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T-Mobile (TMUS) reported weaker-than-expected fourth-quarter profit even though mobile phone subscriber numbers rose by 934,000, beating expectations by about 886,000. The wireless carrier said it is targeting net customer additions of 5 million to 5.5 million this year.
“Our big strategy is to perpetuate our brand proposition of providing the best value in the market, and we have no intention of changing that,” T-Mobile CEO Mike Siebert told Yahoo Finance. ” he said.
Editor’s note: This article was written by McKenzie DeGroot.
video transcript
Brian Sozzi: Okay. T-Mobile releases latest financial results. Let’s hear from T-Mobile CEO Mike Siebert. Mike, the financial results briefing is closed. Thank you for visiting Yahoo Finance. So, look, I — you know, I’ve been covering you guys, especially your leadership, for a while. And then in the earnings call, we actually start talking about some price increases. This is the first time I’m hearing this from you and T-Mobile. Let me explain this.
Mike Seibert: First of all, Sozz, thank you for having me. I’m glad to be here a few minutes after my conference call. Listen, the big strategy for us is to perpetuate our brand value proposition to provide the best value in the market. And we have no intention of changing that.
And what customers generally do is choose a rate card for themselves that T-Mobile doesn’t satisfy. When they buy, they tend to buy some of the best plans. And it offers the most data and the most permissive usage policy for other devices and more. This is great. That’s great for them because it allows them to take full advantage of the highest-performing 5G network. But this is also great for us because we expect our average revenue per account to increase.
It rose 1.8% in the fourth quarter. We have published a confident guide of approximately 2% in 2024. Plus, it doesn’t involve any of the pricing cheating that some of its competitors do.
Brian Sozzi: Where do you see opportunities to increase prices?
Mike Seibert: As you know, this is about optimizing how to efficiently deliver functionality to your customers. For example, in Q4 we changed how autopay discounts work. Nevertheless, from Q4 to Q3, we saw a normative continuous churn movement. Now, we made changes ahead of Netflix and changed the Netflix offer a little bit, but as Netflix changed their portfolio, we also added Hulu.
These are done based on the brand’s value proposition of delivering the best value in the market, and based on what customers value and accept, as well as how to be more efficient. It is also based on whether it can be done effectively. We serve our customers in a way that allows us to compete. And if you can make optimizations here and there, it’s for one reason. So that we can compete.
Brian Sozzi: Just to be clear, then we’ll move on, Mike. Your bill won’t go up as much this year because a lot of real consumers, T-Mobile users, come to Yahoo and join Yahoo Finance.
Mike Seibert: No, not unless you opt for a new plan that offers more services, like Netflix or Hulu. Some plans include Apple TV. Our Go 5G plan portfolio has amazing data buckets for other devices and other great features that may make it better than other plans. I see a lot of that happening.
Brian Sozzi: Mike, I always enjoy watching you talk on earnings calls about people holding their phones in their hands longer than ever before — I know you stream it on YouTube. However, you made an excellent point. What changes will it bring to the communications industry?
Mike Seibert: First, it heavily subsidizes the purchase of a new mobile phone. For us, that’s not the case. It’s never a good idea to slam down your phone when you’re not ready. On the other hand, if you are ready for it. It is important to provide a truly competitive and attractive offer. When people want a new phone, they don’t want any barriers. They want us to be there and put it in their hands for a high price. That’s what we do.
All we don’t do is slap it on people who don’t want it and lock them into a three-year rate plan so they can’t get out of it. And that’s not us. That’s why T-Mobile has some of the most satisfied customers in the industry, even with low upgrade rates. And it’s a win-win for both us and our customers.
Brian Sozzi: Mike, I had the opportunity to speak with many technology leaders at the World Economic Forum. And of course, the main topic there is AI. And I spoke with Qualcomm CEO Cristiano Amon. He was very bullish on putting his AI into smartphones. I think what was notable was the arrival of a new Samsung. Whatever it is, do you think the transition to AI in smartphones will mean big business and big upgrades later this year? Or is this a 2025 thing?
Mike Seibert: It’s hard to understand. However, today’s smartphones are extremely feature-rich and capable. And once the training process is complete, the AI algorithm can be processed. And that’s kind of what Cristiano is pointing out. And in that era, new smartphones will be even more powerful.
There is no question that we are at an unprecedented moment in the history of technology. And as AI becomes more and more entrenched and moves from just text-based to audio, visual, and video, you’ll see people moving payloads of data around. For example, smartphones and the cloud continue to grow. And that’s the real benefit of his 5G. And this is a real advantage for T-Mobile’s signature high-capacity 5G network.
And we are really happy with this development. Because I think it just points out the advantage that we have in the market.
Brian Sozzi: What is the status of your relationship with SpaceX in terms of cool technology?
Mike Seibert: We just launched our first satellite and completed the first T-Mobile direct satellite test cell. And using the T-Mobile phone’s first direct-to-cell phone communication, you could send text messages into space and receive replies. That’s incredible. The next phase is a bunch of launches. They will need to launch a lot of satellites into the air. As a result, we should be able to launch a beta version later this year.
Brian Sozzi: Who are these programs targeted at?
Mike Seibert: Anyone who wants to connect wherever they can see the sky. And that’s very important. This country has an area of 500,000 square miles, but there are no wireless providers that cover it. It is very important for everyone. No matter where you are, whether it’s on a lonely country road, in the wilderness, or on a waterway, if you can see the sky, you can connect and get help. Text your loved ones so they can find you. And that’s important to everyone.
Brian Sozzi: Mike, I was also looking to participate in an affordable hookup program. It could end in April. Currently, 23 million households are benefiting. What are your expectations for the program?
Mike Seibert: Well, I think that’s a much more significant move for some broadband providers. And as this relates to mobile, I would be very surprised if people disconnected their phones and the program ended. Mobile is truly a necessity. What they can do is make sure you get the best deal from high-value brands. And that’s where T-Mobile has an advantage. That’s because we have some of the best value brands, including our flagship Metro by T-Mobile brand and many others, including Assurance Wireless, which is targeted specifically at people in very tough economic situations. Because it is.
So we have some customers specifically for the Assurance Wireless brand. And while there is some degree of financial risk there, this is fully covered within the guidance we have outlined today. But it’s also an opportunity for us. We’re going to stand up for and make sure we can serve those who have lost incredibly valuable subsidies. And T-Mobile always knows how to serve people in tough economic situations.
Brian Sozzi: Finally, Mike, a shout out to all leaders. This year will be an interesting year for many large public companies. Of course, there is a presidential election coming up later this year. As a leader, how are you preparing your business and your people for what could be a very volatile second half of this year?
Mike Seibert: Well, in our culture, it’s about just being there for each other and lifting each other up. And T-Mobile has a very unique culture of loving our customers, and without a collaborative, inclusive, and welcoming culture, we wouldn’t be able to provide our customers with the best possible customer experience.
The outside world is stressful for people on both sides, not just politics, but the whole outside environment right now is stressful and difficult. And at his T-Mobile, we’re creating a culture where people can bring their best selves to work and be in a supportive environment. And it’s reflected in how he treats his customers with Net His Promoter His Score, the best in the industry.
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