The conference call for T-Mobile's third quarter 2023 earnings is about to begin, with Jud Henry, Senior Vice President and Head of Investor Relations, introducing the company's CEO, Mike Sievert, and CFO, Peter Osvaldik. The call will include forward-looking statements and a discussion of the company's results, which can be found on their investor relations website. Sievert thanks the team for their hard work and highlights the company's consistent strategy of providing the best network, value, and customer experience. He also mentions the company's industry-leading growth in customers and finances.

The speaker is proud of the network team for reaching their goal of 300 million people covered with mid-band 5G ahead of schedule. They believe that T-Mobile is still ahead of the competition in terms of network coverage and speed, and they have more spectrum dedicated to 5G than anyone else. This translates to a superior customer experience and potential for growth. T-Mobile is also known for delivering the best value.

T-Mobile's latest Un-Carrier move is freeing customers from three-year contracts and offering feature-rich Go 5G rate plans. This has led to industry-leading postpaid account growth and strong ARPA revenue growth. Despite some offsets from growing segments like 55+ and military, consumer ARPU continues to grow. T-Mobile is also seeing profitable growth in the enterprise space. The wireless industry as a whole is experiencing growth in service revenues and cash flows, while customers are enjoying more data at higher speeds for a lower price. This showcases T-Mobile's 5G leadership and the benefits it brings.

In the T-Mobile for Business sector, there has been a significant increase in account net ads and postpaid nets in enterprise due to the strength of their 5G enabled solutions. The company is also seeing an increase in customers choosing T-Mobile for their network coverage and capacity needs. In addition, T-Mobile is experiencing strong growth in their broadband sector, with high customer satisfaction and lower churn rates. This growth strategy has resulted in industry leading service revenue growth and double-digit growth in core adjusted EBITDA. As a result, T-Mobile has raised their guidance for the year and has confidence in their future growth opportunities.

T-Mobile is optimistic about their future growth potential, especially with the constantly evolving technology landscape. They expect to see revenue growth, margin expansion, and free cash flow growth, which will allow them to invest in their customers and network while also providing returns to shareholders. The company's ongoing success is attributed to their customer-focused team and strong financial performance. They have increased their guidance once again and anticipate adding 5.7 million to 5.9 million postpaid net customers, with a focus on solving customer pain points. They also expect approximately 3 million postpaid phone net additions for the full year.

The company's focus on profitable growth has allowed them to increase their core adjusted EBITDA expectation by over 10% year-over-year. They expect to achieve their full run rate synergy target a year ahead of schedule and will no longer report synergies separately. Merger-related costs are expected to be $1 billion before taxes and $1.7 billion to $1.9 billion in cash for 2023. Operating cash flows are expected to be between $18.3 billion to $18.5 billion, with cash CapEx of $9.6 billion to $9.8 billion. Free cash flow is expected to be between $13.4 billion to $13.6 billion, representing a significant increase from last year and a higher margin compared to peers.

The company's updated free cash flow guidance for the year does not include any significant cash inflows from securitization. They expect their full year effective tax rate to be between 24% and 26%, and postpaid ARPA to increase slightly more than 1%. The company's growth strategy continues to deliver industry-leading results and they will now take questions. The first question is about the company's rapid share gains in rural markets and how much room they have to grow in these areas. The second question is about the workforce reduction mentioned in the 10-Q and whether the company can quantify the OpEx reduction and if there are other factors involved.

T-Mobile has achieved a major milestone by becoming the leader in share of switchers in smaller markets and rural areas, which make up 40% of the country. This is a result of their efforts to bring 5G to these areas and their dedicated team focused on driving commercial success. T-Mobile's goal is to reach 20% share of households in these areas by the end of 2025.

Mike Sievert and Peter Osvaldik discuss T-Mobile's plans for the future, including their goal to become the share leader in smaller markets and rural areas. They also address questions about OpEx for 2024 and state that they are confident in their ability to meet their 2024 goals despite changes in the world. They credit their success to making tough decisions and creating tailwinds for the company. Mike jokes about Peter accidentally revealing guidance for 2024, but Peter assures that they are on track to meet their goals and continue investing in customers and the network. They reflect on their Analyst Day from years ago and how their outlook for the future is still on track.

The speaker is proud of the company's ability to make course corrections and keep promises to customers and businesses while experiencing unexpected changes. They are excited about the growth opportunities for the next year, including the fiber pilot program and potential for expansion in fixed wireless and millimeter wave technology. The company's philosophy remains the same and they are confident in their ability to succeed in the broadband market with a capital light approach.

Mike Sievert, CEO of T-Mobile, addresses speculation about the company's rumored partnership with JANA and clarifies that they are not involved in the transaction. He mentions their interest in partnerships that are capital light and off balance sheet, and their success in the 5G home broadband space. He also discusses their plans to deploy more spectrum resources to reach 300 million people with mid-band Ultra Capacity 5G. He mentions their use of millimeter wave in dense areas and their openness to exploring opportunities for deploying capital specifically for 5G broadband.

The operator introduces Phil Cusick from JP Morgan and asks him to ask his question. Phil asks two questions, one about potential savings from layoffs and another for Callie about business contributions to subscriber growth and ARPU. Callie discusses the growth in all segments and the success of their solutions for enterprise and government, using the example of a recent deployment at Boston Children's Hospital. The operator then asks if there is anything else to add.

In paragraph 13, T-Mobile executives Mike Sievert and Peter Osvaldik discuss the company's ARPU (average revenue per user) and its focus on value creation rather than simply competing on price. They note that enterprise customers are highly attractive and contributing to their financial results. They also mention recent actions taken to create tailwinds and fuel growth, and address a question about a recent price increase for legacy plans.

The speaker clarifies a previous report about a test cell for migrating customers to higher value rate plans. The test was leaked and received negative feedback, so it was ultimately not implemented. The speaker then discusses the success of their Go 5G Plus and Next plans, which offer great value and flexibility for customers.

The company has differentiated itself in the market by offering flexible upgrade options for customers, which has allowed them to increase their pricing. They continue to conduct tests and pilots to find ways to deliver more value to customers and simplify their portfolio. The industry pricing environment is intense and consistently competitive, with a focus on both rate plans and device promotions. The company has performed well in this environment in Q2 and Q3.

The company has experienced some of its best performance in history, with the lowest churn ever recorded for Q2 and Q3. They continue to lead in postpaid net additions and have a positive outlook on EBITDA. The competitive dynamic is stable and consistent, and the upcoming holiday season is expected to be intense. The company's fixed wireless churn has decreased, possibly due to the aging of the customer base. Net promoter scores have remained consistent and the product has been well-received in the industry. There may still be room for improvement in reducing churn.

The speaker discusses the increase in churn rate for new broadband customers and how it decreases as the business matures. They attribute this decrease to improvements in execution and tools for troubleshooting. They also mention their goal of being the best in churn for all of their businesses, including HSI. In response to a question, the speaker explains that their broadband business is successful due to their strong network and spectrum portfolio, and that they do not necessarily need to own the underlying asset, such as fiber, to have a defensible position in the market.

Mike Sievert, a representative from a wireless company, discusses the importance of brand trust in the wireless space and how it can be transferable to adjacent spaces. He mentions their focus on providing excellent service and putting customers first, and how this has helped them build a strong brand. He also talks about their fixed wireless access and how they are marketing to approximately 50 million homes. This number is dynamic and can change based on neighborhood penetration and future wireless consumption trends.

T-Mobile is monetizing excess capacity through their 5G broadband strategy by only approving applicants for their home broadband service in areas where there is no normal amount of share taking or wireless smartphone consumption. This means that they are only approving applicants in sectors of towers where there is excess capacity. Ulf Ewaldsson states that they have rapidly deployed 155 megahertz of Ultra Capacity and are on their way to 200 by the end of the year, with the potential to leverage even more spectrum in mid-band. This is before the deployment of C-band, 3.45, and Auction 108 proceeds, and ongoing refarming from LTE.

In the paragraph, Mike Sievert and Jon Freier discuss the acceleration in net adds for the company. They mention that this could be due to gaining share of decisions within the 50 million or from the reduction of churn. They also mention that net adds have been consistent, with the high 500s this quarter. They then address a question about how the upcoming iPhone launch and take rate will impact existing subscriber upgrades in the fourth quarter. Jon Freier explains that the iPhone 15 has been a popular device, driving switching in the marketplace. They also mention that they are focusing on offering upgrades to those who need it, rather than those who don't.

The speaker discusses the low upgrade rates for customers on their 5G network and how it is not affecting their overall business due to the strong network performance and low churn rates. They expect this trend to continue in the fourth quarter and anticipate industry-leading growth in equipment revenue. The advanced 5G network is providing a great experience for customers and reducing the need for upgrades.

Mike and Jon discuss how the trend of lower upgrade rates and churn in the telecom industry could benefit T-Mobile. They believe that T-Mobile is attracting switchers from both traditional telecom companies and cable companies as their value proposition continues to appeal to customers. Additionally, they mention that the recent headcount reductions at T-Mobile are part of a larger plan for transforming the business.

Mike Sievert, the CEO of T-Mobile, responds to a question about the company's competitive dynamic and transformation. He explains that T-Mobile is always looking for opportunities to attract new customers and create moments where people consider switching to their services. The recent offer of Phone Freedom has been successful in this regard. Sievert also notes that the company is competing well against cable companies and sees potential for continued growth and transformation in the future.

The company is just getting started and plans to continue growing and expanding its core EBITDA through investments in network and rural areas. The team is also focused on harnessing new technologies to increase efficiency and create a better customer experience. They are currently in the process of reimagining the business model to become more data-informed, AI-enabled, and digital first.

Kannan Venkateshwar asks Mike Sievert about the company's capital allocation strategy for the broadband business in the next few years. He mentions the possibility of needing more spectrum or upgrading to fiber, as well as the potential for expansion. Sievert responds by saying they are currently focused on wireless and exploring ways to extend its capacity in the future. They have not made any decisions yet, but are working on finding capital efficient techniques to support their business model. They are also aiming to achieve their high single-digit target in the mid-band spectrum.

The company is focused on expanding into the fiber market and sees it as a long-term opportunity. They plan to do this through partnerships and investments, while still maintaining their focus on wireless. They want to ensure that any efforts in the fiber space will bring a good return for shareholders. The company is currently in a phase of balancing growth and profitability, and is now shifting towards shareholder returns.

The speaker is asked to elaborate on the company's capital investment activities for the year and give an early outlook for 2024. They also address the increase in postpaid phone net adds in the third quarter and clarify that it was due to a specific event. The speaker then jokes about the CFO's spending habits and declines to give specific guidance for 2024.

Ulf will discuss the company's investments and shift towards customer-driven coverage. They have seen a lot of benefit from this approach and believe it will continue to drive capital investment in the network. They may be on the lower end of their 2024 projections. The company has a lean, efficient, and planful approach to deploying capital, which has resulted in real benefits. They have reached 300 million POPs and are ahead of schedule. Ulf is proud of the company's approach, which is different from other operators.

The company has a lean process for upgrading their network, which is aided by AI and data analysis. They have a lot of potential for growth with upcoming spectrum and are focused on staying ahead of competitors with capital efficiency. The team has already begun using AI to make decisions about capital deployment based on individual churn and satisfaction patterns.

During a recent conference call, T-Mobile executives discussed the company's capital efficiency, which has led to a strong portfolio and potential for achieving goals at the lower end of the capital range next year. They also congratulated Ulf Ewaldsson on reaching 300 million subscribers and addressed questions about the source of their phone growth and the potential impact of private networks in 2025. T-Mobile has been quietly serving customers with private networks, while some competitors have only made promises through press releases.

T-Mobile's Senior Vice President, Callie Field, explains that their customers, specifically in the health care industry, are benefiting from their real-time solutions that provide reliable and secure connectivity. They are also offering a new network slice and SIM-based solution to reduce complexity for IT administrators. These solutions are part of their hybrid 5G network, which is meeting the challenges that CIOs are facing. T-Mobile's solutions are well-timed as CIOs are interested in secure and cost-effective connectivity. This has led to an all-time record quarter for their enterprise division.

The speaker discusses the growth of postpaid phones, which has been more resilient than predicted. They mention various factors driving this growth, such as enterprises carrying two lines and postpaid growth at the expense of prepaid. They also mention low-calorie net adds at competitors and intense competition. The speaker is proud of T-Mobile's performance in this competitive market, with 850,000 postpaid phone net additions in the quarter and an all-time record Q3 churn. They thank everyone for their support and invite further questions. The call concludes.

This summary was generated with AI and may contain some inaccuracies.