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T-Mobile increases 2022 capex to maintain 5G position against rivals

T-Mobile on Thursday announced it added 844,000 new postpaid phone customers to its network during the fourth quarter – a figure just behind the 880,000 postpaid phone customers AT&T reported earlier this week.

T-Mobile also said it gained 224,000 new fixed wireless Internet customers, ending the period with a total of 646,000 in-home Internet customers. That's above the company's year-end goal of 500,000 customers and well ahead of the 150,000 Verizon reported at the end of the third quarter.

Finally, T-Mobile reported that it entered 2022 by covering a total of 210 million people with roughly 100MHz of midband 5G services in its 2.5GHz spectrum. That's a critically important figure considering Verizon expects to cover just 100 million people with its own midband 5G network this month – and Verizon is only using around 60MHz of C-band spectrum for that offering. As a result, T-Mobile is advertising download speeds of around 400 Mbit/s while Verizon is promising download speeds of around 90-170 Mbit/s.

AT&T, meanwhile, has only promised to cover around 75 million people sometime this year with its own midband 5G network in C-band spectrum.

During an investor event Thursday afternoon, T-Mobile CFO Peter Osvaldik argued that there's "a tremendous disparity" between the 5G services that T-Mobile offers and the 5G services offered by its rivals. And he said that T-Mobile's sizable 5G network capacity was powering the company's customer gains.

As a result, Osvaldik said T-Mobile plans to make extra investments this year to maintain the company's network position against its rivals.

A focus on network capex

"I believe capex will likely be higher, year over year [in 2022], as we race to implement this network even faster than we planned," he said. Specifically, he said T-Mobile expects to shift some of the capital expenses (capex) it had planned to make in 2023 into 2022, in order to expand T-Mobile's network. However, T-Mobile's Osvaldik didn't provide any firm figures around the operator's expected capex in 2022 or 2023.

In a recent report, the financial analysts at BofA Global Research reported that they believe the nation's three big wireless network operators will increase capex spending by 16% in 2022 compared with 2020. Click here for a larger version of this image. (Source: BofA Global Research)
In a recent report, the financial analysts at BofA Global Research reported that they believe the nation's three big wireless network operators will increase capex spending by 16% in 2022 compared with 2020. Click here for a larger version of this image.
(Source: BofA Global Research)

In discussing T-Mobile's increased spending on its network, Osvaldik pointed to the operator's newly announced 12-year agreement with cell tower operator Crown Castle. As a result of the deal, Crown Castle said it expects to record $250 million of additional site rental revenues in 2022.

Another look at small cells

Interestingly, T-Mobile's agreement with Crown Castle also calls for 35,000 new small cell nodes over the coming years. However, Osvaldik explained that many of those small cells involve locations that T-Mobile is already using and will mainly allow the operator to bulk up its existing small cell network.

Nonetheless, the deal represents Crown Castle's biggest small cell agreement to date, dwarfing the 15,000 small cell agreement it inked with Verizon early last year. It may also represent a slight shift in T-Mobile's tone on small cells, given the small cell complaints the company's networking chief outlined in 2020 and its cancellation of 5,700 small cell orders in 2021.

"This 35,000-node commitment signals the continued importance of small cells to T-Mobile's eventual network densification, even as it currently focuses on upgrading tower sites with Sprint's 2.5GHz spectrum," wrote the financial analysts at Raymond James in a note to investors Thursday.

T-Mobile's Osvaldik said that the operator remains on track to end 2023 with 300 million people covered with its 2.5GHz midband 5G network, a network that will run across fully 200MHz of midband spectrum by that time. In that same timeframe, Verizon is expected to cover around 150 million people with its midband C-band network, and AT&T is expected to cover just 150 million people with its own midband C-band network.

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

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