T-Mobile US, Inc. (NASDAQ:TMUS) New Street Research 5G Conference Call November 14, 2022 12:25 PM ET
Company Participants
Neville Ray – President, Technology
Conference Call Participants
Jonathan Chaplin – New Street Research
Jonathan Chaplin
Good afternoon, everybody and thanks for joining us. So Neville Ray began rolling out 2.5 gigahertz spectrum in New York and Philadelphia at the very beginning of COVID in May 2020. Just 2.5 years later, it covers more than 250 people. It got to that milestone sooner than the company anticipated. It’s now being enriched with 600 megahertz spectrum, which will reach 250 million people ahead of schedule. Having completed the first standalone 5G call in 2020, more recently, this summer, Neville made T-Mobile the first carrier to launch VoNR across several markets.
He has just finished decommissioning 35,000 towers running the Sprint CDMA and LTE networks, having migrated 30 million customers over in just 820 days, not much longer that it took to migrate about 10 million MetroPCS customers to the T-Mobile network after the merger. And it was all done also ahead of schedule. And by the way, I am running through these accolades, so that Neville doesn’t have to. But it really is a fairly phenomenal track record. By moving this fast on the integration, Neville has helped unlock $3.5 billion or $5 billion in synergies that come from the deal which has accelerated the free cash flow growth of the company. After having taken on what we – what they think of as red and blue, Neville’s 2.5 gigahertz spectrum is now enabling T-Mobile to get into the broadband industry, taking on cable with fixed wireless broadband.
As I think about sort of the list of accomplishments, I think this is undoubtedly the most seamless network integration we have seen of the scale anywhere on the planet and as long as I have been covering the industry, which is almost forever. Neville with the wealth of successful network integration largely complete, what are you going to do with the rest of your career?
Question-and-Answer Session
A – Neville Ray
Well, thank you, Jonathan. With all those accolades, we should finish the call now maybe. Let me – greatly appreciate it. Can I just read the disclaimer, because they tell me I have to do this every time, Jonathan?
So before we jump in, just want to note today that we may make some forward-looking statements that involve risks and uncertainties and I encourage you to review the risk factors set forth in our SEC filings. In addition, we may discuss non-GAAP financial metrics. Reconciliations of these non-GAAP metrics to our GAAP financial metrics are on our Investor Relations website. Done. I have got out this stuff.
So let’s come back to the fun stuff. Yes. I’ve been doing this a long time, Jonathan. So I am not sure it’s the halfway point in my career. I think I’d be this U.S. rollout of different technologies over the years. I think I started in 1995. And it’s been a tremendous ride. But the last 2.5 years, I have never counted the days, you said, 820 days. Maybe I should have counted them, but it is literally 2.5 years since we closed the transaction with Sprint. And as a company, and for me and my team, we are delighted with the progress that we have made. We are ahead of our schedule and plan on many dimensions. And we are proud to be driving the industry forward with competition and 5G services and adoption, new capabilities like fixed wireless access that are all coming because of the combination of Sprint and T-Mobile together. And the opportunity that we were presented with to rapidly rollout a 5G network at real pace. And that progress over the last 2.5 years has been just tremendous.
In 2022, we hit our highest production rates of site modernization, adding 5G goodness in both the low band that we call extended range and in the mid-band that we call Ultra Capacity. And I know we will talk through the call in more detail about where all those milestones are. But the 5G build was the first piece, migration of that Sprint customer base that you referenced was the secondary piece and of course, the decommissioning of Sprint sites and unnecessary duplicate assets, that work is effectively complete and almost a year ahead of the schedule that we put together. When we plan this whole thing, literally what, 4.5, 5 years ago, so delighted with the execution. It’s bringing a lot of goodness and opportunity to the company. And we look forward. We are not done. So we still have material work to do as we continue to advance our 5G network and the service and customer experiences that will come with that. But proud of the team and delighted with the progress we have made. And I appreciate the accolades.
Jonathan Chaplin
Neville, I know investors are delighted with the execution as well. At this event last year, we spoke about the fact that you had built what we thought was an insurmountable need over Verizon and AT&T on 5G, both in terms of speed and coverage. But you had some work to do to catch up on 4G coverage. I think since then, you have maintained the lead on 5G, maybe even on some measures, extended it. Where are you in closing the gap on 4G coverage?
Neville Ray
Yes. So I mean, I think, if you look at our coverage story, Jonathan, we have made tremendous progress over the last 2.5 years. And I only think about building a 5G network today. I mean, we obviously still have small areas of the network which are LTE only. But the vast majority of our network has been upgraded to a 5G story. And that progress has been remarkable and very strong and it’s included over the 2.5 years where we’ve been adding that 5G radio. We have also been adding material coverage to the network. A core part of the combination with Sprint was to not just decommission sites, but to integrate well over 10,000 sites into the target network, bringing both coverage benefits that were not resident or provided to the T-Mobile base and also for the Sprint customers coming on board to bring them the breadth and depth of the T-Mobile network, which was obviously materially larger than the Sprint one. So we have been adding coverage for both sets of customers as we have been working through this 2.5-year period and that includes work we’ve been doing on the macro network, work we’ve been doing on in building. So we have been building coverage and continuing to close any remaining gap that may exist with Verizon. And there is probably – to your question, there is probably more of a gap with AT&T than there is to Verizon these days. Verizon has opened up a larger rural footprint with FirstNet build. And we are actually leveraging much of that with new roaming that we have in place with AT&T.
So as we go forward, though and our 5G build in terms of modernization, it starts to slow. We have reached peak rates in 2022. We continue in ‘23 and ‘24. But our focus starts to really shift to what we call customer-driven coverage. And by that making sure that we are investing where it really matters, where there is differentiated need for new coverage or additional coverage from T-Mobile. So that maybe some of the in-building locations that we need to hit that maybe some of the destination locations that we haven’t got to yet. But to be honest, Jonathan, those areas are becoming more and more few in terms of lack of T-Mobile coverage and service.
And I think of the network almost it’s like three rings. I mean, that inner ring, the big one is obviously our Magenta-branded 5G network. Outside of that, we have some roaming, a smaller three-ring, some of that from AT&T, as I referenced some of that from other partners. And then outside of that, so we can actually attack connectivity across the U.S. We have just recently announced our opportunity with SpaceX. Now that service will be text and messaging based in the early running, but the agenda and the attack from the company on coverage is to provide ubiquitous connectivity, it may not be the same service levels, of course. Hopefully, we can address that over a multiyear, but to provide base connectivity wherever you go in the U.S. marketplace. And so we are very, very focused on driving that coverage experience and making sure that our customers can always connect in our core and major market areas that mid-band 2.5 gigahertz footprint now reaches 250 million and the low-band 5G footprint of T-Mobile reaches 321 million. We’ve just updated that number, 1.9 million square miles in the U.S., and that’s a large multiple on Verizon’s coverage, for example, today and more 5G coverage than Verizon and AT&T combined. So we are working all of the dimensions of customer experience, deep 5G, as well as making sure that we can provide connectivity in some of those more vastly populated destination or remote locations.
Jonathan Chaplin
Right. So, if I had to boil it down to one thing, Neville, you guys advertise the America’s fastest 5G network, and biggest 5G network. Verizon still is able to advertise America’s most reliable network. When do you take that away from them? Is that sort of this year or next year event or does it take you a little bit longer to rub them with the sort of the last marketing message that they have got?
Neville Ray
Yes. Well, I mean, I love the fact you repeat back our claims, Jonathan. So America’s largest, fastest, most reliable and now most awarded, that’s a bit agreed just, isn’t it? But most awarded 5G network is where we are. And so we have made sure that across those 5G accolades, the benchmarking is showing what we know to be true that 5G has a leading network proposition. And what’s happening is that’s now pulling through and we are seeing in multiple benchmarking activities and results that we are winning on overall network leadership, including the elements of reliability in many places. And so that mark is on 5G and the performance of the 5G network is lifting that overall benchmarking and experience. At the same time, while we drive that coverage. So in terms of overall reliability, I think you’ve got to be careful which benchmarking source you go to, but we win across all of the majors. And it’s really just a small matter of time before we will win across all of the overall network accolades and benchmarking work that’s ongoing in the market. So very confident on the progress we are making. I’m not going to say it’s going to happen tomorrow, Jonathan. We know we have work to do, but we are very mobilized and very engaged on making sure that connectivity experience is second to none.
Jonathan Chaplin
Got it. And Neville, a lot of the excitement recently has been around what you are doing in fixed wireless broadband. If I go back to the early days in 2018 and then in the merger documents you sized the number of customers that you could support on your mobile network without investing a whole lot of incremental CapEx initially at $10 million and then at $13.6 million. I think two things have happened since then. One is that you have doubled the amount of data you assume fixed wireless broadband customers consume, and you’ve also acquired more spectrum. When you put those two things together, where does it leave you in the context of that sort of 10 million, 12 million, 13 million subs that you thought you could support in the early days?
Neville Ray
Yes. I mean, obviously, we are super excited about this fixed wireless opportunity, Jonathan. And just maybe a couple of more generic words on that front before we dive into some of the network capacity story. But I mean, for us, we always believe that with the size and scale of this 5G network that we could start to compete in, what, historically, let’s be honest, has been a pretty non-competitive space, right? There is a lot of cable monopoly situations out there. And as we have moved into the space and we’ve really only been at it for a year, you could maybe argue 18 months, but we’ve seen tremendous growth. 2 million plus customers now in that fixed wireless space. A level of satisfaction that’s coming back on Network Promoter Score ranking and rating, which is much higher than cable. And really, as we are starting to now on carrier, the cable and home broadband space, we are seeing just tremendous excitement. And there is a lot of latent demand for the product that we are bringing to the marketplace.
So from a capacity perspective, we have always been very careful and diligent to make sure that we grow this network for fixed wireless in the right places. And so as you say, I mean, we have had growth, we have seen good increases in usage from fixed wireless customers. But at the same time, Jonathan, we have been adding more mid-band footprint, and we’re also adding more spectrum to that mid-band footprint. So if you think about our mid-band network today, our Ultra Capacity network, we have about 110 megahertz of mid-band spectrum committed to 5G, which we are leveraging, obviously, for consumer 5G as well as fixed wireless. And we continue, as we move through the balance of this year and into the new year we will continue to add 5G capability and new 5G spectrum to that network.
So, that’s super exciting. The growth path that sits ahead of us and that will open up that will open up more opportunity for fixed wireless access growth. Now we said that we could support 7 million to 8 million customers. And so that’s a 2025 number. And without going into all the detail, that’s obviously not the total capacity that we can offer. That’s a result of, I suppose, the fiber or cable analogy would be homes passed results in the 7 million to 8 million customers that we support and sell. And we’re confident in our ability to meet that objective and go. And we continue to add capability to the network. 5G is in the early running.
I did want to mention just one thing, so a little news break for you. I thought I’d drop in an exclusive today for New Street now, Jonathan. So today, we’re announcing, not announced yet, but it will follow on after this call, that we are now providing standalone. So, pure 5G network capability in the mid-band space and so that’s on data. We can come back to VoNR maybe later. But why is that important in this discussion? Because obviously, the more that we can have this traffic living on a pure 5G lane with all of the spectral efficiency and capability that we can bring, the more that we can continue to grow and drive the experience to be much improved. Be that from a capacity, speed perspective, 5G SA in mid-band is going to have material differences in terms of latency. I mean, this is the most advanced network now in the U.S. in 5G terms. So we continue – I reference that because we continue to push on all dimensions of 5G growth, so that we can continue to feed great experiences to our traditional customers, as well as grow and support our ever-increasing 5G fixed wireless access base.
So an exciting time. I’m delighted with the progress. I just referenced one point, and I know you know this metric and statement backwards, Jonathan. You’ve tracked us very, very closely over the years. But we always talked about how if you look to the combination of T-Mobile and Sprint and the capacity that, that could be generated, that we could generate as contrasted to a standalone T-Mobile by 2025, that multiple was 14x, 14. And that’s hard to get your head around. I mean, it’s greater than an order of magnitude. It’s not 2x, 3x, it’s 14x, and we’re about halfway – almost halfway through that journey of capacity generation. And that is what is clearly opening up this fixed wireless opportunity. So more to come, but a really great start, and we’re learning and understanding the business and customer behaving much better every day, every week. And I’m confident in our ability to achieve the 7 million to 8 million that we’ve talked about to date in terms of new customers.
Jonathan Chaplin
So Neville, that’s really exciting news in terms of getting NR on mid-band spectrum. So I think, remind me how the different pieces work. So you’ve got NR on 2.5 gigahertz already. This brings it into your PCS, AWS portfolio. And then do you have NR on 600 yet? Or is that the next piece to come?
Neville Ray
We do. So we’ve been supporting 600 megahertz on standalone for some time, Jonathan. And now this 2.5 layer can operate in a pure 5G lane. That’s what happens with this mid-band SA story. And we couple those two things together, too, right, to really extend and differentiate our coverage and performance, extending the reach of 2.5 using that 600 megahertz layer. We’ve been doing that for some time. And there is a lot of complexity in the branding. But the next piece you mentioned, PCS, we’re already adding PCS in 5G to our sites. So that is an increasing activity. And as we move through the balance of this year and into next, we will be nationwide or pretty darn close. Certainly, in the new year, we will be pretty damn close on. We will reach nationwide capability on PCS spectrum.
And so this ability to move all of those spectrum bands and opportunities to a stand-alone lane, it really materially improves the performance of the 5G experience, especially on latency. And so, we’ve always talked about this layer cake and where we are. We continue to add multiple layers within the mid-band space, and bringing those home to an SA stand-alone architecture provides all of those performance benefits that we were just talking about.
Jonathan Chaplin
And Neville, where do we stand in getting voice-over-NR to work? Is it have you sort of worked through all the initial kinks and you’re in a position to take it nationwide at this point?
Neville Ray
We’re getting very, very close. And so where are we now? Middle of November, already? Where did the year go? I should be counting those days as you mentioned earlier on, Jonathan. But no, as you referenced in your opening comments, we’ve already launched VoNR with high quality, I might add. So there is no trade-offs between a VoLTE and a VoNR experience. That has to be our benchmark and goal. And we look to expand that as we – to go nationwide with that service in the early part of ‘23. And so they are not just will data live in a pure 5G lane, but so will voice. And so as your mobile phone never has to move between the respective layers. It can stay on the 5G experience. And we’re making – we’ve made real progress with the VoNR story. It’s not easy. We always seem to forget to bring voice along. We forgot and clearly forgot in the 4G world. VoLTE took a long time. And 5G, we kind of forgot, too. But now we’re playing catch up. And as a company, we think about having really just a 5G network. That’s not saying we’re – obviously, we’ve been retiring some legacy capability. We’re certainly a long way from retiring LTE. But when it comes down to thinking about the customer experience, we want the majority of that to be on 5G. And that means we can refarm our spectrum assets to a way more efficient 5G capability. And if we look at just spectral efficiency, Jonathan, so megahertz to megahertz in mid-band, the 5G story is 2.5x to 3x more spectrally efficient. So that’s as good, if not better, than we really planned when we were putting this plan together back in ‘19, ‘18, ‘19. And so that’s great to see. And it forces us to think much harder about migrating our customers off of LTE services.
And of course, the handset penetration now, 5G handset is well north of 50%. That’s really helping us, too. So you look at that next 2 to 3 years, today, we have, as I said, 110 megahertz of mid-band committed on 5G. That number grows almost on a monthly basis. But that’s off of a, what, 300 megahertz-plus mid-band portfolio. So there is a lot of goodness to come for expanded 5G services and fixed wireless. And many of the capabilities now as we look to leverage fully, the asset base that we have, the cell sites that we have, that density we have in a 5G world.
Jonathan Chaplin
Neville, I think one of the things that Mike said is that there is a limit to the amount of fixed wireless broadband customers you could support on the network. But that’s only really a function of CapEx. You could spend money and get more capacity. So I guess my two questions on that are, what would you be spending the money on? Is this densification using macro sites? Is it bringing your millimeter wave portfolio into the mix? Is it buying different spectrum entirely? And related to that, is that good CapEx to spend? Would you get a good return on that CapEx in the fixed wireless broadband market, just given how much – how high consumption is and where ARPUs are in that business?
Neville Ray
Well, we would certainly make sure, Jonathan, that it was good CapEx. I think that’s clearly a hurdle rate that we would have to surpass and beat and achieve. And yes, I mean, I think what we’re finding with 5G is that there are – there is an opportunity now. Obviously, what we’re doing today is we’re leveraging that fallow spectrum that we have in the network. So we forecast out, we look at customer demand on traditional wireless on a go-forward basis, and we look at how much capacity we’re generating with this 5G rollout. We net those two, and that’s the free board effectively that we can commit on a sector-by-sector basis to fix wireless access.
I think as we go forward here, we will continue to find ways to expand that capacity and capability as we recently talked about. The other opportunity is can we bring new spectrum assets like millimeter wave to play in this environment and do something truly incremental over and above the 7 million to 8 million that we talked about? Now I’ll tell you, I don’t have an answer for you yet, Jonathan. We’re working very hard on this. What I’ve presented to the team and our vendor community is, that here we are with this incredible 5G mutability based network. What can we do to create an overlay in, for example, millimeter wave that is more point-to-multipoint specific. And so it doesn’t have a lot of the mobility overhead many of the features that we have to bring in, be that in the core or the radio.
And so that opens up it’s trying to bend the laws a little bit, bend the laws of physics a touch, extend the reach and capability of millimeter wave and move past some of the propagation constraints that we’ve talked about for so long. And for me, that’s not about massive densification, Jonathan. It’s about – and it’s not about using street architecture, like one of our competitors has used over the years. It’s more about a macro overlay in places where that makes sense, whether it’s good homes to penetrate. We have tremendous deals with tower companies that afford us the capabilities at low cost to deploy millimeter wave on many sites now. And so can we build an overlay that opens up new fixed wireless opportunity with economics and incremental capital costs that foot the bill that makes sense. And so we’re working very hard on that. Does that take you down a path of today? Obviously, our customer installation process is incredibly simple. I mean, it’s around it, you take home, but so will voice. And so as your mobile phone portfolio into the mix? Is it you plug it in, it will help and coach you as to where you should place it for best radio reception.
Maybe with millimeter wave, we have to look at maybe an external antenna or external product to enhance the capacity and coverage capability of millimeter wave. But we’re open to all those things, and they were all good if the economics work. And back to where I started on fixed wireless. I think what we’ve seen is that there is a lot of demand in a pretty non-competitive marketplace today. And it’s not necessarily that you have to match a fiber story in much of that footprint, Jonathan. There are many parts of the U.S. where there is very expensive and/or core cable service and/or worse. I mean, there is very poor performing DSL or a lack of even a fixed alternative, folks around satellite, whatever it might be.
And so we’re scratching and working away everywhere we can to figure out where are the right growth opportunities that make sense for the company on fixed wireless. And the exciting piece is, we will continue to do that. And I’m hopeful that we will find another kind of layer or opportunity of growth.
Jonathan Chaplin
And Neville, it’s not just fixed wireless. You’re also exploring opportunities in fiber. I know you have a small initiative with pilot fiber here in New York. There was a story last week about potentially looking for partners to do a new build in certain markets. Is that as an alternative to fixed wireless broadband in certain kinds of markets? Are you sort of – is this just an experiment at this point? Or could fiber be a bigger part of fiber to – in the consumer market, fiber-to-the-home, be a bigger part of the T-Mobile strategy over time?
Neville Ray
I’d say this, Jonathan, we’re open-minded as we should be. We’re in the space now. We’re seeing competitive response and behavior, which is exciting regarding the T-Mobile brand. I mean, we have visibility and awareness and customer relationships across a vast majority of the U.S. population now. So to your question, obviously, we have been exploring. We’ve been doing some work. It’s small scale. We haven’t announced any results yet. And I’m not going to announce them today. But we’re testing our capabilities. I’m not going to comment on the recent Bloomberg story. But obviously, we’re open-minded to that opportunity. And as a company, I think we have the right to look at all of these options and capabilities that we could bring to the marketplace. And nothing to – certainly, I’m not announcing anything here today, Jonathan, but we will see what comes. And I think it’s important as a company with the scale and capabilities we have and the brand experience that we deliver and the customer experience that we explore, and we stay open-minded on these options and alternatives that could come over time.
Jonathan Chaplin
Neville, some of your peers have been very focused on the opportunity within 5G being in the enterprise market, maybe because you’re capturing all of the growth in the consumer market. The enterprise opportunity is part of your plan, but it’s actually quite a small part. Are you less focused on it because you’re less optimistic about the total market opportunity for carriers in enterprise? Or is it maybe just a market that T-Mobile isn’t as well positioned to go after?
Neville Ray
I think we’re very well positioned, Jonathan. I think we make less noise with press releases, and we do some of the doing. And it’s fascinating. I mean, I’m really excited about the great start and improvements that we’re making in the business and enterprise space. And we should be. I mean, with the size and scale of the 5G network that we’ve deployed. The great piece is that we’re starting to turn heads. And there is footprint, Jonathan. There is very little wireless activity now ongoing that doesn’t bring T-Mobile to the table.
And so we have had strong success. Yes, in an underpenetrated segment an area of the marketplace for us. But that’s the great growth opportunity. And customers are coming to us because they want to have the best service for their employees or they are looking for services and capabilities that excite them in the 5G space. And if you think about that standalone announcement that I just referenced, now we are in a position – not saying we are doing this today, but many customers in the business and enterprise space are coming to T-Mobile and saying, can you offer me enhanced SLAs, can you offer me a dimension service, maybe a slice of network capability, that will ensure that productivity for my workforce, the services and applications that we run, that’s going to be enhanced and be better and more committed rate and so on. And so you need an SA network. You need this pure 5G lane to bring all of those capabilities to life. And that’s one of the big reasons why we have been so focused in the space. We have had an SA core running for almost several years now. Our competition is still very, very slow to move into that space. They make a lot of noise about MAC and Edge and these other things. But at the heart of it, you need a 5G network that can start to deliver on all of the 5G promises that we made may be too early and too long ago. And in the enterprise space, super excited about what we can bring. We are not slicing yet. But you can’t slice on a non-standalone network. You can’t bring many of the dimensions of enhanced 5G service that businesses and enterprises are looking for, be that latency floor, maybe that’s a throughput capability. All of those things we can start to mobilize around now that our network is in the position it’s in. Both with coverage and capacity and architecture, you need all of those pieces to come together to start to provision and provide that level of business and enterprise capability that companies are looking for. And that will overlap into the consumer space, too, wearables, for example. I wear wearables, are going to be most effective on our network slices because of the latency requirements that come there. And so we see ourselves as pushing constantly working with the team and our vendors to advance the 5G story so that we can finally start delivering some of these great 5G experiences that, as an industry, we have talked about for a long time. But we yet – we have come up empty handed. And so that’s a big part of the future that we see for T-Mobile. And that early mover advantage in that space, we think will bring disproportionate gains in the enterprise space.
Jonathan Chaplin
So, Verizon claims that in MAC and Edge, they have got a big advantage because they were made an early push into the space with some material investments. And on slicing DISH claims that they have got an advantage because they have got an open cloud native network that allows them to do it more easily. Are these advantages real level, if so, what would it take for you to catch up?
Neville Ray
Well, I don’t think it’s a catch-up, Jonathan. I think we are out in front because if we have a network that can deliver those capabilities, as I have said, across meaningful coverage with the meaningful experience. I think the DISH team is ruling away hard to get a network built. Yes, it’s coming with a greenfield architecture. But many of the capabilities that I have talked about in those domains. We can – we are doing the same thing. We will actually do them long ahead of DISH’s capabilities to do them. I think with Verizon and MAC, I think there has been a lot of news reports and releases. But when you look at what’s actually being delivered, I don’t see us as being behind at all. As a wireless operator, obviously, we are working with all of the cloud providers, too. But the thing that I know will drive most accretive business for us is having your core 5G product deliver on the 5G capabilities. That’s so important. So, not to repeat the prior answer, Jonathan, but I see us as having a good, strong lead on that front. And that’s going to excite more businesses. And as we move into ‘23, we look forward to bringing some of those services to life. We talk about advanced network services, for example, as a branding that we are bringing to market, whereby we can deliver some of these 5G capabilities that, quite frankly, others cannot.
Jonathan Chaplin
Got it. And it really comes down to being first with a 5G as a core. You can…
Neville Ray
And radio that lives on that call, right. And so it’s all about keeping the customer on a 5G lane and not having – I mean that’s where we have been for 2 years to 3 years is we have had customers straddling between this LTE, 4G and 5G experience. And of course, 5G was all built around a 5G core and a 5G radio and putting those two things together. And that comes to life in a standalone. It’s a funny term, right. But it’s, it basically means we are not dropping down to a 4G world for the 5G experience.
Jonathan Chaplin
Right. That makes a lot of sense. Neville, the industry picked up an incredible amount of spectrum over the course of the last 18 months. You have still got a phenomenal spectrum lead over everybody else in the industry. How long does it take your – principally your competitors to burn through the 3 gigahertz spectrum that’s just been acquired to get us to a point where the spectrum that you have over and above this really becomes a real competitive – a visible competitive advantage for you?
Neville Ray
Yes. I mean I don’t want to project when they will burn through their assets, Jonathan. I think you should. Maybe you could go me into that response. But I think to your question, obviously, we have a robust spectrum position through the acquisition and then we have been carefully and diligently adding to that portfolio as and where it makes sense. But of course, our competition has too. I mean if you look at the recent auctions, then by far and away the biggest winners from those auctions that our competition has participated in, I should say, anyway, not because they stood down from some their choice. But Verizon and AT&T have walked away with the lion’s share of C-band or DoD 345, 355 assets. And so they have built material positions themselves in mid-band. It was tough for them to not do that with the assets that obviously we secured from the Sprint and T-Mobile combination. But in terms of where we are as an industry, I mean everybody has now got mid-band. That wasn’t the case if we went back and we were on a call 2 years ago, for example, or you could argue even 18 months ago. So, where are they in their 5G, we know where they are in the 5G rollouts. They are playing catch-up. It’s a tough catch-up. We have leveraged the last 2.5 years to really move ahead and not just have spectrum, but to deploy spectrum at a very, very rapid rate, which has always been the T-Mobile model. We have never warehouse spectrum in my entire career at the company. We never will. So, we continue to deploy and we believe we have a 5G advantage, both in terms of footprint and capacity because of the work and efforts that we are making, our ability to commit more spectrum to that 5G lane back to the earlier discussion instead of having it live in LTE. We are doing all the right things to drive forward a leadership position that we believe will survive and move forward for many years. In terms of what Verizon and AT&T do, we will see. But they have material mid-band assets to bring to the market now. And as to when those will exhaust, Jonathan, I think it comes down to many factors. While services they look to support 2 years from now, where we have a wearables 5G products out in the marketplace that’s driving new form factor of 5G consumption. How does that factor into everybody’s growth story, who plays, who wins, I would like to think we can win because of all the things we have talked about on the call. But this 5G story, I don’t know, people ask me where are we in the 5G story. And I still think football analogy, right. We are in the first quarter. And it is still the early days. And so how everybody looks to deploy their assets and their business plans, obviously, yet to be seen. But everybody has mid-band and everybody is deploying now, everybody that us, AT&T and Verizon, and of course, DISH is now moving too. So, there is a good, strong competitive environment out there, which we always said would happen with the combination of T-Mobile and Sprint.
Jonathan Chaplin
Neville, you have announced a partnership recently with SpaceX to bring space-based, satellite-based communications to your customers in existing phones. I think you said you are going to make it free to Magenta MAX customers at the outset. Is it just text to begin with? And if so, is there a path to get to for voice and data to be able to sort of offer ubiquitous coverage via satellite anywhere that your network doesn’t extend?
Neville Ray
Well, that’s certainly the ambition, Jonathan, right. I mean we have said that in the early running, this will be a text and messaging-based service. So, we are still in early innings, right. I mean we are doing – we are very excited about the opportunity here. We scale LEO provider today, and that was a big part of the rationale behind our partnership and our announcement and the work that we are doing together. And I think the other thing that’s exciting is we are looking to leverage reach [ph] of our spectrum. And the reason, the rationale why, Jonathan, is that as these services live, that service can be made available to the vast majority of our T-Mobile customers. If you think about some of the other solutions, we could talk about Apple, for example, not that we are competing. I think that’s complementary. But Apple is moving forward with the service. But some new fronts, right. It doesn’t work on the whole base of iPhones because it’s a new spectrum band that’s being leveraged in the phone. So, we thought long and hard about how to maximize the opportunity for customers. That was our decision path. So, it behooves us not to just sit and live with the text-based service, mostly text messaging. And we are our exploring and we are in dialogue around how do we move services over time, but nothing to announce on that front yet. But excited about the opportunity. And I think it’s a great complement to the ever-growing T-Mobile footprint in 5G.
Jonathan Chaplin
Neville, this has been a great conversation. I really appreciate you joining us today. Thank you very much.
Neville Ray
Thank you, Jonathan. Great to talk.
Jonathan Chaplin
Cheers.
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