T-Mobile (TMUS) reported second-quarter results that beat Wall Street estimates on both the top and bottom lines. The telecom giant also added more monthly subscribers than expected.
T-Mobile CEO Mike Sievert tells Yahoo Finance executive editor Brian Sozzi that the company has delivered “fantastic performance on all fronts.” Despite growing concerns about a consumer market decline, Sievert notes that phones are “essential,” and while customers aren’t upgrading their phones as often as they used to, he notes that the company’s “bad debt ratio” was just 1.4% in the quarter, and says that “T-Mobile customers are better payers than AT&T or Verizon customers.”
When it comes to AI, Sievert says the company is excited about it because customers are excited about it. As for the potential launch of an Apple (AAPL) iPhone with more generative AI features, he says many of the features would be available to existing iPhone users, so it’s yet to be determined whether that would spur another upgrade cycle, but T-Mobile will be prepared either way.
Watch the video above to hear why Sievert says the company is not currently in talks to make further acquisitions.
For more expert insights and the latest market activity, click here to watch the full episode of Morning Brief.
This post was written by Stephanie Mikulich.
Video transcript
Welcome back to Yahoo Finance.
You’re likely seeing a lot of action on T-Mobile’s ticker page on Yahoo’s financial platform.
That’s after a very good quarter from T-Mobile.
I’m here at the New York Stock Exchange.
The T-Mobile C Mike Seaver.
Mike, good to see you.
It feels like I just saw you, but without the quarter.
Nice to see you.
Good to see you.
It’s a very big quarter.
You just had your income interview.
What are the key conclusions for investors?
It was just a fantastic performance on all fronts.
You know, we’re outpacing topline growth on total revenue, service revenue at 7% on postpaid service revenue, industry leading at 9% on E. That’s three times the growth rate of our key competitors and cash flow is growing at 54% year-over-year.
And it’s all thanks to the biggest second quarter in the company’s history.
When it comes to postpaid net editions, we pay attention to many economic signals.
You can imagine that consumer confidence is declining and consumers are reluctant to make various purchases, but they are still using their phones.
Isn’t the economy just that bad?
Well, phones are just essential, you know?
And what?
We can look at this in different ways.
Are people switching to us?
Are they actively buying?
Now?
You can see that the upgrade speed in the sector is decreasing.
And so people hold on to their phones a little longer.
That could be.
But what we do look at is the percentage of bad debt: 1.4% this quarter.
The best in the industry.
Many people don’t realize that T-Mobile customers are better payers than AT&T or Verizon customers.
And you saw normal bad debt rates before the pandemic.
What a blabbermouth you are.
You’re simply taking market share from At and T Verizon.
Well, you know, what we’re trying to do is grow the business as a whole, and that’s certainly one of the ways we’ve done that.
But the industry also continues to grow.
I mean, my main competitors also outperformed expectations in the Internet space, so we’re competing in a very healthy space and I think that’s a good thing.
That’s good for the consumer, because the values are among the best you’ve ever seen.
Five.
Thanks to G, people can now use four times as much data as they could five years ago, at three times the speed, for about the same price.
And then everyone is a winner, is that the five-G moment?
Finally, it feels like we were hearing about this four or five years ago, but now the time has come and you can charge higher prices because this stuff is just so damn good.
What we were able to do was attract people to T-Mobile, because FiveG was a catalyst for T-Mobile to outpace everyone else and get the best network.
And people want a great network because wireless connectivity is so important.
But yes, we are experiencing that 5G dividend again in a world where all the major players generate fantastic cash flow.
But consumers benefit from the fact that the price per unit, per gigabyte, is a third of what it was five years ago.
They are using much more data and consuming it much faster than ever before, at prices comparable to five years ago.
So they win.
We win, but T-Mobile wins.
I mainly spoke to a top executive.
One of your competitors didn’t want to give his name and asked: Are you excited about the new AI iPhone?
And they said, Well, we’re not really worried about the upgrade cycle, but are you excited about this?
A. I have an iPhone.
Will it provide power?
I think so.
Higher bills for consumers Will this provide a boost?
And what does a higher upgrade or a faster upgrade cycle mean for you?
We’re excited about an I because we know our customers are excited about an I.
That’s what everyone’s talking about.
And it’s not just about having a poem read out loud or a funny drawing made for you.
Essentially, it’s about having an assistant to help you live your life.
So we were very excited about what Apple predicted in their announcement.
I think it’s going to be an exciting launch.
That said, many of the features are still good on your current phone, so we’ll see how much this drives an upgrade cycle. We’re ready for it.
Anyway, if there is a big upgrade cycle, that’s an opportunity for us.
But if the upgrade rate remains low, that’s an opportunity for us to remain very efficient.
Anyway, we are ready to fight.
I think you surprised a lot of investors.
You surprised me, Mike, by making so many acquisitions.
I mean, you’re working on another project, because I think they’re going out of style a little bit, but they’re transforming your business in a big way.
Well, one of the things I said on my phone call this morning is that we are not intensively engaged on any other topic at the moment because events have been moving very quickly.
But that’s because we now have a pretty clear strategy, which you can see from the announcements that we’ve made.
We are a fiber player, we want to be a fiber player and we want to be best in class, in pure play assets.
That’s our bias.
And so you saw us recently with our announcement to partner with KKR to embrace Metro, the fastest growing pure play fiber wireless company in the country and perhaps the most important pure play fiber company.
That’s why we wanted to collaborate with them.
And we are now very pleased that we have a business plan to realize more than 6.5 million homes by 2030.
Fascinating to see how T-Mobile is reinventing microphones.
It’s always nice spending time with you.
Thank you.
I’ll talk to you later.
Be good.
Okay, we’ll be right back.
Yah Finance talks much more about Ticker’s financial economics.
You know, that’s what we do.