TMUS - NASDAQ

Good afternoon, everyone. All participants will be in a listen-only mode. Star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star and one. To withdraw your questions, you may press star and two. You may also submit a question via X by sending a post to @TMobileIR or @MikeSievert using cash tag TMUS. I would now like to turn the conference call over to Quan Yao, Senior Vice President of Investor Relations for T-Mobile US. Please go ahead. Good afternoon.

Welcome to T-Mobile US's first quarter 2025 earnings call. Joining me on our call today are Mike Sievert, our President and CEO, Peter Osvaldik, our CFO, as well as other members of the senior leadership team. During this call, we will make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially. We encourage you to review the risk factors set forth in our SEC filings. Our earnings release, investor fact book, and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call, can be found on our Investor Relations website. With that, let me now turn it over to Mike.

Okay. Thanks, Quan. Hi, everybody. Thanks for joining. We're coming to you from Bellevue, Washington today. Got the whole team here. And first of all, let me welcome Srini Gopalan, our new Chief Operating Officer, to the team. And can I still say new? Because you're already making such a big impact. Srini's certainly joining us at one of the most exciting times in our history. Welcome to the team, Srini.

Thank you, Mike. It's great to be here.

So turning to our results. This was another really strong quarter, showcasing T-Mobile US's outsized performance versus peers and versus the high expectations we set as well. Listen, I get a lot of questions about how we can be this consistent even as the macro environment constantly changes, delivering industry-leading customer service, revenue, and EBITDA growth yet again. And the answer is simple. It's that our team is relentless when it comes to execution, innovating on behalf of customers, and importantly, we are building on T-Mobile US's durable advantages of the best network, the best value, and the best team's obsession with delivering for customers and for shareholders, quarter after quarter. Let's start with wireless. It is all about growth. With even more customers coming to T-Mobile US in Q1 this year than last year. In fact, we set a new record with our best-ever Q1 for total postpaid net additions. Postpaid gross additions were also a Q1 record. In fact, you'll recall that last year, 2024, was our greatest growth year ever, and yet gross additions were up year over year this Q1 versus that year in every single category across total postpaid, phones, non-phones, and even 5G broadband. This is an important indicator showcasing that customers continue to choose T-Mobile US at higher and higher rates. We also led the industry once again in postpaid phones, adding 495,000. And importantly, we did it while growing our share of households, not just in smaller markets and rural areas, but across the top 100 markets as well. And our momentum is equally strong for T-Mobile US for Business, where we continued to lead the industry in both total postpaid and postpaid phone net additions while adding the most ever customers in enterprise, a record quarter. Switching back to consumer, our industry-leading value proposition continues to encourage new customers to self-select up the rate card. 60% of lines on new accounts continue to load onto our premium plans. That's about double that of our current base. This contributed to postpaid ARPA growth of nearly 4%, our highest Q1 in eight years. And we're not slowing one bit on the value and innovation leadership that customers love about T-Mobile US. Just this week, we unveiled the latest value propositions from T-Mobile US, two very simple choices that we call Experience More and Experience Beyond. Our new experience plans are the best expression of T-Mobile US, offering exactly what customers are seeking today. And our new offers are designed to make it even easier for customers to compare and understand the superior value that T-Mobile US delivers.

Turning to broadband. I'll start with our 5G broadband offering. For the thirteenth quarter in a row, we led the entire broadband industry in customer growth with 424,000 net additions. We achieved multiple new records from our lowest 5G broadband churn ever to adding the highest ever net business high-speed Internet customers. As you can see, our new pricing construct, aligned with our mobile on good, better, best hearing, is resonating really well with customers while at the same time, we saw our highest ever Q1 ARPU growth in broadband, showing that the business is in a really good spot. Let's turn now to T Fiber. With the completion of our transaction on April 1 for Lumos, we're now set to officially launch T Fiber later this quarter, something that's been in pilot for the last two-plus years. This is the beginning of something great. Another step on our journey of profitably serving even more broadband customers, leveraging our many go-to-market strengths, including our million-plus fixed wireless waitlist. And we can't wait to close our Metronet transaction soon to further expand T Fiber and bring better broadband choices to more Americans. As always, our ability to take share is enabled by our world-leading 5G network, where we have the best assets and a multiyear lead. And yet, we still set the pace on implementing the most advanced customer-facing technology. We're excited today to announce that T-Mobile US is now the first and only carrier in the country to roll out 5G advanced nationwide, which is enabled by our nationwide 5G standalone core. 5G advanced is faster, more dynamic, and more efficient. We achieved a record 6.3 gigabits per second download speed in a recent real-world field test. And we're also able to better serve our business and customer government customers with improved slicing and lower latency. And, of course, third parties just continue to affirm our with big awards coming in from both OpenSignal and RootMetrics yet again. Now, as cool as all this sounds, I want to be clear that we aren't doing these things just to see if we can. We implement the technology advancements at this pace because it creates a superior customer experience, enabling us to squeeze more customer-facing value out of every capital dollar we spend. This is just fundamental to our approach, and it always has been ever since we were a lot smaller, and it remains a core advantage today. Speaking of, we continue to rapidly roll out our beta of T Satellite now with hundreds of thousands of active users. I'm gonna remind you, T Satellite is the only mobile phone satellite now that keeps you connected automatically. No apps to open, no searching for a connection, phone pointed at the sky, trying to get a message out. And most importantly, no missing messages if you leave the footprint of your terrestrial network without even knowing it. That's our goal. This is a one-of-a-kind service, and our aim is simple. To make T Satellite just work so you are always connected and reachable even with your phone still in your pocket. Now once in a while, we break news on this broadcast, and I want to let you know that after gauging the incredible response from customers, including broader than expected interest from competitors' customers, we've set our final launch pricing for T Satellite at just $10 a month. Except, of course, for our Experience Beyond and Go 5G Next plans that will include it for free. And we're gonna honor this price for AT&T and Verizon customers as well. Because this is the only place they can get a service anything like this. With over 550 satellites in service, and counting. Commercial service starts in July, and this Gen 1 pricing will be good for at least a year for everyone. Okay. Shifting gears. We're not only innovating in network, but a big part of our exciting growth journey centers on transforming customer experiences with digital and AI. Our flagship digital platform, TLIFE, is clearly resonating with customers. Compared to just last quarter, we've nearly doubled the percentage of our postpaid phone upgrades completed digitally, with well over half of upgrades being digital by quarter's end. And growing. And our new Intense CX AI features pioneered with OpenAI are already significantly reducing the need for customers to reach out to our care team. We're solving customer pain points before they happen and meeting our customers exactly where they want. Based on these early results, the audacious multiyear goals in this area that we set out last fall appear to be more than on track. Okay. I want to come back to our underlying theme of delivering thoughtful, profitable, and durable growth. Our best-in-class customer results also translated into industry-leading financial growth across multiple metrics again in Q1. Our postpaid service revenues once again grew 8% year over year, and overall service revenues grew 5%. That's a rate that is more than triple that of our next closest competitor. Core adjusted EBITDA also grew 8% year over year, double the average of our wireless peer group. We also delivered $4.4 billion in adjusted free cash flow, a new Q1 record, translating to once again industry-leading adjusted free cash flow conversion from service revenues of 26%, a new Q1 record, and about double that of our closest competitor. We have had a powerful start to 2025. Our story is so simple. And it's consistent. We have built sustainable, long-term, durable advantages allowing us to continue to offer a highly differentiated value proposition that's right on point. Our execution, our focus on customers, and on setting the standard in innovation and technology transformation, are the things that continue to set us apart. We have always aimed to deliver thoughtful, profitable, and durable growth, and that's exactly what we continue to do across every area of the business again in Q1. And let me end by saying, we are far from complacent. This team right here, along with our thousands of coworkers, come to work every day and act like we are running for our lives. Constantly coming up with new customer ideas and new ways to improve how we serve them to smash the pain points that still make this industry notorious. At T-Mobile US, we call this mindset. We won't stop. So we won't stop. And for those of you that are counting on us, and I know you are, I want you to know we won't slow down either. Okay. Peter, over to you to give an update on our guidance.

Alright. Thanks, Mike. As you can see, 2025 is off to a strong start. So let me provide an update of our expectations for the full year, our financial guidance now also reflecting the inclusion of Vistar, Bliss, and Lumos. Starting with customers, we continue to expect to deliver total postpaid net customer additions of between 5.5 and 6 million, of which approximately half will be postpaid phone net additions. Both of these remain our highest ever expectations at this point in the year. We're also increasing our postpaid ARPA growth expectations to be at least 3.5% for the full year, as we see continued deepening of customer relationships. This is up from our prior guidance of around 3%. And at the same time, we expect postpaid phone ARPU to grow at 1.5% this year, even higher than last year's growth of 1.1%. With the higher expectations for ARPA and ARPU growth, we now expect 2025 organic service to grow at an even higher rate than where we guided last quarter. We now expect core adjusted EBITDA to be between $33.2 billion and $33.7 billion for the full year, up just over 5% at the midpoint. Turning to cash CapEx, we continue to expect cash CapEx to be approximately $9.5 billion. Finally, we now expect adjusted free cash flow, including payments for merger-related costs, to be in the range of $17.5 billion to $18 billion, driven by both margin expansion and capital efficiency and resulting in industry-leading service revenues to adjusted free cash flow conversion. Alright, let me also spend a moment providing some more color on the close of the JV transaction which acquired Lumos. Going forward, the consumer experience and retail business is fully owned by us, and we also share in 50% of the JV economics. We will treat the acquired customers as a base adjustment in our second quarter results. And as we fuel customer growth, expect the retail business will be slightly accretive to service revenues and neutral to adjusted EBITDA and adjusted free cash flow this year. Additionally, our 50% equity stake in the JV will be reported below the line as an equity method investment and is expected to be immaterial to net income this year. After closing MetroNet, we will provide you with a more comprehensive update regarding the contribution of both of our fiber JVs. To sum it all up, in Q1, we continued to show we can consistently execute and continue to deliver outsized and profitable growth. And with that, I will now turn the call back to Quan to begin the Q&A. Quan?

Okay. Let's get to your questions. You can ask questions via phone by pressing star then one. And via X by sending a post to @TMobileIR or @MikeSievert using hashtag TMUS. We'll start with a question on the phone. Operator, first question, please.

Our first question comes from Benjamin Swinburne from Morgan Stanley. Please go ahead with your question.

Thank you. Good afternoon. I guess two questions. Maybe I'd love to hear from Srini. I know it's been a short period of time, but you know the company well. Now that you've been in the seat, what do you think is the biggest opportunity ahead of T-Mobile US? Anything you think the market in particular doesn't fully appreciate? And then if I can get more out of you guys on T Fiber, but now that you've closed Lumos, you're gonna start selling the product, can you tell us a little bit more about sort of the go-to-market and, you know, expectations for kinda driving that business into the base, especially the fixed wireless waiting list and your existing wireless customer base. Seems like a pretty big opportunity, out of the gate here now that you've closed that. So would love some more color on Lumos now that it's done.

Okay. Thanks, Ben. Well, we'll start with Srini, then we're gonna go over to Mike Katz.

Okay. Cool. Well, Ben, thanks for that question. Yeah. It's been about fifty days in. And like you said, I'm not new to this company. I've been on the Board for well over four years, but just some early impressions. Nothing quite prepares you for being here? It's this incredible combination of a focus on kind of smashing customer problems, huge intensity and commitment to quarter-to-quarter delivery, but also an incredible boldness for the vision and making a change difference to this industry and to our performance. So I've really enjoyed my first few weeks here. To your specific question on the biggest opportunities, look, I think this company has got something incredibly special in terms of its culture. Of smashing customer problems. I think the big opportunity we have is taking that culture and putting that together with what we have now as easily the best network. In this industry. Along with the huge strides that we've made in our digital capabilities. And Mike talked briefly about them, more than half of our upgrades now being done through TLIFE. I think the real big opportunity is to bring together this culture, this incredible thing that we've built. Along with the best network and now world-class digital technology to continue smashing customer problems in a different and more enabled context. Love it. Okay. And T Fiber, the go-to-market approach. What can we expect, Mike?

Yeah. No. Thanks for the question, Ben. And we agree with you. We're also really excited about this, and we think it's a big opportunity. And for exactly the reasons that you just said, you know, the assets that we have we think make a real difference as we get into the T Fiber business. And Mike said that we're gonna do our launch later this quarter. And you'll see us leverage some of these capabilities in our go-to-market approach, you know, things like our brand. And leveraging our national advertising campaigns that we already do for our broadband business today. Things like on-the-ground distribution. And if you look at a business like Lumos, they've never had the benefit of a big retail distribution in the ground in those markets. With big customer flows coming into them that we'll immediately be able to take advantage of. The customer list with HSI because HSI is a fallow capacity business. We do have customers, like Mike said, over a million that are sitting waiting for broadband from T-Mobile US. Some of those customers happen to be in these Lumos markets that we'll immediately be able to serve. So you're gonna see us start to and begin, once we do our commercial launch, take advantage of those, and bring people straight on to T Fiber.

Terrific. Thanks, Ben.

Operator, time for the next question, please.

Our next question comes from Samuel McHugh from BNP Paribas. Please go ahead with your question.

Go ahead, Sam.

Okay, let's move on to our next question. I realize...

Oh. There you go. I'm in now. Sorry. I was on mute. I did the classic thing. I was saying, hi, Srini as well. A couple of questions. One is just on the price ups. You managed them incredibly well last year. In terms of churn, but some of your peers have struggled more recently, I think, with price ups. So as we're looking into Q2, should we think about a pretty decent step up in churn rates? I guess that's question one. Two, it looks like you could have gone a bit heavier on, you know, kind of marketing and promos and trying to win customers in Q1. There yeah. As we can see, the strong EBITDA result. Did you hold back in the first quarter? I'd love to hear your views on kind of industry dynamics. Thanks.

Love it. Well, thanks, Sam. First of all, on the pricing, you know, what we are out there doing right now is really just completing a project that started last year to get after some long-outdated plans. You know, first price increase of this kind in more than a decade. And I think because of that, our customers, you know, have a lot of acceptance of it. I think they understand especially since we take our time in a test and learn method like we've been rolling this out, we understand how to talk to them about it. And explain to them what's behind it, and they've been accepting it. And so that's gone really well. It's only affected some customers, but it is millions of legacy rate plans. And the churn artifacts that you see from that are temporary in nature. I mean, the notifications were in Q1. The bill actually changes in Q2, you see the effects across both quarters. So far, it's coming in just as expected. So, you know, and again, that shouldn't surprise you because we've been doing this in such a stepwise fashion over a period now. Of many months of rollout. As it relates to promotional intensity, you know, my personal view, and I'd love to turn to Jon Freier next, is that the nature of competition keeps changing. But the extent of it isn't changing the way a lot of investors think. And this is kind of a misunderstanding, there. I want to be clear that, like, overall in the industry, while it's competitively intense, the industry overall is more successful now than it has ever been. I mean, think about that. Overall industry cash flows over the past twelve months are just about 50% higher than 2022 levels. Just three years prior. That's amazing. And that's on the strength of 5G, and it's not on the back of customers. Customers are experiencing three times more data and four times better speeds across the industry, not T-Mobile US. Than just five years ago. For every dollar that they spent. So customers are getting more, the industry based on cash flows, is, you know, cash is king, is more successful than it has ever been. Even in the environment of the promotional intensity that you're asking about. Specifically on Q1, you know, in every single quarter, we can do more than we do, and we're guided by this discipline that allows us to go after the ads that we think are going to make the biggest long-term impact to our business so we can really serve people over the long haul. Maybe you can talk just a little bit about competitive dynamic that we saw in Q1, Jon, and how we were able to deliver these outsized results.

Yeah. So as everybody knows, as you can see from the release, it was just a phenomenal quarter for us at 1.3 million total postpaid net additions and leading in the overall gross adds across every single postpaid category. And like Mike said just a few moments ago, the competition's always changing. Sometimes you're competing a little bit more on pricing, on your traditional plans. Sometimes it's a little bit more on devices. And what you see this dynamic is more of a promotional on devices kind of competitive intensity. In the marketplace. But that's been pretty generally consistent from the last several quarters. And what we have found is customers, you know, continue to love a great product, a great value, and paired with an incredible experience. That's why you're seeing the kind of responsiveness that you're seeing from us, you know, quarter after quarter after quarter. And not just, you know, some of our high growth areas, but also across like Mike said in his prepared remarks, across our top 100 markets. And across smaller markets in rural areas. Even in our top 100 markets, we're still growing across each one of the cohorts that we talked about in our Capital Markets Day where we're number three in share position or number two in share position or perhaps even number one in share position, we're growing across each one of those categories and continuing to find ways to win that's resonating with customers.

I think a lot of people would be surprised to hear we're still gaining share in the top 100 markets versus a year ago. And we're not, but some are. And, you know, it just goes to the strength of the differentiation the value proposition. I think T-Mobile US is in a spot right now where it's more differentiated versus the competitors than it ever has been in our history. With the strength of our 5G network, all the things we're doing with T Satellite, the Magenta status kind of member, you know, benefits of membership benefits that we're able to convey to people, and the day-to-day superior experience that only T-Mobile US people can provide. And, you know, that's showing up in all-time Q1 customer results. So, you know, my general sentiment on it is, this is a great neighborhood, this industry, and T-Mobile US is the best house in it.

Peter, perhaps you could touch on the EBITDA results.

Yeah. I mean, you know, it's just, as Mike said, the question of are we slowing down in terms of what we could have gone and get is absolutely no. We optimize every quarter, as we've long said, for the most value creation in terms of the number of nets. And Q1, much like on customer growth, much like on subscriber growth, much like on account growth or service revenue growth was very strong from an EBITDA perspective. And that allowed us, of course, with the M&A activity as well, to increase the guide for EBITDA for the year and have confidence in delivering that guide. As you know, one of the things we're doing this year is investing for some of those amazing opportunities that we laid out at Capital Markets Day that underpin the 2027 guidance that we gave. And we see a lot of that, whether it's now shifting over to new macro site build on a network or continuing to invest in digitalization and the opportunities that that unlocks. From a customer value perspective and love perspective and secondarily, the cost elements of it, we'll see a lot more of those happen as we get into Q2 in the balance of the year. So that's kind of shaping as I think about EBITDA. But very pleased obviously with the Q1 results across all the financial metrics.

Thanks, Sam. Operator, next question, please.

Our next question comes from Peter Supino from Wolfe Research. Please go ahead with your question.

Hi. And thanks. Two, if I may. One on Lumos and Metronet and US Cellular. You have a lot of future EBITDA that is coming over the next several years and not in your long-term guidance. You've budgeted the cash for those, excluded from your buybacks in your long-term guidance. And so I wondered when and how you might incorporate those acquisitions in your EBITDA guidance. And then kind of on a parallel M&A track, I wonder if you could talk a little more about cable assets as theoretical strategic assets for T-Mobile US, especially as the number of fiber assets dwindles. Thank you.

We'll turn to Peter on the first one. Maybe I'll pick up the second one.

Yeah. I mean, that's just simple. Honestly, we'll update you subsequent to as and when those acquisitions close. So both for MetroNet, as I said earlier, we'll give you kind of a bigger picture around the total T Fiber strategy once we close that. And US Cellular will give an update to the initial figures that we gave in the press release early on. As and when we close the transaction. But you're absolutely right. It's very exciting to be in a position where those strong 2027 guidance figures that we gave actually excluded all of these elements of M&A. So that's something...

But includes some of the cash...

But includes the cash outlays when we talked about the capital investment profile. Yeah.

And we'll do that just like we did it for Lumos. And so we closed Lumos this quarter, as you saw in our guide, we indicated to you that this will be slightly accretive to service revenues. It'll be about neutral to EBITDA this year because it's a growing business, a subscription business. And then overall, between that and our positive momentum on ARPA, you know, we're seeing positive upside to prior guide on service revenues, probably squeaking in closer to 6% than the prior guidance of around 5% based on both those dynamics. Exactly. So second question, do we want a cable asset? You know, it's hard to answer that one. You know, I don't want to sort of speculate on rumors and all that stuff. But I think we've kind of mostly shown our hand here. Look, we're a growth company. I mean, we are a growth company. And so what you show what you see is our interest in 5G broadband that has made us the fastest-growing overall broadband company in America. For thirteen quarters. And you've also seen us show our hand in terms of wireline Internet as having an interest relative to other things in pure play fiber. Why? Because it's a growth category. We also think it's the most elegant way to serve customers. It's lower cost. It's a superior product, and more consistent with the way we run our company. So I, you know, I can't talk broadly about rumors and speculation and all that, but our strategy is pretty clear here. And I love the hand we have because we are leaders in broadband today, intend to continue to be, I think you'll see T Fiber continue to play a bigger and bigger role slowly and systematically over time.

Thank you, Peter. Operator, next question, please.

Next question comes from John Hodulik from UBS. Please go ahead with your question.

Great. Thank you. Mike, it seems like churn is up sort of across the board from the wireless carriers here. And I it seems like a lot of it is driven by price actions. So two questions. So first of all, in the past, you've said that a bigger switching pool is good for T-Mobile US because it allows you to take share. Do you still believe that's the case, number one? And number two, do you think we've pushed a little too hard on pricing? Because it does seem like you're seeing a little bit more sensitivity than I would have thought for the entire industry. You know, have we pushed as far as you think we can go? And then one quick follow-up. Are you guys seeing any macro pressure in the prepaid market or on the wholesale market that is starting to emerge from what we're seeing in the account? Thanks.

Okay. Great. I'll start. Maybe we'll turn back to Jon on the macro pressure on prepaid and wholesale question. You know? So overall, right, you saw across the industry churn was just on the margin a little elevated, and I think there's a number of dynamics there. That probably have more to do with kind of macro questions than with competition. You know, I think people there's a certain element out there where people are in a time of uncertainty about the future. Grabbing what they can afford now. And so you're seeing kind of some amount of probably move forward of upgrades and switching. And so churn was a little elevated for everybody, and upgrades, you know, seemed to be happening at pace. And, you know, I don't know if that's tariff questions or what's the, you know, what's the economy gonna look like tomorrow questions. I'd say, you know, whenever I get asked about the economy, my first answer is, you know, we're not really the people to ask. I mean, we're probably the least canary in your coal mine because people feel so strongly about this category that will find a way to keep paying their bills. But there might be a little bit of a pull-forward dynamic happening. And, you know, of course, it is competitive out there. But as I said, in response to a prior question, I think the nature of that competition just keeps changing. By the way, in the first moment when it changed, sometimes again, you see a little bit of a pull-forward, and there was a lot of focus on devices over the past few months. Your question about kind of how much more of this can we take, I mean, I know how to answer that other than, you know, it is competitive. And again, when you look at the lens of the companies overall in the industry and their performance, it's similarly competitive because the companies overall are delivering all-time record success. Certainly, T-Mobile US leading the way in our financial growth on things like service revenues, EBITDA, and cash flow margins. Switching to your second question on oh, and is switching still an opportunity for us? Absolutely. And I think you can see that in our all-time record results. In Q1 that corresponded with the question. And then what's happening in prepaid, Jon? And is there anything about the macro environment that might be affecting industry prepaid debts? What are your observations?

Yeah. John, thank you for the question. You know, what's happening in our prepaid business is really great. This question that got asked last time in terms of what might be happening with immigration. And I responded, I didn't think that a whole lot was gonna be affecting our business because we have a premium monthly subscription business for the most part in our prepaid segment, largely led by our Metro by T-Mobile US brand. We're serving nearly 25.5 million prepaid customers now that's turned out to be exactly the case. There's been some uncertainty out there that's affecting some transactional prepaid brands. That's more in other companies versus ours. Our business has been very, very stable in this area. And as you saw that we had another quarter of growth. When you look at the last four quarters, 350,000 post prepaid net adds over the last four quarters. This particular quarter that we just finished nearly 50,000. In churn, that's actually reduced also on a year-over-year basis by seven basis points. So we're seeing nice stability in our overall prepaid business. You know, what's also happening when you do look at any kind of delinquency rates or payment arrangements or anything that's happening with the consumer, none of that's really changing in our business at all. So it's very nice and stable. As Mike said, we might not be the first canary in the coal mine to tell you what's happening because people find this category so indispensable. And if there ever is any kind of change there's more of a value orientation, well, we're ready to serve because we know how to serve customers in that kind of an environment as well. So yeah, very, very pleased in the overall prepaid business and what we're seeing.

And I think, John, you asked also about wholesale and what are we seeing there. And question because there's obviously a lot of moving pieces in our wholesale and other service revenue component. And what we're really seeing there in the underlying trends so there's long-expected things happening there with respect to Dish and TracFone, and those are declining as we anticipated. What we have in the underlying business, if you take away the expected Dish and TracFone declines is actually growth. And when you take that and couple it with the other service revenue, which is really T-Ads as well as the M&A from Vistar and Bliss, we believe, you know, Q1 was really the low point for us in wholesale and other service revenue, and we anticipate then growth to continue throughout the year and probably will end full year in that $2.9 billion range between the underlying wholesale growth, again, excluding Dish and TracFone, long expected and then T-Ads including Bliss and Vistar and our ability to scale those.

Thanks, Peter. Thanks, John. Operator, next question, please.

Our next question comes from James Schneider from Goldman Sachs. Please go ahead with your question.

Good afternoon. Thanks for taking my question. I was wondering if you could maybe contextualize the contribution you're expecting in broadband in your overall postpaid net additions for the year, do you think you can sort of maintain this pace of high-speed Internet fixed wireless additions above 400,000? And maybe give us a little bit of color on how much fiber adds you might expect once you close both Lumos and now MetroNet? By the end of the year or some kind of run rate? And then as a sort of second question, I want to sort of ask what environment you're seeing right now in terms of gross adds thus far in Q2? Some of your competitors have talked about an elevated gross add environment actually accelerating into Q2. I'm wondering if you're seeing the same thing. Thank you.

Okay. Great, Jim. Thanks. I'm gonna turn to Mike. I mean, we probably aren't gonna give you too much. We don't really guide on these metrics, but at least we can tell you a little bit about how we're feeling about it and what we're seeing on 5G broadband and a little preview on T Fiber.

Yeah. I mean, what we're seeing on 5G broadband is just fantastic. And I think the team that runs this for us has just done an exceptional job. Mike mentioned in his opening comments, 13 quarters in a row, in 5G broadband being the leading broadband provider in this category. And you've heard me say this before, so I'm sorry if you're getting tired of it. But the reason for that first and foremost, is because it's a great product. You know? Broadband is an essential category for people, and they're not gonna compromise. And 5G broadband is meeting the needs of millions and millions of customers across America. And that's really what's driving the growth for us in this category. And you're seeing that reflected in things like churn. Mike mentioned upfront, this was the lowest churn quarter that we've seen in our broadband business. You're seeing it in our satisfaction scores. We've long been the leader in NPS scores in our 5G fixed wireless business. That lead is growing. We had the biggest delta between us and the other categories in Q1 that we've ever had. You're also seeing, we made some adjustments of pricing at the end of the year. Mike mentioned the ARPU gains that we had year over year. You know, you're seeing customers like we see in our postpaid portfolio self-select into the broadband plans that offer them more and more value. So, this business is going great. And it's one of the things, like, we talked about when we first discussed fiber, has given us so much confidence about our opportunity to succeed in fiber as well because we can use a lot of these same capabilities that we've built in running a national scaled fixed wireless business to go succeed at fiber. And I think succeed with some advantage. That would enable us to penetrate more and penetrate faster into the markets where we have fiber. Getting into the specific numbers, we're not ready to do that yet. Maybe we'll save that for after we close the next transaction, but we're really looking forward to it and think we're in a great position to succeed.

I think we're very much on track for the 12 million subscribers we talked about last fall by 2028 as well. As it relates to your question about kind of ad momentum inter I thought I'm surprised it took till the fifth question to get that. I'm gonna resist the urge. I really wanna tell Peter to put his spreadsheets on blast and just send them out. But, you know, last quarter, we resisted the urge to give you much, intro color. We're gonna do it again. I can tell you a few things. One, reminder, Q1 was an all-time record in terms of postpaid net additions and gross additions for T-Mobile US. We also moved up on ARPU and ARPA on the strength of self-selection of the rate card, some of the optimizations, and the overall competitive dynamic. We also moved up service revenues related to all that. Marginally. We're defending the highest guide we've ever had on postpaid net additions and therefore phones for a Q2 even better than last year's guide, which was an all-time record year. So those are the things I can tell you. Hopefully, you can tell we're feeling great about the year. We think we're very much on track for the things that need to unfold for us to deliver our year as well as our multiyear guidance to you. But we're gonna resist the urge to provide intra-quarter dynamics for you. Okay. Okay. Great. Thanks, Jim. Operator, next question, please.

Our next question comes from Craig Moffett from MoffettNathanson. Please go ahead with your question.

Hi. Thank you. Let me ask the obligatory question about tariffs. Since it's likely that we'll see fairly significant tariffs on handsets, coming in. How do you think that plays out in your business? Do you think that we are likely to see higher handset prices? And if so, will that dampen upgrade rates, or is it likely that those will be absorbed by the promotions that you and your competitors offer? And so I'm just wondering how you think about how that plays competitively.

Yeah. Thanks, Craig. Yeah. I mean, it's pretty hard to predict right now what's going to happen from a tariff standpoint. Obviously, it's a moving target. We certainly understand the goals of the administration. It's not clear how much this is gonna affect the handset market. I think to the extent that it does land and if it's a material thing, you know, ultimately, I think we're gonna see that the customer is gonna wind up having to bear that cost. You know, taking on something big on the tariff front is just not something our business model is interested in trying to do or able to try to do. So, you know, it's gonna the customer's gonna wind up bearing the cost of that, and probably the dynamic of that would be a slowdown in upgrade rates. Exactly to the premise of your question. And that has other tumble-on effects in terms of possible benefits and possible costs to us that we would adjust for. Add it all up. Right now, we haven't seen anything that causes us to think there's any kind of material impact to our business coming either way. And, you know, obviously, if something changes on that front, you know, our investor community would be the first to hear. But right now, we don't see anything on the horizon that would rise to being material or causing us to second guess our guidance we've shared with you. Anything to add to that, Peter?

No. I think that's everything we see today. It is embedded in that EBITDA guidance. Again, we reiterated CapEx guidance. So we're continuing to build. We're continuing on all of that front. But as you mentioned, it is a very dynamic environment and we continue to monitor it, of course.

Thank you, Craig. Operator, next question, please.

Our next question comes from Timothy Horan from Oppenheimer. Please go ahead with your question.

I bet, guys. Comcast said today they're seeing more and more using their mobile devices to replace their home broadband. Are you seeing much of that? And you know, I know you have a new price plan out there with 250 gigabit, you know, hotspot. Is that intended to maybe help that process and I guess related to that, are there other things you can do to create almost quad play, like, services so people cut their wireline or broadband? Thanks.

Yeah. Thanks. It's always been a dynamic we've seen, Tim, in the category especially among the prepaid sub-segment. So there's a pretty significant part example, of our Metro by T-Mobile US base where their Metro phone is their only connection to the Internet. And the percentages go down as you kind of move up the prime scale and into postpaid. It's always been a dynamic that we've seen. I don't have any evidence it's really changing in a significant way. But on the other hand, as people are faced, with, you know, tough economic choices, and some families are, you do see that they prioritize wireless. That we've seen, and we've been seeing it now for nearly a decade that when forced to choose, they would prefer to have wireless than broadband. That's the most important connection in their life. But I'm not seeing a sort of secular change in the dynamic there so far.

Thanks, Tim. Okay. Let's go over to social. We've got a question from Roger Etner for Callie. Could Callie talk about the T Priority progress and what do we expect for the year?

Hey. Thanks, Quan. And hey, Roger. Thanks for the question. Look. I'm seeing that T Priority is one of the most exciting growth opportunities ever for T-Mobile US for Business. In fact, we just delivered the all-time best-ever quarter for first responders with T Priority. And I'll tell you, our growth is happening across the country in smaller markets in rural areas, in top 100 markets. We welcomed the city of Las Vegas, we welcomed the police department. We welcomed Oklahoma City Police Department and so many more. In fact, it was the best quarter for new account growth with first responders as well. Our funnels are up 50% year over year, and it really is a pretty fantastic solution for first responders. And I'll remind you guys, it is the only truly nationwide slice available for first responders on a 5G standalone core architecture. We're seeing the double the capacity, two and a half times speed, and the priority and preemption along with the most availability and the most reliability, really resonate with first responder customers, I couldn't be more excited about it. Thanks for the question, Roger.

Okay. Thanks, Callie. We'll go back to the phone now. Operator, next question, please.

Our next question comes from Greg Williams from Cowen. Please go ahead with your question.

Great. Thanks for taking my questions. You spoke a little bit about cable M&A. You mentioned that pure play fiber and you being a growth company that would be your focus. There's media reports out there that's saying, you know, you could be presumably passing on the Lumen fiber to home assets that could be a fairly attractive price. So, you know, you guys have that $20 billion disposal capital envelope. Just curious to hear your thoughts of that type of M&A and that sort of size of a deal to augment your T Fiber business. Thanks.

Yeah. Thanks for the question. I mean, we don't really have anything new to report here. What I've been saying for a while is that we are interested in the space. We are, you know, out there kicking the tires. And, you know, our appetite is limited and it, you know, has to be just the right thing. And we've kind of shown our preference for pure play fiber. Doesn't mean we're going to limit ourselves to that, but we've shown our preference for that. We also love the strategy that we've already unveiled. I mean, you know, if you think about our fixed wireless product moving to 12 million, our Lumos and MetroNet moving to 12 to 15 million homes passed, on top of 12 million customers. That's a pretty substantial footprint already. Allows us to be choiceful. You know, if there's things out there that we think could really add value and that we could derive a great return for our shareholders, like we have in these first two, where we predict IRRs in excess of 20%. Then we'd be interested. And, you know, probably the simpler and more elegant more pure play, the better. But you know, it's not a hard and fast rule. Great. Thanks, Greg. Alright. We'll go back to social. This is a question from Chetan Sharma for probably Ulf. Congrats on a great quarter. Could you please give us some insights on how slicing usage is growing across different applications and industry segments?

Alright. Well, thanks, Chetan, for the question. And as you know, the network team and the company went all in with 5G from the beginning. We had a standalone core already back in 2020 launched. And in 2023, we started to play around already with network slicing. We started in sports events because it's a great way to show that it really works. We did it for PGA golf. We did it for MLB baseball, and we did it for Formula One in Las Vegas and so on. And we were able to demonstrate that we can do points of sales on network slides. We can do critical communication for the events on a network slice. All of that has led us in '24 to industrialize this much more. I think one of the best examples of this is we launched a security slice where we can tie SIEM security all the way through a slice into the network core. And as Callie mentioned earlier, the key priority is probably the best demonstration of how well this really works. Much more to come. We can see several use cases that are coming up in health care, manufacturing, in retail, where slicing provides the network experience that people really want and all powered by our formidable 5G network, end to end with standalone core. Callie?

Well, that was very well done. I'll take you out on the road. I just was gonna mention, when it comes to a broadcasting slice, we announced this past quarter an interaction that we had with Disney Studios where we provided private 5G and a network security slice where they were able to broadcast from remote locations to their studios real-time, and that was on Lilo and Stitch. That was a very cool use case. TSIM Secure, we literally have tens of thousands of SMB customers that are signing up for T SIM Secure when they don't have a sophisticated IT department, for instance, this is a really fantastic use case for them. And point of sale systems have become fantastic ways for people in sports and entertainment to make sure that they cut down on long lines, that they provide security, and that the fan experience is just the ultimate experience with our point of sale slice. So yeah, it's been really, really great momentum, and I think what I would say here is we're just getting started. I mean, T Priority has been the most scalable and I think, really nailing the pain point and the use case on the head. But we're just getting started here.

And to that just getting started, point, one of the things we announced today is that we're nationwide with 5G advanced. And that makes the slicing capabilities easier. Because in the early going, part of the challenge with slicing is each implementation is kind of a bespoke program. And now we're moving into the phase where we can automate implementations for our customers, which just opens up the TAM considerably for us on the kinds of opportunities that Callie and Ulf just talked about. So we're very excited about the moment.

Okay. Thanks. We'll go back to the phone queue. Operator, next question, please.

Our next question comes from Kannan Venkateshwar from Barclays. Please go ahead with your question.

Thank you. So, Mike, just in terms of the fiber question, I think a lot of us are trying to basically figure out why 12 million to 15 million is the right number. And I think in the past, you've described this as more of, you know, funneling mechanism, fixed wireless being top of the funnel, and you're funneling people or upgrading people to fiber at some point. But if you end up with 12 million, then 15 million fiber passing just seems inadequate, broadly just from a long-term path. So it would be great to get your thoughts on why 15 million is the right number for fiber. And then, Peter, from when we think about the fiber business and the impact on the P&L longer term, I appreciate that you may not want to give us the details right now. But directionally, if we think about the business, initially, there might be some fixed payments you have to accrue to the JVs even before revenues start kicking in. So directionally, do these businesses become a drag initially, and then over time, they essentially start contributing and become accretive? How should we think about the framework? You know, over the next two or three years? Thanks.

Okay, Kannan. Those are two great questions. First on the question about fiber. Your question really goes to our why. What is our why? Why are we doing this? And, you know, I'll just kind of return you to our general premise here is actually pretty different than the premise that some others have in this space. And, you know, their premises are really based on the deep interplay with all the other products so-called convergence. And for us on fixed wireless, there's some of that. Obviously, opportunity. But the much bigger question for us is whether or not we can, based on our know-how and our embedded investments and our big customer base and our 5G network and our data and our strength of our brand and our distribution, whether we can just quite simply on its own, make a superior return in wireline fiber a purely disinterested financial investor could. And we think we can. You know, those first two transactions, we unveiled that we do see very strong IRR potential overall. And it's just kind of different than the premise that I think others have in the space. And it sort of showcases why we have the preference. Srini, you're a global in this space. You've seen the perspective both from the US and from Europe. Maybe you can comment on your views on convergence and how our strategy is a little different here at T-Mobile US.

Yeah. Sure. Thanks, Mike. So just picking up from where you left off, we normally tend to refer to convergence as a significant shift in consumer mobile buying behavior. Where they move to buying wireless products from their wireline provider. And that's the thesis of a few players here. As you said, our thesis on how this market evolves is different. Let me give you two or three data points that kind of support where we stand on this. The first one of those is more than 85% of the US for over five years has had the option of buying wireless from their wireline provider. Now to the extent that they've chosen to do that, that's built into our run rates. I think the second piece is behind this thesis of convergence is this story that somehow convergence is inevitable in the US like it was in Europe. Now there's a flaw in that theory, it isn't inevitable in Europe. Some of the biggest European markets, whether that's Germany where I recently worked in or the UK, have convergence levels that are lower than the US. And that happens because whether the change in consumer behavior or not happens or not, is down to market-specific things. And you look at the US, the extent to which we have family plan bundling, in wireless, I mean, the US is probably the only market I know where wireless churn is significantly lower than wireline churn. Which tells you something about the quality of those wireless relationships. You put all of that together, and that's why our thesis on convergence is different. That said, we see a significant opportunity to make equity-enhancing investments in fiber so the question for us is always going to be what's a good investment in fiber versus whether it's big enough. And that's the difference in questions we're answering, I think.

Yeah. And well said. And I think to the very specific question you asked about the 12 to 15 million, you know, I hate to give an unsatisfying answer, but it sort of it depends. You know, we're gonna follow the capital allocation strategy that Peter has laid out over and over again. And to the extent that we see opportunities, based on all of our strengths, embedded capabilities, know-how to make a superior return and therefore deliver you, our shareholders, with a superior return, we're interested. And, you know, that may not mean that 12 to 15 million is where we end. But it's certainly taken the first two JVs plus our wholesale partnerships where we think we're tumbling to with the transactions already decided on. You know, we'll see where the future takes us on this one.

Yeah. You know, as you were asking Kannan about the long-term growth and how do these play out, I won't speak to MetroNet yet. It's not closed. It wouldn't really be appropriate for us to do so. But as I think about this, the first off, on the Lumos JV, there are no fixed payments. We aren't settling ourselves with fixed payments. All of this is funding accretive growth. And that's the exciting part of all of this is whether it's remember, we have 50% economic interest in the JV itself, the Infracro, which is gonna continue to grow in the case of Lumos as well to pass a significant number of households. And for us, it's about customer growth. Funding subscriber acquisition. So that's what we're investing in right now. And as you think about what that returns from a value proposition into the longer term, that's what we're doing here. It's not just funding today's growth. It's funding the growth of T-Mobile US beyond 2027 even. How do we set the company up to be a high-growth company many, many years beyond just the Capital Markets Day that we gave? So it's important, I think, to think about these structures because of the way we did them as cash-generating structures. You know, we talked about Metronet in particular. In the case of the current plan that we put into the press release is the case for this, we are already gonna be seeing distributions back before the end of that 2030 period and the six and a half households six and a half million households pass there. But all of this is funding strong value accretive customer acquisition and creating great long-term value creation for T-Mobile US.

Thanks, Peter. Thanks, Kannan. Operator, we have time for our last question.

And our next question comes from Jonathan Chaplin from New Street. Please go ahead with your question.

Hi, guys. Just one for me. Following up on the fiber discussion. Does it matter where the fiber locations are to you? Is it a matter of sort of building fiber in markets that don't have fiber today? Or is it more important for you to have markets in big growing cities which might also be markets where you need mobile capacity, some point in the future? And would love your thoughts. Given that you can get better returns on these assets than disinterested independent operators, would love your thoughts on market structure. Does it make sense for you guys to deploy fiber in markets that might have two players already or would you stick to two-player markets? Thank you.

Thanks, Jonathan. Let me try to simplify it. Shortest version of the answer is not really. In other words, geography is not one of the primary inputs into our thought process on this. And the reason for that is that so far, based on our experience in fixed wireless and in our pilots of T Fiber, there's a strong industrial logic for both places where we're highly penetrated and where we're less penetrated. And the obvious industrial logic kind of speaks to itself. You know, where we're highly penetrated, we have more embedded advantages and therefore less friction. Where we have less penetration, we have more upside. It can be a great front door. And we're just pretty open-minded on that front. And part of it is if you look at our high-speed Internet business in 5G, it's geographically distributed all over the country because it really isn't about marketing in one city or another or in a rural area versus a suburban area. It's about finding pockets all across this country of capacity where no normal amount of mobile usage any time soon will take up our capacity and where we approve applicants for fixed wireless. So that's our fallow capacity model. And since it is so widely geographically dispersed, the natural synergies don't inform the decision as it relates to geography. Based on that, I forgot your second half of your question already. What was it again, Jonathan? It was about geographic. Are we gonna go into places with two existing fiber players or two broadband players? I mean, the very...

Our intention is to move quickly and for the majority of our work to be first to fiber. And, you know, that's where the returns are best. That means there's probably a cable operator. There may be fixed wireless available in that area. But our intention, generally speaking, is to be first to fiber.

Alright. Thank you, everybody. That's all the time we have. We're excited to speak to you again soon if there are any further questions. You can contact the IR or media departments.

Ladies and gentlemen, this concludes the T-Mobile US's first quarter 2025 earnings call. Thank you for your participation. You may now disconnect, and have a pleasant day.