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5G

T-Mobile CEO blasts towercos' 'disinformation' on 5G buildout

There's nothing slow about T-Mobile's 5G network buildout, according to executives from the company.

T-Mobile CEO Mike Sievert took issue with recent comments from executives in the US cell tower industry who suggested that T-Mobile's 5G buildout isn't moving as quickly as they had expected.

"I love the fact that some of the tower companies are out there spreading some disinformation about our pace. We're in all the biggest cities in the country with 2.5GHz 5G already. And we will be in thousands of cities and towns across this country as we exit this year," Sievert said Thursday during his company's quarterly conference call with analysts. "We're running really fast."

He continued: "The reason it feels tough over there at the tower companies is because both standalone T-Mobile and Sprint were planning on lots of new sites, Sprint for coverage and T-Mobile for capacity. New T-Mobile [the company created via the merger of Sprint and T-Mobile] has synergies. That's called site avoidance. And I know that's tough if you're a tower company because billions and billions of dollars in site avoidance causes the kinds of comments you're now hearing from them. That doesn't affect our rate. We're going like crazy."

T-Mobile network chief Neville Ray added that the operator is currently updating roughly 700 cell tower sites per week with its 2.5GHz 5G equipment.

"That's thousands of sites in a month and in a quarter," he said.

But Ray added that T-Mobile would eventually look to work more closely with major cell tower providers. "We could be doing some more with the tower guys, but there's a competitive process in play right now," he said. "We have choices that we can make. We fully anticipate that we'll start more tower builds as we move into the second half."

T-Mobile's new CFO, Peter Osvaldik, said that the company's capital expenditures would be relatively flat from Q2 to Q3 before "ramping significantly in Q4." He said the increase would be due in part to spending on T-Mobile's 5G network.

T-Mobile recorded capex in its second quarter of $2.26 billion, up from the $1.75 billion it spent in the first quarter and the $1.79 billion it spent in the second quarter of last year. The company said it expects to spend between $6.5 billion and $6.9 billion on capex during the second half of 2020.

During quarterly conference calls with analysts in recent days, executives from SBA Communications, American Tower and Crown Castle all suggested that T-Mobile's network buildout is moving more slowly than they had expected.

"Although we have seen a modest increase in activity, it has not yet reached the level we expect to eventually see, based on T-Mobile's public comments," explained Rod Smith, American Tower's CFO, according to a Seeking Alpha transcript.

American Tower, Crown Castle and SBA are the three big public cell tower companies in the US, although there are dozens of smaller, private tower owners. Most towers are not owned by wireless network operators in the US, but are instead rented to them by tower owners. The upgrade to 5G requires operators to install new equipment on those towers.

Some Wall Street analysts suggested the back-and-forth is partly due to "competitive positioning."

"We believe the disclosure from New T-Mobile, when considered in tandem with the public towercos' comments made during their own Q2'20 results, confirms that (1) New TMobile has been focused on strategically planning its network activity that maximizes its network build effectiveness (which includes not building sites where the standalone companies might have and perhaps avoids the public towercos in early activity), and (2) network activity with the public towercos is expected to come in earnest, perhaps as early as lateQ3'20," wrote the Wall Street analysts at Wells Fargo in a note to investors issued immediately after T-Mobile's call with analysts. "We suspect there is competitive positioning between New T-Mobile's network team and the towercos, but ultimately the network needs to touch the scaled public towercos' sites. With the sheer amount of spectrum being made available, we believe it is only a matter of time before this new build activity materializes for the towercos."

T-Mobile added 1.2 million total net customers during the quarter; it surpassed AT&T as the nation's second-largest wireless provider.

Lightshed analyst Walter Piecyk on Twitter noted that T-Mobile did not lead the industry in terms of postpaid phone net customer additions in the second quarter, as it usually does. Instead, cable company Charter led that metric with a whopping 325,000 customers. T-Mobile followed closely behind with 253,000.

Overall, T-Mobile reported revenues of $17.7 billion in the second quarter and a net income of $110 million.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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