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T-Mobile lowers capex guidance, raises profit outlook

T-Mobile said its free cash flow should reach up to $14 billion by 2023, a $3 billion increase from prior expectations. Meantime, the operator lowered its capex to between $9 billion and $10 billion for 2023.

Mike Dano

March 11, 2021

6 Min Read
T-Mobile lowers capex guidance, raises profit outlook

T-Mobile said it expects to make more money in the next few years than it previously expected following its merger with Sprint. At the same time, the company said it expects to spend less on its network than expected over the coming years.

T-Mobile also said it expects to gain between 7 million and 8 million fixed wireless Internet customers within the next five years. That figure is slightly below the estimates T-Mobile provided in 2018, when it said it would gain 9.5 million customers within that rough time frame.

Company executives promised to hold a launch event for T-Mobile's fixed wireless Internet product – where they plan to disclose pricing and rollout details – later this month.

Those were the primary highlights from the operator's three-and-a-half-hour investor event Thursday. T-Mobile's management team used the event to lay out the operator's overall strategy for the next few years in an attempt to convince investors that T-Mobile is a better bet than its rivals AT&T and Verizon.

According to T-Mobile CEO Mike Sievert, the operator is "miles ahead of the competition." However, Sievert did not employ the flashy presentations or salty language that became the hallmark of his predecessor, John Legere.

Nonethetheless, Sievert and his management team offered a detailed look at T-Mobile's outlook for the next few years.


T-Mobile said it expects its earnings before interest, taxes, depreciation and amortization (EBITDA) to reach between $28 billion and $29 billion by 2023, above its previous expectations. And the carrier said its free cash flow is expected to reach up to $14 billion by 2023, a $3 billion increase from its original expectations.

T-Mobile said it expects to reach those goals through a number of efforts including fixed wireless Internet services as well as expanding its business in rural markets and with business customers.

In rural markets specifically, T-Mobile said it hopes to grow its market share from the "low teens" to 20% in five years. And with business users, T-Mobile said it expects to grow its share from 10% today to 20% in five years.

The operator also said it would expand its distribution in part by increasing sales of its phones in Walmart and Best Buy stores.

Overall, T-Mobile expects its "merger synergies" to reach $70 billion, up 60% from its original merger plan filed in 2018. The company said the situation will allow it to conduct up to $60 billion in share buybacks by 2025.


T-Mobile executives attributed much of those financial gains to T-Mobile's growing 5G network. The company is in the midst of shutting down Sprint's network and subsuming it into a 5G network running over the operator's lowband 600MHz and midband 2.5GGHz spectrum holdings. Indeed, T-Mobile said it expects to decommission the Sprint network sometime in 2022, a year earlier than it previously expected.

T-Mobile also recently purchased around 40MHz of C-band spectrum for around $10 billion, but those licenses won't be available for commercial operations until 2023. T-Mobile executives confirmed that the operator's current 5G radios do not support its C-band spectrum.

T-Mobile's networking chief Neville Ray said that the operator is lighting up around 60MHz of its 2.5GHz holdings, which is producing average speeds for customers of around 300Mbit/s. He said the operator will increase that to 100MHz by the end of this year, raising speeds to around 400Mbit/s. He noted T-Mobile owns a total of around 160MHz of 2.5GHz spectrum nationwide.

Ray also said that T-Mobile this year will begin employing carrier aggregation technology in order to glue together 5G transmissions across its 600MHz and 2.5GHz spectrum holdings, a move he said would increase the coverage of its midband 2.5GHz network by 30%.

"The next couple of years is where we perfect that [5G] footprint," Ray argued. "Those capacities and efficiencies are absolutely real."

Interestingly, T-Mobile executives boasted that the operator will have more cell sites – around 85,000 after its network upgrade is complete – than its rivals. Indeed, the financial analysts at Raymond James estimate Verizon counts just 64,000 cell sites, while AT&T counts 70,000.

Verizon officials argued the carrier will not have to add more cell sites to its network in order to deploy its C-band spectrum holdings – statements that sparked consternation among T-Mobile's executives.


T-Mobile executives noted that the carrier initially expected to spend between $9 billion and $12 billion on capex by 2023, but now expects that number to be between $9 billion and $10 billion.

"I doubt you'll hear anyone else in the industry lower their expected capex intensity while adding C-band deployments," argued T-Mobile CFO Peter Osvaldik.

T-Mobile's Ray said the carrier has managed to squeeze savings from a number of areas, including from new contracts with its vendors. He also estimated T-Mobile will be able to transmit data at roughly half the cost of AT&T and Verizon over the next five years – though it's likely those operators would disagree with that assertion.

Fixed wireless Internet

Finally, T-Mobile executives offered a few more insights into the carrier's plans to deploy fixed wireless Internet services in a challenge to the nation's wired cable Internet providers. T-Mobile first outlined that strategy in 2018 and then launched an LTE test project in 2019. More recently, T-Mobile has been seeding its fixed wireless customer base with 5G equipment from Nokia.

"This network has massive capacity," Sievert said in response to analyst questions about whether T-Mobile's network could handle customers' home Internet traffic.

Dow Draper, the executive leading T-Mobile's fixed wireless access (FWA) effort, said the operator counts around 100,000 participants in its LTE tests, and that 20% of those users are consuming more than 500GB per month. He added that fully 35% of the operator's FWA customers do not subscribe to its phone services.

Draper said that T-Mobile initially plans to roll out the service in rural areas where it has extra network capacity, but would eventually expand it into suburban and urban areas as well. He said that, in some urban and suburban areas, T-Mobile would bundle its fixed wireless offering with other services including streaming video products and mobile phone connections.

Draper said T-Mobile expects to count around 500,000 fixed wireless customers by the end of this year.

Edge computing and private networks

Unlike Verizon, T-Mobile executives didn't spend much time talking about edge computing and private wireless networks. Operator officials acknowledged T-Mobile is working in both of those areas – T-Mobile's Michael Katz said the operator is testing edge computing with a bank for security applications – but that the services are not a part of the operator's financial plans.

CFO Osvaldik said it was "too early to responsibly include" edge computing and private wireless networking in T-Mobile's financial forecasts.

Related posts:

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

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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