Within the past couple of hours, T-Mobile finished its Un-carrier style earnings call. And unlike any other call I’ve listened in on, very little time was given to the scripted run down and slides of all the quarter’s financials. Instead, Legere&Co wanted it to be an open discussion between analysts, journalists and themselves, switching between answering questions on call and questions posed on Twitter.
Because of the varying themes in the questions asked, there was no one single thread or narrative to the call except to say: T-Mobile is doing really well.
As reported yesterday, here are the key highlights from Q3
- Fantastic quarter, biggest growth quarter, best quarter for postpaid branded adds net
- 1.4 million postpaid net adds, 1.2 million postpaid phones (record)
- 411,000 branded prepaid (record)
- 10 million net adds over the last 6 quarters
- Service revenue – 10.6%up year-on-year – $5.7 billion (record)
- ABPU – 4.2% up YoY – $61.59 per month (average monthly spend per user)
- Adding the right customers, high customer lifetime value. Not just low value customers joining.
- 250m PoPs LTE coverage, 260 million by the end of the year
- 280 million by mid-2015, 300 million by year end 2015
- 700MHz and 1900MHz LTE rolling out
- Wideband LTE rolling out to new markets – 19 markets currently (26 by year end)
Analysts questions, as you’d expect, mostly revolved around money and the usual metrics: ARPU/ABPU (average revenue per user) and EBITDA (earnings before taxes/expenses etc.).
One thing reiterated during the call was T-Mobile’s balance between offering great value plans, but also maintaining profitability. Although it made a loss, revenue for T-Mo is at its highest ever level of growth. And, although Sprint has recently announced a really low, generous plan, it doesn’t help anyone if the network behind it isn’t very good. And so, T-Mo isn’t going to go “Unlimited everything for $50” in response. It doesn’t need to. Sprint is going through a huge network restructuring and potential for customers to join, hate the service, and leave is really high.
T-Mobile has focussed on value, while also upgrading its network at ridiculous speed. What’s more, offering a free test drive to customers so that they can try out the network before signing up. There’s also the +$30 unlimited data tier on Simple Choice (launched earlier this year) that boosts T-Mo’s average revenue per user to its highest ever monthly spend of $61.59.
What I found particularly insightful was that T-Mobile – of the four major carriers – is the #4 spender in marketing. It spends much less than its rivals, and yet is #1 in growth. And that’s down to the public spreading the news, social media, and great experiences.
Porting ratios are still good too. For every customer porting their T-Mobile to one of other carriers, another 2.2-2.5 are coming the other way.
With all that taken in to account, and October’s unannounced performance, T-Mobile estimates that it will end Q4 with another 700k-1.1 million postpaid net adds. Which – although conservative – would still be a very good quarter.
iPhone 6/6 Plus Supply and Demand
We all know the iPhone 6 and 6 Plus launch didn’t exactly go smoothly. Demand was “unheralded” according to T-Mo. But, on the plus side, the supply and demand issues haven’t dampened the desire for the device by consumers at all. The company predicts that supply will remain constrained for the iPhone 6 in to November. But an end is definitely in sight.
With the iPhone 6 Plus, it’s a different story. Apple is having trouble getting enough of them on to shelves and to the carriers. It’s likely that supply won’t catch up with demand until the beginning of 2015.
As with any quarterly report, T-Mobile hinted vaguely at the next Uncarrier move(s). Some of what they mentioned on the call was perhaps hinting slightly at pulling Verizon and AT&T’s loyal enterprise/business customer base away from them. But that’s all. No specifics. And, although some sources are edging along the same lines, we’ve not heard any real specifics elsewhere either. But stay tuned, the picture could become clearer relatively soon.
If you want to listen in, or catch up, head on over to the T-Mobile investor site and catch the webcast there.