T-Mobile believes that U.S. consumers are beginning to understand the difference between the company’s 5G network and that of its competitors and as proof T-Mobile EVP and CFO Peter Osvaldik pointed to the company’s own market share estimates. “In the top 100 markets we are typically in the 40% market share,” Osvaldik told investors at the MoffettNathanson investor conference today.
Osvaldik added that T-Mobile attributes the growth in market share to more customers having 5G-enabled phones (T-Mobile says 60% of its postpaid customers have 5G-enabled devices), which means they can fully experience the advantages of T-Mobile’s 5G network as compared to AT&T or Verizon’s 5G network.
But T-Mobile isn’t just seeing market share gains in the top 100 markets, Osvaldik said that in the 775 smaller markets and rural towns that T-Mobile has categorized as coverage areas, it has about 16.5% penetration. The company, during its 2021 Analyst Day, set a goal of increasing its coverage in these smaller markets from 13% share to 20% share by the end of 2025.
Osvaldik outlined the company’s process for increasing its market share in these smaller markets, noting that it relies on “customer-driven coverage,” which he said involves getting feedback from customers about where they need connectivity. “It’s beyond just the POPs [points of presence] and looking at where do they need connectivity,” he said. Then once T-Mobile has expanded its coverage in an area, the company brings in the distribution, whether that’s retail stores or retail partnerships.
T-Mobile also stated during that 2021 Analyst Day that it wanted to grow its penetration in enterprise and government arena to 20% by the end of 2025 and Osvaldik said that the company is seeing success in that area as well. He said that enterprise and government customers typically require a Request for Proposal (RFP), plus they also test the network before they purchase, which leads to a longer sales cycle.
He added that these enterprise customers are valuable because the relationship typically expands over time as companies add more postpaid devices or connected devices to their contract.
When asked about the company’s fixed wireless access (FWA) business, Osvaldik said that unlike the cable MVNO competitors, T-Mobile doesn’t plan to offer any converged bundles that tie together its mobile service with its FWA product. “We haven’t seen evidence in the U.S. that convergence is more than a discount,” he said, adding that the company’s goal is to monetize the excess capacity in the network and create high-margin customers.
However, he said that while the company has a goal to grow its existing 3.2 million FWA customers to around 7 million to 8 million FWA customers by the end of 2025, it is looking at various options that may allow it to grow beyond that 7 million or 8 million figure. “We are investigating usage of millimeter wave spectrum or using point-to-multipoint technology. We have a lot of spectrum we can use to benefit customers.”
800 MHz deal in flux
T-Mobile is uncertain about whether the Dish Network will proceed with its plans to purchase 800 MHz spectrum from the company for $3.5 billion. “Our potential 800 MHz spectrum transaction sits in Charlie’s court,” Osvaldik said, referring to Dish Chairman Charlie Ergen. In April Dish received an extension of 60 days to decide if it wants to go through with the transaction.
Ergen, meanwhile, indicated during Dish Network’s Q1 earnings call with investors in early May that while it’s challenging for the company to come up with the funds for the transaction, there are ways to make the deal happen. If Dish decides not to go through with the purchase, it will have to pay a penalty of $72 million to T-Mobile.