T-Mobile 4Q15 Earnings Call Notes

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John J. Legere – President, Chief Executive Officer & Director

700 mhz customers have higher satisfaction

“substantially all of our sales now are 700 megahertz compatible. And what we’re observing is that when someone has a 700-megahertz phone in a 700-megahertz market, their churn rates are better. Their satisfaction rates are higher. And that’s to be expected. But you can see the benefit of that as it flows into our system and as we continue rolling out the spectrum.”

AT&T is actually bleeding the most customers right now

“contrary to the belief that most of the donation in the industry is coming from Sprint, it’s actually coming from AT&T, and I think they’re in for a bit of a rude awakening. So the prepaid business, very strong and an awful lot more that we can do. And by the way, we see MetroPCS’ main target to not be Cricket per se, but to be Sprint”

We needed to show that customer acquisition would lead to revenue growth and it has and we also needed to show that the network could support it and it has

“I know this is earnings and everything is going to be very quantitative – but there is something that’s happening at T-Mobile that you can’t ignore and I say this all the time since we started this journey, getting aggressive on the marketing, acquiring customers has two things that we needed to show. One is that it would lead to revenue growth, would lead to profitability, would lead to cash and we’ve talked about that today. Second thing, though, is that ultimately, the network would become the same breadth and reach and speed or better than anybody else, which it has and that’s why we will continue to fight the perception issue because customer experience for us is improving. And that’s why churn is at all-time low.”

IoT has been helping wholesale business

“And one of the things you see within our wholesale business is that while there has been some softening of the low-end wireless subscriber, MVNO type of business that we see, in favor of big brands like MetroPCS that I already talked about. To counterbalance that, machine-to-machine is really taking off. And it’s based on the trends that you’ve heard of a million times, the Internet of Things, and it’s real and people want access to these wireless networks.”

Verizon’s 5G claims are pure [profanity]

“what Neville said I believe is extremely visible right now, which is Verizon has spent so much of their existence just leaning back on having, in their minds, the best network and that’s significantly under attack. So now they’re trying to change the definition to having some inherent advantage of this next-generation capability, and I will tell you that up to and including a couple of weeks ago when Lowell McAdam sat on TV with Jim Cramer and tried to describe a Super Bowl of the next Super Bowl with a 50x speed on a consumer device in the audience, that is pure [profanity] (01:12:50); it’s not going to happen. Either he doesn’t know or what they’re attempting to do is what they’ve done several times, is to connect the current to a long-term strategy for 5G, but call it 5G way before the standards and/or the handsets and capabilities are available.”

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

There was an expected increase in bad debt expense

“the increase was a function of a shift to subprime during the cash-rich tax season of the prior year. And certainly there is an impact due to higher amounts financed on smartphones. But to really counteract that for the upcoming year, we’ve taken several steps that have tightened credit for subprime during the first quarter of this year to counteract that phenomena that we saw in the prior year. So, yeah, we are very focused on this issue, and you’ll see a lot of real positive developments in Q1.”

Neville R. Ray – Chief Technology Officer & Executive VP

Binge On has led to a reduction in network traffic

“So when we activated Binge On, we’ve seen, as we’ve talked through before, a material reduction in network traffic. So the benefit that Binge On brings with customers now being able to enjoy three times the amount of video approximately compared to prior, that’s translating into a reduction in load on the network as they really enjoy a great video experience on their smartphones. That percentage is in the 10% to 12% range in terms of reduction of data that they’re seeing on the network through Binge On, so a material shift.”

Competitors are trying to push to 5G because they’re losing in LTE and it’s misleading

“One competitor has pushed out and talked about, I think in a somewhat misleading fashion, about consumer 5G in what I think the near term, inside the next couple of years. I think the Verizon guys, if they’re under so much pressure from us from a network perspective, they’re looking to change the story and move on to the next thing. They’re losing the LTE game very, very quickly. So let’s change the story and focus on 5G.”

True 5G wont be here until 2020

“when you think about 5G in a smartphone, you’re talking a 2020 story. And nobody that understands the technical space and where we are with standardization would really tell you anything different. That doesn’t mean there won’t be trials and use cases that form and storm ahead of that.”

G. Michael Sievert – Chief Operating Officer

Uncarrier moves are permanent

“we pulse in and out with promotions. But we only pulse in with Un-carrier moves, meaning, when we come up with these major changes in how the industry works, they’re permanent. So, Binge On, for example, is a big move that we think addresses one of the most important needs customers have as Internet consumption switches to mobile. And as video consumption takes off, we wanted to solve a major problem. So, those are the kinds of things we do with our Un-carrier move.”

Customers don’t want Verizon to curate their content for them

“What we had to go on at that time was go90 from Verizon. It was extremely unpopular. And so, we were looking at it saying, hey, that’s obviously not something that customers’ want, which is to hire Verizon, to curate their content for them. But we have our ear down, we’re listening, and if it’s something our customers want, then we’ll look at it.”