something in just forget it. We always listen, how to make things better and we decided to go forward and do it this summer.”

It’s kind of depressing to watch large carriers try to adjust to us

“We spent the summer giving more to T-Mobile customers, while as usual, our customers spent the summer doing the opposite. It’s actually kind of depressing to watch them box in customers as they struggle to react to the Un-carrier revolution.”

$1.8B in adjusted EBITDA, up 25% y/y

“Service revenues grew by 12%, while total revenues were up 14% year-over-year. And even with this incredible growth, adjusted EBITDA came in ahead of expectations at $1.8 billion, up 25% year-over-year and 31% sequentially. The adjusted EBITDA margin expanded from 26% in the second quarter of last year to 30% this year.”

Adjusted EBITDA guidance of 6.8-7.2B

“Based on these great results, we are increasing our postpaid net adds guidance to a range of 3.4 million to 3.9 million, while maintaining our adjusted EBITDA guidance of $6.8 billion to $7.2 billion and our cash CapEx guidance of $4.4 billion to $4.7 billion.”

Connected devices are very low ARPU

“when you move from right now in the industry from postpaid and prepaid subscribers, to tablets and connected devices, right now in the AT&T and Verizon world, let’s be clear, those are no ARPU or minimal ARPU free tablets and $1 ARPU connected cars.”

Competitors have turned their attention to adding love value types of products

“I just don’t think, it’s a matter of mix at our competitors. It’s a matter of what they can do. And so, in an environment, where they simply can’t get positive phone net adds anymore. And haven’t been able to find success in that for many quarters. They’ve turned their intention to lower value types of products that they can acquire.”

They hit a terminal size and even though their churn is good, they are throwing off enough customers for us to feed on

“They hit this kind of terminal size where their phone churn, although the churn rates are fairly good, some of the best in the industry, their size is churning out so many customers that we are feeding on, others are feeding on. That they just can’t out run that with their gross adds.”

Other players are going to migrate into this space

“we don’t see any of these industry evolutions, as a threat. We see them as a logical progression of that industry structure continuum that we outlined in a way they use our reach on the mobile side to other players that want to enter the space. And I think I have always thought and said that in several years, we will think back and think it was completely humorous that we believed that the “wireless industry was four-carriers, and a structure that needs to be protected”, because ultimately both Google, Comcast other players are going to migrate into the space.”

Everyone needs more capacity not just us

“when you get to the medium to long-term, absolutely everybody needs new sources of supply. Not just us, and we’ve been clear about it. We all have different paths and we feel very comfortable and we are still in a superior position as it relates to supply per customer as defined by megahertz POP.”

We have more spectrum per customer than competitors and best mid band contiguous spectrum position

“why are we different? Most spectrum per customers than Verizon and AT&T, right out of the gate. We have less than half of our spectrum that we own committed to LTE today. That number is about 40% right now. So we have a lot of LTE growth ahead of us. The MetroPCS execution that’s been referenced to couple of times on the call. Just simply outstanding, it’s delivered two things, one the most dense network in the U.S., and two of the best mid-band contiguous spectrum position. The compounding nature of those two things is the envy of all of our competitors. They’re throwing small cells, host of different ideas and plans to try and come close to matching that Macro network density with a great macro mid-band spectrum position.”

The DISH assets have to come to market at some point

“the DISH folks have a fair volume of spectrum that you have to be – brought to market. It has as to come to market at some point in time.”