You know when you take a flight how the takeoff is loud and bumpy while the plane rolls down the runway, then it lifts off the ground and accelerates into the clouds but soon reaches an altitude where the flight is smooth and quiet. That’s the cruising altitude. That’s where T-Mobile is right now. The company has reached a point where it is reporting consistent results while still planning to grow. It has emerged from several years of rapid integration with the Sprint network and accelerated its 5G buildout to capture market share from competing mobile network operators and cable companies.
Wireless service revenues in 2Q23 were $15.7 billion, up three percent on a year-over-year basis. Net income for the quarter bounced to $2.2 billion from a $108 million loss in 2Q22. Core Adjusted EBITDA came in at $7.3 billion, an 11 percent YOY increase. Adjusted Free cash flow grew 64 percent YoY. Much of that upside resulted from the Sprint merger synergies that are estimated at $7.5 billion in 2023. That total includes about $2.7 billion in SG&A expense reductions, roughly $3.2 billion in cost-of-service expense reductions achieved through network efficiencies, and approximately $1.6 billion of savings through avoided network costs. The company estimates $8 billion in synergies in 2024, mainly by avoiding new site builds.
T-Mobile led the Big 3 MNOs with 801,000 postpaid net adds in 2Q23, expanding its retail postpaid and prepaid subscribers to 116.6 million at the end of the quarter, up from 110 million a year ago; that is second to Verizon’s 143.2 million retail subscribers. T-Mobile is leading all MNOs in fixed wireless access, adding 509,000 high speed internet connections in 2Q23 to reach 3.7 million. The company is targeting 7-8 million FWA subscribers by 2025.
T-Mobile’s 5G Extended Range 600 MHz service now covers 98 percent of the U.S. population. Its flagship 5G Ultra Capacity that utilizes 2.5 GHz mid-band spectrum reached 285 million POPs at the end of the quarter with the plan to cover 300 million POPs by year-end 2023.
During the company’s 2Q23 earnings call, Ulf Ewaldsson, T-Mobile President- Technology, commented on what the company believes is a two-year 5G network buildout lead over other MNOs, “It gets harder and harder. As you grow through every 100 million POPs [it] takes about three times the effort in terms of upgrading and building new towers to be able to deliver the same POP growth.”
Ewaldsson added that T-Mobile has 255 MHz of mid-band spectrum and all of its low band spectrum allocated to 5G. “When others are talking about their coverage, they’re sharing this between LTE and 5G, and we’re not — we’re dedicating spectrum.” He says that mid-band bandwidth will grow to 200 MHz dedicated to 5G by the end of 2023 through migrating more LTE spectrum over to 5G. Ewaldsson pointed out that T-Mobile can access a lot more mid-band spectrum. Starting in 2024, the company will begin deploying C-band and 3.45 GHz along with 2.5 GHz garnered in FCC Auction 108 and potentially re-farming existing AWS frequencies.
T-Mobile raised its 2023 capital expenditure guidance by $50 million at the mid-point to $9.5-9.7 billion. Though not officially offering guidance for 2024, Peter Osvaldik, T-Mobile CFO indicated that the company’s capex next year would likely be in the $9-10 billion range.That’s cruising speed, and good news for the wireless infrastructure industry!
By John Celentano, Inside Towers Business Editor
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