T-Mobile CEO talks up pricing strategies

T-Mobile's chief executive said the company's new Go5G pricing plans have proven popular among customers since their introduction earlier this month. And he also obliquely addressed a question on how T-Mobile might handle pricing changes in the future following the end of a government mandate against pricing increases.

T-Mobile's Mike Sievert said the company intends to retain an advantage against its rivals in pricing. T-Mobile has long been viewed as the operator with the lowest overall prices compared to AT&T and Verizon, and Sievert said he expects that to continue.

However, he said the operator doesn't intend to maintain a "static price." Instead, he said T-Mobile would retain a pricing advantage relative to the prices of its competitors – but that the operator may also respond to things like inflation.

"There's an opportunity for us to move along with those things," he said. That's noteworthy considering AT&T and Verizon have been raising prices in recent months. Indeed, a Verizon pricing increase went into effect earlier this month.

Sievert's comments come just days after T-Mobile released new Go5G plans, some of which are slightly more expensive than the operator's existing Magenta-branded plans. However, T-Mobile continues to offer its older Magenta plans alongside the new Go5G plans. Sievert said the new plans allow customers to "self select" more expensive plans if they want them. "Our customers are buying up our rate card voluntarily in an era of inflation," Sievert said, indicating customer demand for T-Mobile's speedy 5G network.

Figure 1: (Source: Robert K. Chin - Storefronts/Alamy Stock Photo)

The timing of T-Mobile's new plans is noteworthy. As a condition of its $26 billion purchase of Sprint in 2020, T-Mobile agreed not to raise prices for three years. That commitment ended earlier this month.

Raising guidance

Sievert made his comments Thursday during T-Mobile's first quarter earnings call. The company reported postpaid phone net customer additions of 538,000 in the quarter, mostly in line with analyst expectations.

However, the company noted that the figure was slightly below what it reported during the same quarter a year ago. In its investor factsheet, T-Mobile attributed the situation to "continued normalization of industry growth toward pre Covid-19 pandemic levels," alongside several other factors.

That language is significant considering widespread expectations of a coming slowdown in growth in the US wireless industry in general.

T-Mobile also raised its financial expectations for the remainder of 2023.

For example, T-Mobile expects total postpaid net customer additions throughout 2023 of between 5.3 million and 5.7 million, an increase from its prior guidance of 5 million to 5.5 million. The company also expects net cash from operating activities of between $17.9 billion and $18.3 billion, an increase from prior guidance of $17.8 billion to $18.3 billion.

The move comes as little surprise. T-Mobile routinely meets its quarterly financial goals and often raises its yearly guidance.

Fixed wireless

T-Mobile reported adding 523,000 new fixed wireless access (FWA) customers. That brings its total FWA customer base to 3.2 million.

T-Mobile officials also said the company continues to expand its 5G network to offer FWA in more locations. The company currently covers 275 million people with its speedy midband 5G network, and expects to expand that number to 300 million by the end of this year.

At the same time, T-Mobile said it's adding more spectrum to its network. Company officials said T-Mobile counts around 150MHz of midband spectrum today and will increase that to 200MHz by the end of 2023.

More spectrum often translates into a better network that can support more customers with faster speeds.

Finally, T-Mobile officials again reiterated the company's position that it has adequate resources to reach its goal of supporting up to 8 million FWA customers by 2025. But Sievert, the company's CEO, said T-Mobile would consider investing in additional infrastructure – including millimeter wave spectrum – to support more FWA customers beyond that figure.

"We would entertain that," Sievert said of the potential for further investment into FWA infrastructure. "We're interested in it."

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