T-Mobile undeterred by AT&T’s heightened 5G investment

Earlier this week, AT&T said it will invest in 5G beyond what it had stated earlier – it’s now boosting its 5G and fiber broadband capex to around $24 billion after the Discovery/WarnerMedia deal closes in 2022.

Instead of reaching a population of 100 million by the end of 2023 with C-band deployments, it’s planning to target 200 million by the end of 2023. Earlier this year, AT&T said it planned to spend $6 billion to $8 billion, mostly in 2022-2024, on C-band deployments.

T-Mobile executives were asked about AT&T’s newfound emphasis on 5G during Deutsche Telekom's Capital Markets Day on Thursday.  

“I think what we’ve seen from both Verizon and AT&T over the past two, three, four months, and certainly this last week with AT&T, is a journey towards both of our major scaled competitors realizing that T-Mobile’s strategy of being a pure-play mobile internet company is the right one. All content and entertainment of all kinds are leaving their prior linear forms and going digital,” said T-Mobile CEO Mike Sievert. “The internet itself is going mobile, and T-Mobile, years ago, established itself as a pure-play mobile internet company and sought the best assets,” which it won big-time with the acquisition of Sprint’s 2.5 GHz bounty.

“This is a viable, profitable industry that’s changing people’s lives in big ways,” Sievert added. “Both of our major competitors have decided to wake up and try to emulate our strategy. The problem is, they’re years behind, and we have the wherewithal to stay ahead for the duration of the 5G era.”

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Both Verizon and AT&T bought C-band spectrum in the record-setting $81 billion Auction 107. Verizon spent more than $45 billion, and AT&T about half that, on the spectrum. The first tranche of which won’t become available until the end of this year.  

T-Mobile President of Technology Neville Ray said the thing that caught his attention this week is AT&T said it will have 200 million people covered with C-band spectrum by the end of 2023. That compares to the 200 million people T-Mobile expects to cover with mid-band spectrum by the end of this year; it already covers 140 million.

“We have an incredible leadership position that they now have to try to close that gap,” Ray said. With AT&T and Verizon, “there’s a lot of catch-up they have to do to try to mirror and match what we can do this year inside 2021.”

T-Mobile executives talk a lot about how their spectrum position and aggressive 5G deployment schedule puts them in a position to rule the 5G era with the best network, a reputation that Verizon had with LTE. T-Mobile executives have said they recognize a lot of it has to do with perception, as well as the actual network prowess, and they’re bent on making sure the perception catches up to reality.

A question that occasionally comes up is whether AT&T and Verizon have an advantage in owning their own fiber in parts of the U.S. Once again, T-Mobile was asked about that.

Sievert also said the advantages of owning fixed assets are “a bit false.” T-Mobile relies on partnerships for its fiber across the country, and it’s been very clear on that for a number of years. “There’s plenty of supply,” Sievert said.

Ray said T-Mobile has an advantage in that it can invest in its wireless network rather than fiber.

“We’ve had fiber to our cell sites for many years, now we’re just scaling that delivery. We have actually decreasing price levels coming into our business while we scale the throughput and output on those links, so we’re very, very comfortable today with how we construct our delivery there,” he said.