T-Mobile is betting that the launch of its TVision service will drive its 5G mobile subscriptions as well as set it up for home broadband services as the company reported strong third quarter results.
CEO Michael Sievert said TVision for T-Mobile will be about positioning to be more of a connectivity provider in the home. The plan to be an over-the-top (OTT) provider comes as T-Mobile has integrated the Sprint acquisition well and accelerated its synergy timelines.
Sievert said on T-Mobile’s third quarter earnings conference call that video is a key part of becoming a bigger broadband player.
Referring to TVision, Sievert said:
We’re coming soon with home broadband. We’re serious about home broadband. It’s going to be an important way that we grow this business and make money. And you have to have the full suite of services to really be able to serve customers there. I also think there’s potential benefits on the mobile side. Customers count on us for their connectivity. They love our brand. We’re able to deliver in this product a great, simple, elegant solution that we’re investing in, because you’re a T-Mobile customer, so they get a great value. And we’re just smashing a bunch of the pain points in this industry. And this industry is so full of them, as we talked about at our launch. So we’re very excited. We’re just getting started.
One of the other things I’ve talked about for a long time is we also intend to be a great partner to media companies and an ally, because we’re not a media company. We’re a pure-play network and connections company.
We’re in it for the long haul. But we’re doing it to delight customers, and we’re doing it to set up a home broadband business which is going to be where a big piece of the profit pool is.
Add it up and Sievert is counting on video to be a building block for broader connectivity services and not necessarily a big profit driver. That approach is going to put pricing pressure on other video services.
If successful, T-Mobile may also become a key connectivity provider amid remote work and education as consumers look for more competition for cable incumbents.
The TVision comments come as T-Mobile reported strong third quarter results and better-than-expected guidance. T-Mobile reported earnings of $1.3 billion, or $1 a share, on revenue of $19.3 billion. The company added 2,035,000 total net additions with 689,000 postpaid phone additions.
T-Mobile ended the quarter with 100.4 million customers.
The company also said it will deliver more than $1.2 billion of synergies from the Sprint merger in 2020. So far, 15% of Sprint’s postpaid customer traffic has been moved to the T-Mobile network.
Other key items:
- Postpaid churn was .90% and prepaid churn was 2.86%.
- Postpaid accounts were 25.6 million at the end of the quarter.
- T-Mobile saved $600 million in network synergies due to avoiding new site builds.
- The company is accelerating its marketing consolidation plans and rationalization of retail stores.
- The iPhone 12 upgrade cycle will be more spread out and also be promotional.
Here’s T-Mobile’s outlook for the rest of 2020.
