T-Mobile pushes position for long-term 5G leadership

During T-Mobile’s investor day Thursday, CEO Mike Sievert and other senior leadership emphasized turning the operator’s head start on 5G into long-term wireless leadership.

They talked up plans for network prowess, expanding into market segments where they have share to gain, upped financial guidance and said they expect benefits from the Sprint merger on a faster timeline.

With Verizon’s investor day held Wednesday, T-Mobile was sure to point out that unlike competitors, it won’t need to borrow in order to deploy new C-band and other spectrum, with a network build that’s funded by synergies from its Sprint merger.

While saying it can achieve ubiquitous 5G coverage more quickly than rivals, T-Mobile also decreased the high-end of its capex guidance, now expecting to spend between $9 billion to $10 billion by 2023.

Sievert said the timing of the merger essentially gives it “two for the price of one” in terms of network spending because it already needs to touch nearly all of the sites anyways to realize the benefits of the Sprint integration.

C-band pricey to deploy

On the heels of the mega $81 billion C-band spectrum auction, T-Mobile’s executive team pointed to Verizon and AT&T’s respective double-digit billion price tags, and gave themselves credit for following what they previously said would be a disciplined approach.

“Now that the [C-band] results are out, what we knew all along should be plainly evident to all - that we are well positioned to maintain our 5G leadership for the duration of the 5G era, not just for a year or two,” Sievert said in prepared remarks.

RELATED: T-Mobile CEO on C-band: We’re interested, but ‘disciplined’

T-Mobile spent around $9.3 billion, not inclusive of clearing payments and costs, to acquire 40 MHz of C-band in top markets across the U.S. That compares to Verizon at over $45 billion, and AT&T around $23 billion, not including clearing costs or payments.

T-Mobile President of Technology Neville Ray pointed to propagation characteristics of C-band, which is in the key mid-band range but a higher frequency than T-Mobile’s 2.5 GHz, agreeing with some analysts that greater densification is needed and nationwide C-band deployment would be costly.

T-Mobile estimates ubiquitous coverage using C-band would take 1.5-times the number of sites than 2.5 GHz, and 2-times more sites than for PCS and AWS spectrum that is largely deployed today. It plans to focus its C-band deployments on urban and suburban areas where it already has the requisite site density.

“Bottom line, deploying C-band in non-urban areas is going to a very expensive proposition for our competitors,” Ray said.

RELATED: Verizon answers some of those big C-band questions

Ray estimated that T-Mobile’s cost per gigabyte could be half of that for Verizon and AT&T in five years if they densify their networks for nationwide coverage using C-band.

That said, Verizon at its investor day detailed plans for a $10 billion increase in incremental capital spending, which T-Mobile’s Sievert said to him that “basically indicates that they have no plans to densify their network to a material degree” and be satisfied with a network that isn’t dense enough for their holdings.

Now Verizon itself may not agree with that take. Verizon’s Adam Koeppe recently told Fierce that C-band fits ideally with PCS and AWS-type macro sites, and the carrier is targeting existing locations where it has PCS and AWS density.

Increasing to 80-100 MHz of 2.5 GHZ this year

T-Mobile anticipates its 5G network to largely be complete by the end of 2023.  

5G is going up on about 85,000 macro sites (more than the roughly 70,000 sites Ray cited for peer networks), augmented with around 50,000 small cell sites. About 1,000 sites are being upgraded every week, according to Ray.

Even with Verizon and AT&T’s large C-band spectrum winnings, Ray said it will be difficult for other carriers to catch up to the 5G coverage T-Mobile has today and future expansion plans.

Around 200 million people are expected to be covered with its 2.5 GHz and mmWave Ultra Capacity 5G by the end of the year, with 125 million POPs currently. Low-band 600 MHz extended range will reach more than 300 million people by the end of the year.

While the first 100-megahertz tranche of C-band is expected by December 2021 or earlier, the remaining won’t be ready for use until the end of 2023. Verizon and AT&T have access to spectrum set for earlier release, as well as the later timeline, while all of T-Mobile’s C-band is in the 2023 group.

So far T-Mobile has been deploying about 60-megahertz of its 2.5 GHz spectrum, seeing speeds around 300 Mbps. That amount will be upped to between 80 and 100-megahertz this year, with expected speeds of around 400 Mbps. 

As Wells Fargo analysts noted, it compares to 60-megahertz of C-band that Verizon could be able to deploy this year.

“TMUS has a clear window in the next 1-2 years, in our view, to really press the accelerator on subscriber acquisition,” wrote the Wells Fargo team led by Eric Luebchow.

T-Mobile also has more to play with, holding a total of about 160-megahertz of 2.5 GHz nationwide, that will be used after the Sprint network integration is complete.

The operator is also spending less on the buildout than originally expected, which Ray attributed in part to material savings on procurement and working with radio vendors to support higher bandwidths meaning a fewer number of radios.

Other T-Mobile investor day tidbits:

  • T-Mobile plans to expand into smaller markets and rural area, where it wants to increase its current low-teens market share to nearly 20% by 2025.
  • In-home broadband is part of the plan. It ended 2020 with 100,000 subscribers for its 4G LTE fixed wireless pilot, expects to grow to 7 million to 8 million over five years.
  • Also targeting enterprise market, aiming to grow enterprise market share to 20% in the next 5 years, up from less than 10% today. With 50 million corporate lines today, targeting 60 million in 2025.
  • For retail, T-Mobile plans to launch in approximately 1,000 Best Buy stores and 2,200 Walmart stores, and open about 500 Metro by T-Mobile branded and multi-carrier stores.
  • Will migrate at least 60% of Sprint customers onto T-Mobile’s network by the end of the year.
  • Opportunity for increased shareholder returns from 2023 through 2025, up to $60 billion in share buybacks.