T-Mobile Ends 2020 Like It Started – Leading The Net Add Race

T-Mobile pre-announced a spectacular Q4 and 2020 despite the headwinds of COVID-19. T-Mobile saw 1.7 million net additions in Q4, which we expect will easily lead the industry. 1.6 million high-ARPU postpaid subscribers were added and an additional 824,000 prepaid customers were added.

Another highlight of the quarter and year is T-Mobile continues to lead US 5G rollouts. It now covers 280 million people with its low-band 600MHz spectrum (marketed as ‘extended range 5G’). It also covers 106 million people with its mid-band 2.5Ghz spectrum (marketed as ‘ultra capacity 5G’). T-Mobile also has C-band and mmWave licenses it can incorporate into its network coverage.

Customer churn was only 1.03% in Q4 despite absorbing Sprint. Sprint had churn two times higher than Verizon, AT&T, and T-Mobile in 4Q19 and 1Q2020–the two quarters before the merger with T-Mobile. T-Mobile has done an admirable job reducing churn of the roughly 25 million subscriber phone base of Sprint.

Similar to how T-Mobile quickly and efficiently absorbed prepaid channel MetroPCS, it is quickly and efficiently moving Sprint subscribers onto the T-Mobile network. T-Mobile is accelerating its rollout of Sprint’s 5G 2.5GHz network holdings. Since October, updating cell sites has increased from 1,000 sites per month to 1,000 sites per week.

Key highlights during Q4 and 2020:

  • Usually in the US market, there is a shift to prepaid from postpaid when unemployment and economic uncertainty is elevated. This is not the case even during the COVID-19 pandemic. Within T-Mobile, there has been migration from prepaid to postpaid. This is positive for service revenues and ARPU.
  • T-Mobile added 1.6 million postpaid customers in Q4 and 5.5 million during 2020.
  • 824,000 postpaid phone customers were added in Q4 and 2.2 million were added during 2020.
  • 84,000 prepaid phone customers were added in Q4 and 145,000 during 2020.
  • 794,000 ‘other’ net customers were adding during the quarter. This is mainly comprised of hotspots, wearables, and tablets. 3.3 million were added during 2020.
  • Churn was 1.03%. Promos were aggressive but not as aggressive as AT&T. Netflix bundle and other ‘un-carrier’ moves have kept phone churn near record low levels.
  • 5G rollouts continue. Over 180 million consumers are covered by 5G. 2.5GHz mid-band spectrum rollouts are accelerating at about 1,000 sites a week. This spectrum is seeing speeds approaching 300 megabits per second, which will improve in 2021 as more spectrum.
  • Counterpoint Research estimates T-Mobile sold about 6.4 million postpaid smartphones and 2.1 million prepaid smartphones. Bring-your-own-devices was down slightly during the quarter.
  • T-Mobile now has a smartphone base of over 66 million. Despite being considerably smaller by smartphone subscribers –Verizon has a smartphone base of over 91 millions – we expect T-Mobile sold about the same number of smartphones as Verizon during the quarter. For complete US channel sales, see North America Online-Offline Monthly Channel Tracker-November 2020.
  • Top sellers during the quarter include Apple iPhone 12, iPhone 12 Pro Max, iPhone 12 Pro, LG Stylo 6, and Samsung Galaxy A11.
  • Similar to how quickly T-Mobile integrated MetroPCS, T-Mobile has absorbed Sprint into one master brand ‘T-Mobile’ brand and the prepaid channel of ‘Metro by T-Mobile’. T-Mobile has done good work converting Sprint customers over to T-Mobile service plans. Sprint’s handset leasing plans are being phased out as the mathematics are not working.
  • Other opportunities include fixed wireless opportunities. As Verizon and AT&T are focusing on mmWave within metros, there may be an opportunity for T-Mobile to offer low or mid-band 5G fixed wireless in smaller metro and even rural areas. TVision LIVE television package for $40 per month is now selling. This will be difficult to break through, but will be interesting to watch in 2021.