T-Mobile Capital Markets Day
I attended T-Mobile Capital Markets Day in San Francisco this week, getting an update on the carrier's business opportunities and financial projections. The executive team gave high-energy presentations with the core message that T-Mobile has delivered on its promises - on the merger with Sprint, 5G rollout, FWA, financials, and rural, school use. After years of T-Mobile bombastic press conferences and Uncarrier events (especially under prior CEO John Legere), current CEO Mike Sievert talked about how T-Mobile intends to disrupt itself now that it is no longer a challenger brand.
In addition to metrics on its performance in wireless, home broadband, and new fiber partnerships, T-Mobile had several pieces of news.
T-Priority
T-Mobile is going after AT&T FirstNet and Verizon Frontline with T-Priority, a 5G network slice for government and first responders. T-Priority creates a virtual network with priority access and preemption, fast speeds, plenty of capacity, and enhanced security against cyberthreats. Network slicing has long been a key promise of 5G, but providing it at scale requires a fully 5G Stand Alone network and, ideally, a lot of spectrum. Callie Field, President of T-Mobile’s Business Group, announced that the City of New York will be the anchor customer for T-Priority. This is both a high-profile customer win and a testament to T-Mobile’s strong network performance in the New York area – something that Techsponential can validate but was absolutely not the case a decade ago.
AI Initiatives
Two "special guests" joined Sievert on stage:
OpenAI's Sam Altman, to talk about a partnership with T-Mobile exploring how ChatGPT can be used for personalized 'next best action' for customer support. Nothing concrete has been announced yet, but the goal is to listen to customer issues and then provide solutions that are more personalized than just using AI to allow human customer service reps to pick from a problems/solutions tree.
Nvidia's Jensen Huang, talking about a new AI network testing center opening in Seattle with Nokia and Ericsson. There were a lot of buzzwords being thrown around including AI RAN, AI services, software-defined ASICs, AI at the Edge, and digital twins. AI RAN aims to provide "compute power at the edge computing secondary workloads" with "CUDA at very low latency," that "reutilizes overprovisioned network resources." In English, the idea is to use Nvidia AI silicon to improve network infrastructure using better algorithms that improve cellular network coverage. There may also be an opportunity to run AI workloads on these servers when they aren’t directing traffic.
Home Broadband – Wireless and Fiber
T-Mobile has seen great adoption of its fixed wireless home broadband service, and it is growing for business use as well. T-Mobile now expects to sign up even more customers than it initially promised – 12 million, up from 7 - 8 million – over the next three years. T-Mobile claims that its home broadband speeds have actually gone up even as more people are using it: the carrier has been able to upgrade its network faster than it fills it up. T-Mobile will boost efficiency further with a new home gateway/router in 2025 that has more advanced cellular networking and will support Wi-Fi 7 in the home. We need to follow up on this; current T-Mobile routers are built around MediaTek’s chipset.
T-Mobile Home Internet uses a "fallow capacity" business model (i.e., only offering home broadband on wireless where there's extra network bandwidth), and the company reports that there are 1,000,000 people on its waiting list in areas where the network can’t support additional broadband users without impacting mobile performance. In some cases, T-Mobile can address that opportunity by buying additional spectrum (the rationale for its UScellular deal) or freeing up more of its 4G spectrum assets for 5G, but the other potential solution is to use fiber. T-Mobile is partnering with several fiber-to-the-home firms to offer home broadband, using its customer and marketing data to add value without investing capital in buying and laying the fiber itself.
Device Q&A
There were some device-related questions during the Q&A session.
Walter Piecyk asked how device upgrade cycles are impacting customer acquisition. Mike Sievert responded that iPhone sales at T-Mobile in 2023 were above 2022, and that iPhone 16 preorders were higher than last year. He cautioned that, “this probably isn’t a ‘supercycle,’ whatever that means.”
I asked how T-Mobile is thinking about device subsidies in the current competitive environment. Sievert said that that AT&T got extremely aggressive with incentives three years ago, but things have settled down since then. T-Mobile has been consistently winning market share at its current subsidies and trade-in values, so he sees no reason to change. He also noted that the three-year device contracts offered by competitors make customers feel trapped; T-Mobile’s device contracts are a more customer-friendly two years.
Conclusions
I’m skeptical about some of the more aspirational announcements around AI, and it’s not clear whether the geographies where T-Mobile’s partners are rolling out fiber matches the areas where T-Mobile’s FWA (fixed wireless access) offering is over-subscribed. T-Mobile’s success in home broadband is coming at the expense of cable and other alternatives, not its wireless competitors — Verizon and AT&T are gaining share here as well. However, the core story around T-Mobile’s prospects is convincing: T-Mobile has an excellent spectrum position, strong brand, and history of execution in the post-merger era. It will need to lean on that execution to win in public safety and enterprise wireless where Verizon and AT&T have established positions, but whatever T-Mobile does get is pure upside.
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