T-Mobile Sees More Network Expansion Ahead

T-Mobile (NASDAQ: TMUS) has more work to do. Yesterday’s announcement that its mid-band 2.5 GHz 5G Ultra Capacity service now reaches 300 million people is a milestone, Inside Towers reported. The company already covers 98 percent of the U.S. population with its low-band 600 MHz 5G Extended Reach service. At the end of 3Q23, T-Mobile reported wireless service revenues of $15.7 billion, up three percent on a year-over-year basis. It ended the quarter with 117.9 million postpaid and prepaid subscribers, a six percent gain from the year ago period.

Full-year 2022 was T-Mobile’s high point in annual capital expenditures, peaking at $13.8 billion, as the company completed its merger with the Sprint network, Inside Towers reported. Cumulative spending through the end of 3Q23 was $8.2 billion, down 22 percent from the $10.6 billion spent in the same period in 2022. In its 3Q23 earnings report, the company raised its full-year 2023 capex guidance to $9.7-9.8 billion. With year-to-date spending, we estimate that 4Q23 capex will be around $1.5 billion, down 56 percent YoY. Without offering formal guidance, Peter Osvaldik, T-Mobile CFO suggested that 2024 capex would be in the $9-10 billion range, although he is leaning towards the low end of that range. Still, that is a positive development. 

Admittedly, projecting quarter-to-quarter capex is an inexact science, though historic spending patterns suggest increasing network activity throughout 2024.

At the end of 2022, T-Mobile reported its 4G LTE and 5G network infrastructure comprised 79,000 macro cells and 41,000 small cells and distributed antenna systems, covering 265 million POPs. Having reached 300 million POPs with mid-band Ultra Capacity 5G, the company is planning to increase its 2.5 GHz bandwidth capacity to that base from 155 MHz today to 200 MHz by the end of the year.

T-Mobile has an arsenal of spectrum yet to be deployed. The company holds mid-band C-band and 3.45 GHz licenses along with additional 2.5 GHz licenses from Auction 108, Inside Towers reported. It is also refarming 4G LTE spectrum like AWS and has expanded its 600 MHz lease agreement with Comcast.

Ulf Ewaldsson, T-Mobile President-Technology, points out that 5G traffic now accounts for 70 percent of its network payload. “As we continue to see more 5G traffic, we can move over frequencies that are used for [4G] LTE into 5G. We have these enormous spectrum assets in mid-band, which is where the [fixed wireless] Home Internet products are residing,” he says.

Ewaldsson explains that T-Mobile has a very efficient cell site deployment process where it focuses on lead times and deliveries of precise upgrades at sites where it needs them. He points out that the company is refining its deployment process by relying on more inputs from AI, existing data, and market analysis on where to achieve the best returns on investments as it continues to build and upgrade the network.

Fixed wireless access is gaining for the company. T-Mobile estimates that it can market its 5G Home Internet to about 50 million homes. That’s the equivalent of fiber homes passed. The company reported 587,000 net additions in the quarter to reach over 4.2 million FWA subscribers. It previously indicated that it expects FWA to reach 7-8 million subs by 2025. The company says it has tools to determine where it has excess capacity to sell 5G broadband and monetize that capacity.

By John Celentano, Inside Towers Business Editor

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