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T-Mobile bucks ‘slower growth’ trend, boasts Q4 churn

At this time last year, a lot of people were worried about slower growth for the wireless industry, something that seems to be a perpetual concern.

The industry did see lower year-over-year growth in the second half of 2022, but two of T-Mobile’s best quarters since the merger with Sprint came in the second half of the year, CEO Mike Sievert said during the company’s Q4 earnings call today. T-Mobile reported net income of $1.5 billion in the fourth quarter of 2022. Service revenues were $15.5 billion in Q4 and $61.3 billion for the full year 2022.

T-Mobile revealed last month that it added a record high 6.4 million postpaid net customer additions in 2022, including 927,000 postpaid phone net adds in the fourth quarter. AT&T reported 656,000 postpaid net phone adds in Q4 while Verizon posted 217,000 postpaid net phone adds for the same time period.

Today, T-Mobile also said its 5G network leadership is translating into overall network leadership, pointing to third party reports from Ookla, Opensignal and umlaut. “For the first time, T-Mobile takes the crown as the overall network leader in America,” the “un-carrier” said. “This opens big growth pathways for our future,” Sievert said. “The facts show T-Mobile is the new network leader.”

Postpaid Q4 phone churn was 0.92%, the lowest for a fourth quarter in the company’s history. T-Mobile said it was the only operator to improve year-over-year in postpaid phone churn. For the full year 2022, churn was 0.88%.

Investment analysts pointed out that Q4 and 2022 results would have been worse for all operators if they included losses from 3G network shutdowns, but Verizon in particular. With 3G network shutoffs included, T-Mobile’s Q4 phone net adds tallied 880,000 compared with AT&T’s 584,000 net adds and Verizon’s losses of 544,000, LightShed Partners analyst Walter Piecyk tweeted last week.

Cyber security plans Sievert briefly addressed the “recent cyber incident,” where an open API exposed data for about 37 million postpaid and prepaid customers.

After identifying a criminal attempt to access T-Mobile data through an API, “we shut it down within 24 hours,” he said. “More importantly, our systems and policies protected the most sensitive kinds of customer data from being accessed. We take this issue very seriously. While I’m disappointed that the criminal actor was able to obtain any customer information, we are confident that our aggressive cyber security plan, working with the support of some of the world’s experts will allow us to achieve our goal of becoming second to none in this area.”

Looking ahead to 2023

For 2023, T-Mobile expects postpaid net customer additions to be between 5 million and 5.5 million.

Analysts at New Street Research expect industry adds to slow to 6.4 million this year, with cable accelerating. “AT&T’s adds will have to slow more sharply, and Verizon’s will have to be firmly negative for T-Mobile to land at this level. It will be a strong result,” wrote NSR analyst Jonathan Chaplin.

T-Mobile also said merger synergies are expected to be between $7.2 billion and $7.5 billion, including $2.5 billion to $2.7 billion of SG&A expense reductions, $3.1 billion to $3.2 billion of cost of service expense reductions and about $1.6 billion in avoided network build costs.

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