T-Mobile US Inc at JPMorgan Global Technology, Media and Communications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Awesome. Peter, last fall, T-Mobile outlined an aggressive multi-year business plan to transform T-Mobile from challenger to champion in the wireless ecosystem, underpinned by continued postpaid share gains. Can you take a step back and help us think about T-Mobile's relative position in the industry, confidence in the growth levers from here, and where you see the greatest opportunities in the medium term?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Great. Yes, we'll touch on a lot of those topics here. But starting, as you touched on, with the postpaid ecosystem and subscriber growth, a lot of focus coming out of the first quarter on churn and gross ad activity. But T-Mobile posted record 1Q gross ads in the quarter. How would you describe the second-quarter competitive environment in switcher pool quarter to date? And any update on what you're -- how you're thinking about the 2025 postpaid subscriber expectations relative to what you outlined a couple weeks ago?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : That's very helpful. And as we look at the year-over-year pickup in churn, though, in the first quarter, have you been able to disaggregate maybe the impact from what was idiosyncratic in terms of the price up relative to maybe industry dynamics? Any way to break out or discern?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Okay, and then as we look at the prepaid to postpaid migrations in the quarter, somewhat pretty relatively low relative to the last couple of years here. Any impact, or is it indicative from population, immigration growth, competitive issues?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. And so last month, shifting to the five-year price lock, last month, you revamped your T-Mobile brand offers. You introduced the experience, More experience, More Beyond, which now include a five-year price lock on top texting data. I guess, number one, what pain points is the company trying to address with these new offers? And how do you measure the relative success of these new offers, whether it be churn, gross adds?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. And then you touched on the open by your three growth segments, right? Top 100, SMRA, as well as enterprise. How much runway do you have left in each of those? Can you maybe zoom out a bit?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. And then thinking about the rural opportunity, the US Cellular acquisition is still pending. But does that augment your small market rural opportunity? And I guess, maybe relatedly, where are you in terms of distribution there? And how important is that in the small market rural area to your longer-term efforts?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : And I guess relatedly to that, you unveiled a T-Life app at your Capital Markets Day. And you highlighted on the call, I think that the number of postpaid phone upgrades completed digitally had doubled quarter over quarter, well over 50% of gross adds at the end of the quarter. So just remind -- I guess, remind us what the Team Life -- or taking a step back T-Mobile's digital road map overall, including T-Life and how you plan to unlock value there and scale that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. And now shifting gears to broadband, T-Mobile introduced new 5G broadband pricing and packaging in late 2024. That has not only broadened the aperture or the TAM to more price-sensitive subscribers but also resulted in -- I think you highlighted lowest-ever churn, record broadband ARPU growth each of the last couple of quarters. And then in 1Q '24, you once again led the industry in broadband net adds. So are you continuing to see tailwinds from the pricing and packaging changes? And maybe help us think about volume expectations from here in FWA?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Great. And then on the T-Fiber side, Lumos JV just closed. You have -- Metronet's pending. But the Lumos JV has ambitious build targets. I guess, how quickly can the team scale that build? And what gives you confidence in hitting your target of 3.5 million passings by '28?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : And do you still have limited appetite for fiber M&A at this point, or is it more about just integration and scaling?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Yes. And so I think at a conference earlier this year, you mentioned that you don't necessarily need a, quote-unquote, big deal to compete. But we do still constantly kind of get that question. I guess, how do you update us -- I guess, how you and the team are looking at convergence in the US? Because obviously, AT&T was here this morning and lots of focus on broadband and build -- fiber builds, and so scaling their locations passed. So I guess help us think about that.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. So now shifting gears to financials, you raised guidance most recently in late April. But help us maybe think about the guidance increase in terms of what portion of the service revenue and ARPU upside was driven by just organic relative to maybe some of the acquisitions you closed. Help us maybe.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : I guess, similarly, on the core EBITDA side, some of the feedback we've been getting centers around the upside to revenue, but maybe not that much flow through down to EBITDA. And so maybe, once again, kind of helping us think about the inorganic or organic pieces around EBITDA guidance? And what, if any conservatism, is kind of baked in given some of the macro industry? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Okay. And maybe help us think about the macro environment. And obviously, it changes very much day to day. But just thinking about that and then overall consumer sentiment, does it inform or change how you view taking additional rate optimization opportunities from here? How are you thinking about that?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : As you think about the 60% take rates of your premium plans, is that just kind of what you touched -- that driven by what you touched on earlier, just increasing value proposition within your offers? Is it -- what's the silver bullet there?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : And I guess, closing the loop on financials and ARPU before you pivot to the end of the conversation here, but the question we got coming out of results was very strong ARPU results in the first quarter, but postpaid phone ARPU was a little bit light in 1Q relative to your full-year guide of 1.5%. Does that suggest anything about free line contribution in the quarter that we should be thinking about?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Got it. And then on the 4Q call, you talked about -- in terms of shifting to capital allocation, you talked about a steadier cadence of share repurchases in 2025. Is that still the expectation? Just again, given the macro competitive and environments as well as current deal pipeline, is there any risk to that? Or is that still the right kind of level?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Okay. And so on the M&A front, so we talked about Vistar and Blis that was closed earlier this year. And I think just last week, you announced a partnership with IPG Mediabrands as well. Can you maybe level set where you are today in terms of your advertising capabilities, how the recent deals amplify what you're doing, and if you're strategically complete in that area? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Is there any appetite to maybe invest in other adjacencies above and beyond advertising in the medium term?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : And as we wrap up here, on the 1Q call, you touched on it earlier, you announced T Satellite pricing of $10 per month, except for the Experience Beyond and Go 5G Next plans, which get it for free. And so how do we measure success of T Satellite? And then is this just helping a driver of migration to higher plans? Is it a brand halo thing? How are you thinking about that?

Question: Sebastiano Petti - JPMorgan Securities LLC - Analyst : Well, Peter, I think it's a great place to leave it. Thank you for joining us today.