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T-Mobile Readies Mobile 5G for 2019, but Stresses 4G's Primacy

Dan Jones
2/8/2018
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T-Mobile plans to launch its initial commercial 5G markets in the US in 2019, going nationwide in 2020, even as executives stressed that real competition in mobile will still rest on the performance and coverage of 4G LTE networks over the next three years.

T-Mobile US Inc. said on Thursday that it had spent $5.2 billion on capital expenditure in 2017, in part on network expansion. Even with the additional expense of 5G deployment, CFO Braxton Carter anticipates that the "Un-carrier" will spend between $4.9 billion and $5.3 billion on capex in 2018, which will be "fully employed."

The foundation of all this network expansion is T-Mobile's low-band 600MHz spectrum, which is being deployed now for greater 4G coverage with "5G-capable" equipment. The 600MHz LTE network coverage is now up in 586 markets, covering 300,000 square miles in the US.

"We'll launch 5G in 2019, leveraging 600MHz," said CTO Neville Ray on the company's quarterly earnings call. He said that T-Mobile will switch on the service with a software upgrade as compatible smartphones become available, which is expected to happen in the first half of 2019.

This means that all four major mobile operators are expecting to have some mobile 5G markets up in the US in 2019. Verizon Communications Inc. (NYSE: VZ) is expecting to have up to five fixed markets up in 2018, while AT&T Inc. (NYSE: T) is expecting 12 5G mobile markets late in 2018. (See 5G in the USA: Where We At?.)

Nonetheless, 5G "is not a 2018 battle," T-Mobile CEO John Legere stated on the call. CTO Ray agreed, noting that the real competition for US carriers will be on LTE over unlimited data, speeds and coverage.

Ray suggests that LTE will "ride along" with 5G for at least five or six years in the US. In fact, one of the less discussed elements of the 5G spec is that a 5G smartphone will simultaneously be connected to LTE at the same time, so that the user doesn't lose connectivity. (See Qualcomm: First 5G Smartphones Coming Mid-2019 for more.)

T-Mobile now covers 322 million people in the US with 4G LTE. "By the end of 2018, we are targeting a population coverage of 325 million and a geographic coverage of 2.5 million square miles," the company stated in its earnings release.

"We were the first U.S. carrier to exceed 30 Mbps average download speed with 31.6 Mbps," T-Mobile says of its LTE speeds now.

Technology Business Research Inc. (TBR) said of the T-Mobile's network strategy in a research note Thursday:

    T-Mobile is holding to its original commitment of deploying commercial 5G beginning in 2019 and expanding 5G coverage nationwide in 2020. T-Mobile is not pressured to offer 5G services prematurely to incentivize subscribers as the company remains the industry leader in postpaid phone subscriber growth through its current Un-carrier offerings, evidenced by the operator significantly outpacing rivals in wireless revenue growth (+5.1% YTY) and postpaid phone net additions (+891,000) in 4Q17. T-Mobile is also cognizant that rushing to offer 5G services is unnecessary as 5G-compatible devices will not be largely available until mid-2019 and use cases that will require 5G connectivity, such as autonomous driving and advanced healthcare solutions, will not be prevalent for at least another several years.

T-Mobile realized a $2.2 billion benefit for the fourth quarter, thanks to the huge corporate tax cut enacted late last year. Revenue for the quarter was $10.76 billion, up from $10.23 billion for the year-ago quarter. Net income was $2.7 billion -- or $3.11 per share -- against $390 million --or $0.45 EPS -- in the same quarter a year ago. The operator added 1.9 million customers during the fourth quarter, including 1.1 million subscribers who signed on for a monthly contract.

T-Mobile shares are trading down $1.38 -- or 2.22% -- at $60.68 on Thursday morning.

— Dan Jones, Mobile Editor, Light Reading

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DanJones
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DanJones,
User Rank: Blogger
2/8/2018 | 12:50:02 PM
5G IoT
Braxton Carter suggested that T-Mobile needed the foundation of 600MHz 5G for coverage to supply 5G IoT coverage.
DanJones
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DanJones,
User Rank: Blogger
2/8/2018 | 4:36:39 PM
Re: I hope T-Mobile becomes more reliable in my area...
Filling the holes is the aim of the 600MHz rollout. Interested to hear how well it's working.
kq4ym
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kq4ym,
User Rank: Light Sabre
2/22/2018 | 8:35:25 AM
Re: I hope T-Mobile becomes more reliable in my area...
And one might wonder too about the supply of devices as T-Mobile plans to "switch on the service with a software upgrade as compatible smartphones become available," and how that might affect the timeline.
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