The operator introduces the T-Mobile second quarter 2024 earnings call and hands it over to Kathy Au, Senior Vice President for Investor Relations. The call will include forward-looking statements and a comprehensive list of risk factors can be found in the SEC filings. Mike Sievert, President and CEO of T-Mobile, joins the call and highlights the strong quarterly results and recent news. The T-Mobile team has demonstrated strong execution and the company has surpassed 100 million customer connections.

T-Mobile experienced balanced growth in both smaller and larger markets, with a record low upgrade rate and strong network performance. They were recognized as having the fastest download speeds and most consistent network by independent third parties. Their fixed wireless offering was also successful, leading to a record share of industry broadband net ads. Additionally, T-Mobile announced a partnership with KKR to acquire Metronet, a fast-growing fiber provider that will expand their reach to 6.5 million homes by 2030.

In the third paragraph, the speaker discusses the Lumos JV and Metronet JV partnerships, emphasizing their potential for success due to T-Mobile's assets and capabilities. They then shift focus to the current business and financials, highlighting the company's ability to deliver profitable growth and record financial results. The speaker also mentions the upcoming Capital Markets Day and hands it over to Peter to discuss key financial highlights and the company's outlook. Lastly, they mention the recent acquisition of Mint Mobile and Ultra, expressing excitement for them to join the team.

The acquisition resulted in a one-time prepaid base adjustment and additional service revenue of $100 million. The company expects to add 5.4 to 5.7 million postpaid customers and maintain ARPA growth. Core adjusted EBITDA is expected to increase by 9% and ACP impact is estimated to be between $350 million to $450 million. Cash CapEx is expected to be between $8.7 billion and $9.1 billion for continued investment in network performance.

The company expects their longer-term revenue to be in the $9 billion to $10 billion range annually, but 2024 may be lower due to certain capital efficient network activities. They anticipate Q3 to be the lowest point of the year before accelerating in Q4. Adjusted free cash flow is expected to be between $16.6 billion and $17 billion, up 24% year-over-year. The company plans to continue extending their network leadership and scaling growth opportunities. They will share more about their multi-year plans at Capital Markets Day in the fall. The first question on the call was about the company's fiber strategy, which includes two big deals and partnerships.

The speaker discusses the recent deals made by the company, including the acquisition of Metronet and Lumos, and the potential for future deals. They highlight the company's focus on pure fiber, partnerships, and best-in-class assets. They also mention their limited appetite for further deals that fit their strategy.

The speaker discusses the company's recent transaction and their excitement about it. They also mention the performance of their pilot markets and their partnership with Metronet. They believe their brand and distribution can improve performance for their partners. The speaker also addresses a question about ACP and its impact on the company's financials. They mention the expectations for churn and the potential impact of the upcoming iPhone cycle on their business.

Peter Osvaldik discusses the impact of ACP on the company's financials, stating that the majority of the $350 million to $450 million impact will occur in the second half of the year, with Q4 being the biggest impact. Mike Sievert adds that the company's prepaid nets of 179,000 were the best in years, attributing it to their portfolio of brands that cater to value consumers. He also expresses excitement about the upcoming upgrade cycle, citing the growing interest in AI and the ambitious efforts of major companies in the space.

The speaker discusses the excitement and benefits of the upcoming phone launch, stating that their business model is not dependent on the cycle. They are prepared for any changes that may occur and are looking forward to seeing the impact of AI on consumers. The next question is about the strength of postpaid phone net ads in the quarter and the speaker mentions diversified impacts, but Jon Freier will provide more details on where the customers are coming from. The second question is about T-Mobile's multi-year return of capital goals and whether there have been any changes in timing or magnitude.

In the second quarter, the company had 777,000 postpaid phone net additions, the highest ever in its history. The business is performing well in smaller markets and rural areas, with the highest switching and a focus on gaining a fair share in the marketplace. There is also growth in the top 100 markets, thanks to the best-in-class 5G network and ultra-capacity capabilities. The company is also seeing good geographic responsiveness across all segments. Additionally, the company had the highest percentage of broadband nets in its history, which is adding to its success.

The paragraph discusses the strength of the company's performance across different areas and its consistent capital allocation strategy. The company prioritizes investing in its core business and driving differentiation, as well as seeking higher value opportunities to create long-term value for shareholders. The company has made significant acquisitions and shareholder returns, and plans to continue its capital allocation strategy until mid-2026.

The company has a strong capital allocation framework in place that allows them to generate significant shareholder value. They have a multi-month plan in place for their stock buybacks, but they had to temporarily pause due to the unexpected pace of the stock's rise. They anticipate being back in the market and meeting their goal of $8.7 billion in shareholder returns for the year. The company is proud of their business and the future looks promising for continued growth and cash flow. They are pleased to have both opportunities for growth and shareholder returns, and expect to continue generating strong cash flow for years to come.

Mike Sievert and Mike Katz from T-Mobile answer a question from Jim Schneider about the company's broadband and mobile wireless subscribers. They mention that T-Mobile has reached $5.6 million homes with their broadband product and that the majority of these customers also have mobile accounts with the company. They also discuss how the broadband product is performing well in the market and is giving them opportunities to sell wireless services as well.

Michael Katz and Mike Sievert discuss the success of T-Mobile US's FWA product, which has high satisfaction rates and is leading to growth in broadband customers and decreased churn. They attribute this success to the product being great and filling a need in markets with limited options. They also mention T-Mobile US's strategy of being the service revenue growth leader and maintaining their position as the value leader in the industry. Despite making some changes this year, they are committed to their strategy and have seen growth in per-customer revenues.

In response to a question about the company's fiber strategy, the speaker emphasizes that their actions are in line with their strategy of providing the best value to consumers. They acknowledge making changes along the way but attribute their success to their trusted relationship with customers. Another question is asked about the possibility of a large capital light transaction, to which the speaker does not provide a clear answer. The final question asks about sources of postpaid phone growth, specifically in the enterprise sector.

Mike Sievert reiterates that T-Mobile's appetite for further transactions in the industry is limited, but they are open-minded if the right opportunity arises. The company is focused on their capital allocation strategy and maintaining their pure play model. Callie Field then discusses the business and enterprise sector, highlighting their outpacing of competitors in phone nets and churn, positive port trends, and strong contribution to overall growth. The company also saw their best quarter ever in postpaid phone nets in the small and medium business segment.

The speaker is discussing the company's success in the enterprise market and how their superior network and advanced solutions are attracting new customers and expanding existing relationships. They also mention a specific example of a large oil and gas company choosing them for network solutions and adding on their secure products. The speaker emphasizes the profitability of this business and is pleased with the overall performance. The following question asks about the company's fiber strategy and whether it is part of a convergence strategy, to which the speaker responds that it is not, but they have learned from offering a bundle of wireless and fixed wireless access. The speaker is then asked about their thoughts on convergence and a potential for a converged offer.

Mike Sievert, in response to a question about the strategy behind their recent deals, explains that they are open-minded and will evaluate their options once the transactions are completed. He clarifies that their mobile business is strong on its own and these deals are not defensive measures. However, they do recognize the importance of convergence and offer bundles to customers who want both services. Sievert emphasizes that convergence is not necessary for success in the mobile market, but it is a growing trend that they are aware of.

The speaker discusses the possibility of expanding their business and mentions the importance of being cautious and working with high-quality teams. They also mention a recent acquisition and answer questions about the details of the deal. They also mention the difficulty in determining the cause of certain market trends.

The speaker discusses the truth behind a statement about a competitor's higher market share in areas where they also offer broadband, but notes that it is difficult to determine causation. They mention that churn (customer turnover) is lower when customers purchase bundled offers, which is part of the reason why they believe they can outperform purely financial investors. They then shift to discussing the Metronet Deal and its components, including acquiring residential customers and the need for no additional equity contributions.

The company does not require additional equity contributions and anticipates receiving dividends back from a joint venture in order to meet their business plan of reaching 6.5 million households by 2030. The majority of their fixed wireless broadband ads are coming from post-paid consumers, but there is still potential for growth in other segments. The product is performing well and is generating positive word of mouth, which could lead to further success in the future.

The operator introduces a question from Kannan Venkateshwar of Barclays about T-Mobile's fiber build plan. Kannan asks about the strategy behind the build plan and whether it will affect the fixed wireless business. Mike Sievert turns the question over to Mike Katz, who explains that fiber is complementary to fixed wireless and will allow T-Mobile to move demand from fixed wireless to fiber in areas where there is excess capacity. Kannan also asks Peter for clarification on the EBITDA guidance, and Peter is asked to break down the components.

The speaker discusses the complementary features of their fiber business and how it is not the primary reason for their investment. They believe their unique assets will drive enterprise value and give them an advantage in the fiber market. However, they also see potential for fixed wireless users to migrate to fiber, creating additional opportunities for their fixed wireless product. The company has a long list of interested customers for their fixed wireless product but can only serve them in areas with open capacity. The speaker also addresses a question about the EBITDA guide and explains that their core business is experiencing continued growth due to profitable share taking from customers.

The team at the company is focused on delivering outsized customer ads and translating that into financial performance. However, the wind down of a government program and the impact of ACP have affected EBITDA growth. The company has a strong bias towards pure play fiber assets, but is not completely averse to copper assets. The company is also seeing strong growth in the small and medium business sector.

T-Mobile CEO Mike Sievert discusses the company's success in growing its share in small and medium sized businesses, as well as its fixed wireless business. He also addresses the potential for expanding into the fiber market, stating that T-Mobile has the capability and know-how to outperform in this area. He also mentions the strong customer lifetime values as evidence of the company's great product. The CEO also responds to a question about the long-term trend of ARPA service revenue contribution.

The speaker discussed revenue development and mentioned that ARPA is a key measure of revenue per customer. They stated that their strategy is to continue increasing ARPA in order to drive long-term growth. They also mentioned that the industry as a whole has seen strong volume and net ads, and that their business plan is adaptable to respond to opportunities in the market. The speaker did not provide specific information about upgrade trends or industry switching activity for the second half of the year.

The speaker is asked about the potential for an increase in industry switching and its impact on EBITDA. The speaker responds by saying that it is difficult to predict industry trends, but the company is confident in its plans for the second half. The other speaker adds that the company is always prepared for potential opportunities for share taking and is excited about the upcoming holiday season and new iPhone introduction.

In response to a question about the mix of gross ads in FWA and the fallow-capacity model, the speaker explains that the company's approach is to look at every sector and smaller geographic elements to predict future capacity usage. They consider ongoing share taking, growth of mobile phone usage, and growth of broadband customers to determine when to approve applicants for broadband.

The speaker discusses the reasons for the high demand for their product and their sophisticated model for accepting customers. They also mention that the majority of new customers are coming from cable and that the quality of customers and profitability is improving.

Sebastiano Petti asks two housekeeping questions during the Q&A portion of the call. The first question is about the recent online promo for $55 for FWI and how it fits into the overall strategy. The second question is about Peter's statement on expecting normal seasonal postpaid phone churn trend in the second half of the year, and whether it should be viewed sequentially or relative to the prior year. Peter clarifies that it should be viewed sequentially, and Mike adds that the company is always trying new things and learning from them.

The speaker states that the company has moved away from constantly offering discounts to customers and has returned to a more standard pricing model. They thank the audience for their questions and express their commitment to being responsive. The call then concludes.

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