T-Mobile outlines rural growth strategy
In the next four years, T-Mobile sees itself being the wireless provider of choice to one in five people living in rural America.
"This is a huge opportunity for us," explained Jon Freier, executive VP of the consumer group at T-Mobile US, in comments at an investor event this week, where he was speaking of T-Mobile's plans to expand its business in rural parts of the US.
"We have the opportunity to bring to smaller markets in rural areas something that they've never seen, which is the best network and the very best value," he said.
Freier is the primary T-Mobile executive in charge of the operator's new expansion into rural areas. His remit: to increase T-Mobile's market share in rural areas from the "low teens" today to around 20% by 2025. That territory covers fully 40% of the US population or around 140 million people in 54 million households.
The carrier's rural push is primarily based on the expansion of its network and its retail operations into the less populated portions of the country.
T-Mobile's network expansion is powered by the 600MHz spectrum the operator purchased for around $8 billion in 2017. That spectrum is ideal for covering vast geographic areas. However, T-Mobile is working to bolster that spectrum with the midband 2.5GHz holdings the operator acquired from Sprint last year. The combination of 600MHz, 2.5GHz and 5G technology is supporting download speeds of around 300 Mbit/s, according to the company.
T-Mobile already covers 295 million people with 5G on its 600MHz spectrum, and expects to cover 300 million people with its 2.5GHz spectrum by the end of 2023. A good portion of that coverage will be due to the 10,000 new cell towers T-Mobile is working to build mostly in rural areas, according to company officials.
Peter Osvaldik, executive VP and CFO for T-Mobile, pointed out that AT&T and Verizon expect to cover just 200 million people with their own midband C-band spectrum holdings by 2023, customers who will likely mostly be in urban areas. The result, he said, will be that T-Mobile will be the only operator to offer speedy 5G services to customers in rural areas in 2023.
Freier said he's working to open "a couple hundred" new stores in rural areas this year. He said T-Mobile will open "hundreds more" stores throughout the next five years. Those new stores will help bring T-Mobile's services to customers in rural areas.
Concurrently, Freier said T-Mobile recently inked an agreement with Walmart to sell its services through roughly 2,200 Walmart stores. Freier said around 1,000 of those locations are in the rural areas T-Mobile is targeting in its expansion.
"If you're not there [in Walmart], you're missing out," Freier said, explaining that Walmart is often the primary shopping destination for consumers in rural areas.
T-Mobile's retail expansion will be underpinned by roughly 7,500 new employees the company plans to hire. Roughly 2,500 of those employees will be a "Hometown Expert," which T-Mobile described as a "one-person store, but without a traditional storefront." Those employees will cover the smaller towns where T-Mobile will not operate a traditional storefront.
The final part of T-Mobile's rural strategy involves selling in-home broadband services in select locations where it has excess network capacity. T-Mobile's Home Internet service is a nationwide play, but company officials have said that a sizable (though unspecified) chunk of the roughly 8 million customers the operator hopes to acquire in the next five years will live in rural areas.
"This is very early innings of our game plan here," Freier said.
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