T-Mobile executives on the operator's third-quarter earnings call Monday morning said AT&T's $85.4 billion attempt to acquire Time Warner is just another sign that its larger rival is not really focused on its mobile business anymore.
Unsurprisingly, AT&T Inc. (NYSE: T)'s $85 billion bid to buy Time Warner Inc. (NYSE: TWX), confirmed over the weekend, which would create a media conglomerate that owned both significant means of creating and delivering entertainment, was a big topic on the call.
When first asked, T-Mobile US Inc. CEO John Legere described it as "clearly a very exciting... bold move," albeit with a very long road till the deal is decided upon. He added, however, that it showed that AT&T is focused on pursuing a strategy of "vertical integration" to build revenues and add customers, rather than building its wireless business.
All of this, Legere suggested, is good for T-Mobile in the "short to medium term" as it tries to grow its customer base. During the question and answer session, the CEO was asked if the acquisition will mean that AT&T will take its eye off the ball in mobile.
"AT&T can't take their eye off the ball because it hasn't been on the ball in so long; they haven't added a phone customer in over two years," Legere taunted.
For the third quarter of 2016, AT&T lost 268,000 wireless customers on a (postpaid) monthly contract. T-Mobile, meanwhile, added 851,000 branded postpaid phone subscribers.
Nonetheless, he recognized that AT&T is building a video on any device strategy. "There is a piece of the industry of the future that they are trying to define," he said.
"We have many paths forward for that," he said, citing T-Mobile's Binge On video streaming and Mobile One unlimited video plan. "We may end up becoming an aggregator of aggregators... AT&T may end up being content provider to us," he added.
Legere expressed no concern that AT&T would be able to block T-Mobile or others from using video from providers like HBO that it would acquire with the Time Warner deal. "I think that will get sorted out in Washington," he stated.
T-Mobile's CTO, Neville Ray, meanwhile, claimed on the call that his 4G LTE network -- with 312 million people covered in the US -- is now at "parity" with Verizon Wireless . The operator continues to add low-band 700MHz spectrum to its network too, with 225 million people now covered.
The operator has just switched the first mid-band AWS-3 (Band 66) spectrum markets it won at auction in January 2015. The first compatible device will come this month, followed by "a slew of devices" in the first half of 2017. (See Hey Big Spenders! AT&T, Dish & VZ Splash Cash on Spectrum.)
This will be followed by unlicensed spectrum in 2017 and 2018. Ray said. This means LTE-Unlicensed (LTE-U) and License Assisted Access in 2017 "almost guaranteed," Ray stated, followed by 3.5GHz unlicensed spectrum in 2018. (See T-Mobile Sounds Off on Verizon 5G, LTE-U Frustrations and Tech Giants Team Up on 3.5GHz Initiative.)
This will be followed by "moving to millimeter wave" for 5G in the "2020 time frame," Ray said. "Obviously the old phrase is that we've never seen a megahertz we don't like," Ray said.
T-Mobile's GAAP net income for the third quarter was $366 million (or $0.42 per share), compared with $138 million (or $0.15 a share) during the same quarter last year.
The operator is now trading up $3.93 -- or 8.98% -- at $50.68 on the earnings results.
— Dan Jones, Mobile Editor, Light Reading