Yahoo Finance’s Brian Sozzi sits down with T-Mobile CEO Mike Sievert.
BRIAN SOZZI: T-Mobile posted much better than expected third-quarter earnings after Thursday's close. Shares are up about 6% this morning. Following the company's earnings call, I caught up with T-Mobile CEO Mike Sievert.
MIKE SIEVERT: You know, I think this quarter we surprised the cynics and the optimists alike. We delivered 2 million net adds, the highest in our history, more than AT&T and Verizon combined.
And to the premise of your question, what we're really demonstrating with this model is that as we unlock synergies, we're able to simultaneously deliver growth and financials. And you saw us today beat every single estimate on the financial metrics across EBITDA and service revenues, EPS, while simultaneously increasing our guidance across the board. And it's really about execution and it's about synergies.
BRIAN SOZZI: We've talked before about the one big number that you threw out at the time of the Sprint integration, $43 billion in synergies over time. Are you still on track for that?
MIKE SIEVERT: We are. In fact, I don't see any reason why it shouldn't be bigger than we predicted and come sooner than we predicted. And for NPV, sooner matters. So this is all about unlocking run-rate synergies across our network and our operations. And this year, we're going to be delivering $1.2 billion in run-rate synergies, which is a big piece of what you need on your way to that $43 billion NPV.
So we're really excited, and we gave a little hint that next year is probably going to be double that number. So this is really about taking these two operations and not burdening the American consumer with paying for two totally separate networks, instead making one that's far better, that's clearly the network and 5G leader in this country.
BRIAN SOZZI: You're the second tech company-- and I'll quantify you as a tech company-- in as many days to come out and say bullish things on 5G. Qualcomm, very upbeat guidance, in large part because of 5G. You raised your second-half outlook I would think because of the new Apple 5G iPhones. You think the Street understands the profit potential for companies like yours from 5G?
MIKE SIEVERT: Well, our thesis is pretty easy to understand. It's share taking, and that's different than some of the other companies. And so I can't answer it broadly as an industry, but investors understand our thesis as you're seeing in how they're reacting to our ongoing momentum.
You know, with this demonstrable lead in 5G, we'll be able to sustainably lead as the network and value leader. In this industry, we've always made you choose, network or value. Now T-Mobile's positioned to have both at once. And when we've got both at once, that should allow us to do two things, consistently take share and translate that share into financial results for our shareholders.
BRIAN SOZZI: There was a little bit of pushback on the earnings call with how intense the competition is right now for the holiday quarter. What are you seeing out there in the market?
MIKE SIEVERT: You know, we see a trend that looks a lot like last year, which is ambitious, aggressive competition across the board but not different. Nothing discontinuous.
You know, the fourth quarter is a competitive and therefore expensive quarter. Consumers have new phones usually in the fourth quarter because Apple times their new introductions this time of year, and it's the holidays. And past years create a dynamic where people also are due for upgrades this time of year.
So it's competitive. It's expensive. But nothing's happening here that's not in the run rate, so it's all part of the business model. Customers pay a lot of money for our service, and when it comes time for a phone, you know, they want us to help with that. And, you know, that's been a big part of our Un-carrier story all along.
BRIAN SOZZI: Is Mike Sievert in the camp that there will be an iPhone 5G supercycle?
MIKE SIEVERT: Yes, and it's going to develop over time. It's happening now. Don't get me wrong. This quarter, there's a lot of interest in these new phones.
But what's going to happen is as we start to pull away from the pack on network-- think about this. Today I announced we would be at $100 million people with high-capacity 5G. We're already at 270 million people covered by 5G. But 100 million with the ultra-high-capacity version while Verizon's down about 2 million.
So when you've got 100 million people with the high-capacity version that's hundreds of megabits per second, totally transformational, people are going to see that. You're going to go around, and you're going to be able to do things with your phone that they can't. And that's going to create-- it's many times faster than today's LTE phones. That's going to create jealousy, and it's going to create interest, and yeah, in the end, a supercycle.
BRIAN SOZZI: Mike, quickly before I let you go, listen, the world-- all eyes on the US and the outcome of the presidential election. If there is a change in the White House, how does it help or hurt T-Mobile? You know, a President Biden, I imagine, will help a lot of folks. He will focus a lot on rural broadband. How do you play in that?
MIKE SIEVERT: Well, first of all, Brian, let me just say how it's a little bit surreal and crazy to be here with you on a day like today talking about T-Mobile when so much uncertainty is happening in the world around us, certainly in national politics. But on the other hand, isn't it kind of refreshing to be able to talk about something as clear and unambiguous as this blockbuster quarter that we just delivered? So I'm happy about that.
Look, across the last eight years we've seen two administrations with two totally different philosophies, and T-Mobile has thrived through both. In the Obama administration, we were able to acquire spectrum at competitive rates. We were able to benefit from other policies. We engineered a complete turnaround in T-Mobile and then started a sustained success story.
During the last four years, we've also been very successful, and we've been able to merge, and we've been able to create something super pro consumer and pro competition with support of the current administration.
So listen. Every administration brings a different policy. What's consistent is T-Mobile's value proposition. And over the long run, you know, we're so well positioned to be the leader in the 5G decade. You know, it doesn't matter really about the politics that surround us.
BRIAN SOZZI: Well, I'll echo you on that one, Mike. It's good to actually talk about quarters again and slowly get back to some form of normal. Mike Sievert, T-Mobile CEO, always good to speak with you.
MIKE SIEVERT: Great to see you, Brian.