T-Mobile US, Inc. (TMUS) Earnings Call Transcript & Summary

Hi, and good morning and good afternoon. Welcome to day 1 of our European TMT Conference coming to you from the virtual Barcelona. And we're delighted to welcome back T-Mobile, one of the regulars at the event. And Peter Osvaldik, the CFO; and Mike Katz, the President of the Business Group, welcome.

Thank you, Simon. Great to be here virtually in Barcelona.

Thank you. Good morning. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. There is also a question box on the webcast, so feel free to submit questions, and we'll get to those as we can at the end. So Peter, you had an Analyst Day back in March, you put out long-term guidance. You talked about the priorities for the company, the updated synergy guidance. We're now exiting '21 where we've had a great year for the wireless industry overall. You've continued to raise your guidance. How are we positioned into '22 and beyond?

Yes, absolutely. Thank you, Simon. And before I jump in on that, of course, in all these conferences, we may make some forward-looking statements. [ So we have a ] number of significant risks and uncertainties. So please look to our SEC filings. And of course, we're in the quiet period for Auction 110, so I can't comment that. But as we look into 2021 and what we've done to date, I'm just so spectacularly pleased with the performance of this team and this company. Now as you mentioned, we've exceeded not only Wall Street expectations every quarter, but even our own in terms of where we are with the integration and the network build. So that's really the primary focus. I think about the priorities for the balance of 2021 as we close it out and into 2022, of course, it starts with the network, right? The product that everybody sells. And you just heard earlier this week, we announced that we hit the 200 million nationwide POPs coverage milestone for our Ultra Capacity 5G network, which is just a tremendous milestone ahead of schedule. We originally -- when we accelerated it and anticipated it to be at the end of this year and hit that 6 weeks early. So tremendous success. And that covers about 80% of our existing T-Mobile customer base. So it's just an impressive way for them to get differentiated experience. And of course, our extended range coverage. We continue to build that and have hit 308 million covered POPs there. So tremendously excited about the network build and what Neville and his team are doing. And we'll get into how that really presents itself as differentiated opportunities for us. The second priority is, of course, Sprint integration, and accelerating the Sprint integration and getting through this hurdle and bringing all of those customers over because of all the goodness that, that brings on the back end. And we'll talk a little bit more about where we sit in integration. But that's something we're hyperfocused on because of what we've seen with the small cohort of customers that have come over fully and actually are churning at par with Magenta customers, which we always had as the hypothesis when we brought the full value proposition to these customers that, that would be what ultimately transpires and creates a tremendous tailwind for us and a headwind for competitors. Right now, of course, during the integration period, we acquired a customer base that was churning at over 2% on the postpaid phone basis in Q4 of the quarter before the merger. And our goal was to always cut that churn by half, the delta between Magenta churn and Sprint churn. And so we're tremendously excited about the progress by accelerating this, what we've seen with the cohort of customers that have come over and what we've been able to do with the customers that have not yet received the full value proposition. But the focus is to accelerate that integration as much as possible and get all of that goodness and tailwind behind us. And the third priority is really focusing on all of the differentiated growth opportunities that we have. And you've heard us talk about smaller markets and rural areas. We'll certainly dive into enterprise and government opportunities with Mike Katz here today. And of course, our high-speed Internet business. So those are very differentiated growth opportunities for us. While, of course, also having the dominant 5G network and the ability to continue to grow in the markets where we've been strongest to date. So that's really what we're looking at. And as we look past '21 into '22, really working and building on the momentum that we've had on all 3 of those areas as we focus on synergy unlock and the free cash flow unlock that, that brings and are tremendously excited about as we rotate from '21 into '22. So that's really the 3 top priorities for us right now, Simon.

Great. Great rundown. Mike, maybe we can pick up on Peter's point around the network milestone, 200 million POPs. Help us understand how that resonates with enterprises and how you're in a position to monetize that.

Yes. Thanks, Simon. Yes, it's a really big deal for enterprises. Because enterprises and government agencies, in particular, they buy [ on network ] and network performance first. And you've heard us talk about this before that when we're selling to an enterprise or a government agency, they don't just take our word for coverage and network performance, they actually put us through very, very rigorous side-by-side testing with the incumbents. And we're only considered if we win. And what we're seeing in our business is we're coming out on top of those tests more and more. And in the 5G area, we're coming out on top the majority of the time. And I think -- we talked a little bit about this in earnings, but I -- we really think that the first big 5G use case is core connectivity. And I think that's particularly true in the enterprise space for all the reasons I just said a second ago, but also because enterprises and government agencies have long purchase cycles. They may only buy this category once every 3 or 5, sometimes even 10 years. And so when they're making a decision, they want to make sure they're picking a contemporary technology and one that has durability for the time period that they're going to be used. And in the 5G, where we are with 5G right now, it's -- there's only one clear leader in that space, it's us, and it's really helping us a lot. I also see -- you're going to see more and more products emerging out of 5G and some of them are already in the market. And I think for enterprise and government customers, one of the first categories is broadband. And earlier this year, we announced a couple of different products for business customers and government customers in broadband, including a product that's helping facilitate remote and hybrid work, our home office Internet product, which we're seeing really small demand for. We're also offering a full broadband replacement for small businesses in our small business Internet product. And we've seen also great response on that because [ life ] for consumers, small businesses have very little or no choice in broadband selection. And that little choice is resulting in huge, huge fees for their monthly broadband connection. So we've seen our value proposition resonate with small businesses really, really well. And then I think one of the other categories that's kind of -- I call it an earlier adopter to 5G is IoT. And IoT, like I talked about with core connectivity, companies that are purchasing big IoT that really requires the capacity of a 5G network also have really long time [ for assets for it ]. Oftentimes, these IoT devices will be in production for 5 or an entire decade -- 5 years or entire decade. And so when those companies are making choices, they want to make sure that they've got a network that can perform today, but also that they have confidence it's going to perform for the duration of their project. And we're really seeing some good momentum in the IoT business with those kinds of use cases. One of the best examples is in automotive. When car manufacturers are putting connectivity into a car, they know those vehicles are going to be on the road for 10 years. And they're looking for networks that will work where the vehicle is going to be and that they have confidence will work for the next 10 years. And over the course of this -- just this last year, we've announced big partnerships with VW, who's integrating T-Mobile into their vehicles. Daimler will exclusively be using T-Mobile in the U.S. We also are going to be working with Hino Motors, who just started launching their vehicles in Q3. And then you're going to see some additional announcements that we make in the auto space. And again, primarily because auto manufacturers are attracted to 5G leadership. And so we think that's a space where we'll continue to see a lot of momentum.

Great. And maybe just to level set us, just remind us on where new T-Mobile sits today in terms of market share? And what you see as the opportunity over the coming years?

Yes. As we've talked about since merger, we are -- we have about 10% share in the government and enterprise space. But I would say, rapidly growing, including this last quarter. One of the things that we announced at earnings this year is it was our single best quarter that we've ever had in enterprise from a gross and net add perspective. So we see rapid growth really fueled by an improving win rate for opportunities that are put in front of us, both in enterprise and government. And when we look at win rate, we really look at kind of 2 different things. One is when we're competing head-to-head against an entrenched incumbent, and then when we're competing for greenfield opportunities where an enterprise or government is deploying connectivity for a project for the first time. And what we're seeing in both of those areas is really exciting. On the opportunities where we're competing against the incumbent, we're seeing a win rate that is well above our market share and improving. It was the highest that we've seen to date in Q3. And then on greenfield opportunities, we're seeing an even better win rate when there's not an incumbent in place and where there's a brand new project. And both of those are leading to a really exciting growth trajectory that we've seen over the course of the last several quarters. In fact, if you just look at our growth since the beginning of 2020 relative to kind of the category leader, Verizon, we've outgrown them by over 50% since the beginning of 2020. So we feel like we're making really, really good progress on that. The other thing that's helping is the kinds of partnerships that we're getting. T-Mobile has always done business with a lot of enterprise companies, but typically smaller projects that -- and typically, we're not the primary -- we haven't been the primary wireless provider. And that's really starting to change. The kinds of projects that we're getting involved in are putting us in a position where we're either the primary or the co-primary wireless provider for enterprise. And you're actually going to see us make an announcement here really soon where it's not very typical in the enterprise space where an enterprise picks one single provider. Typically, they've got some redundancy, but we have a big enterprise announcement that we're going to make here shortly, where you're going to see a major enterprise who made the decision to use T-Mobile exclusively. And we're seeing more of that behavior more and more, which is really helping us. But because of all that, we've talked that our goal for this 5-year planning horizon is to double our market share from 10% to 20%. I feel like we've made really good progress towards that, and I have high confidence that we will achieve that 20% with the potential of upside over this planning horizon.

Right. Great. Peter, maybe if I could pick up on your commentary on the early experience of the Sprint migration across in the low churn. And I think you gave us a little bit of an insight into what could be down the road saying that your net adds could have been 1.2 million if you had similar churn in the base. So that's sort of the promised land. Help us understand the road map here. And how many more quarters do we expect this sort of migration? And is it going to be continuing at this sort of churn rate? Or just what should we be expecting early part of '22? Second part of '22? And then when are we really in a kind of an entirely new T-Mobile?

Yes, absolutely. So let's start with the road map and how I think about it. It certainly begins with the network. I think, as of Q3, we've already migrated over 90% of the customer traffic onto the T-Mobile network, which allows -- of course, as that traffic falls off the Sprint network, allows us to do a couple of things. One is to start decommissioning cell sites, which we're doing already at pace. Of course, '22 is the biggest year for site decommissioning. And two, is to refarm the spectrum and put it to use on the anchor T-Mobile Magenta network and all the goodness that you're seeing happen there. So over 90% of the customer traffic is already on the network. We have about 53% of the Sprint customers whose traffic we have migrated onto the network. So meaning it's not just 90% of the traffic, part of which is done via think about it as seamless kind of intercompany roaming, and that's how the traffic happens. But 53% of our customers are now originating on the T-Mobile network. So they've either transitioned and changed their SIM out or they've upgraded to a new device that enabled them to be on the T-Mobile network. And so that's 2 big elements of it. That is going to continue into 2022. I can tell you since our target is really to decommission all 35,000 sites by the end of '22, that gives you a sense of how that traffic and that customer migration on the network piece will occur. So that will be throughout the course of '22. The other thing that we're ramping up, we're obviously known for our customer experience, customer care and our team of experts model that leads the industry from an MPS perspective, and it's just bringing so much goodness to the Magenta base, we're rolling that out to our Sprint customers en masse. Now that was a little bit -- during COVID, a little bit challenged to get everybody and get all of the customer care representatives that we needed and trained up, but we're past that and are really excited about the rollout which will continue throughout the start of '22. So we get customers into that base. We're also been very, very hyperfocused on device value propositions. And you've seen how we've exited quite rapidly out of the lease constructs that existed at Sprint and how the lease revenue has kind of fallen with that and bringing them on to the Magenta value proposition of EIP type of constructs with devices and all the goodness that, that brings with ultimate device ownership and all of the programs that you can enable yourself with. And then lastly will come billing migration. And I think we talked earlier this year, we have transitioned the vast majority of Sprint customers from their legacy Sprint rate plans onto their target T-Mobile plans. It's still in the Sprint billing system, but they're on their target rate plans. So as this traffic migration happens, as we roll out team of experts, the goal is that the billing conversion and migration is actually seamless and in the background and won't be a disruption to Sprint customers. So we're seeing all of those things will line up. The billing migration will lag. It was always planned to be very lagging because it will be seamless, right? And that was, again, one of the unique aspects to this integration plan is that we could disconnect the brand migration from the network migration, from the billing migration and really make those as seamless as possible for customers to create as little friction and potential for churn. As we think about the churn profile of the Sprint customers, so one thing we've done is we're going to do this quicker than we originally anticipated. And so that brings forth some of that churn. And we do believe, in totality, the number of disconnects from Sprint customers will be lower than what we originally planned during the course of the integration. Of course, we're bringing that to a tighter time line. And so that would mean a heightened period of churn. We certainly saw that in Q3 and Q4, you have seasonality in there. And we'll see that for the first part at least of 2022 as we accelerate this integration. And so -- but the prize is so tremendous in terms of tailwinds that you mentioned that we did give a figure at earnings of had the Sprint churn been the same as Magenta, then we would have had 1.2 million postpaid phone net adds. And we certainly didn't do any sort of calculation of how much less switching that would mean for the competitors who are temporarily benefiting from this heightened Sprint churn environment as we go through this as well. Just another reason for us to get through it. And as we said before, when we see customers, the full migration happens, and we see them on the Magenta value proposition in the platform, [ they're churning ] at the same rate as the Magenta customers. So it gives us a lot of positive momentum there and compels us to do this as quickly as possible. But I'd see it through the balance of '22 as we go through this process and decommissioning.

Okay. And Mike, if -- just follow up on some additional use cases. I think Neville was talking the other day about wearables. And I think AR/VR is seen as a big take. Obviously, there's consumer applications, the metaverse, et cetera. But for maintenance of aircraft engines or there's a lot of potential industrial use cases there. There's a lot of mobile edge compute, of private networks taking advantage of network slicing, low-latency. Any kind of interesting enterprise conversations or kind of areas that are going to be early from the kind of adoption phase?

Yes. It's something that we're really excited about because we do think the unique capabilities that come with this 5G network can start that creating some really new product categories for us. And we think we've got a real strategic advantage here because of the way that the network has been built and engineered. Obviously, we talked a lot about the scale of our network, both in low band and now in mid-band with over 200 million people served, so our network is more available than anyone else's. But there's also some really great engineering decisions that Neville and his team made when they built this 5G network, including the fact that we've got a dedicated 5G network for it. So our 5G traffic doesn't have to run through our 4G network, which for customers means a higher performing, lower latency network, just without any augmentation. We also have a really distributed MSO network. We've got a lot of data centers, which means that we can process closer to customers' applications on average, probably on average better than anyone else. And we think there's opportunity for us to take those and really put them to work to solve problems for enterprise and government customers. And you've heard me mention on previous calls that we have a number of trials happening right now in enterprise and government, both in mobile edge compute and in private networks. And these are big customers. We've got like 12 of the Fortune 50 that we're in trials with. And one of the things that we're seeing is the interest in enterprise and government is all around performance. They're looking for network performance, network reliability and network certainty on applications for jobs or processes that they're trying to complete. One of the trials that I talked about in earnings is with an airline. And the reason they're so interested in this performance is when a plane comes and parks at an airport gate, there's a bunch of tasks that need to be completed in a fixed amount of time. And the airline is really interested in having a network performance and processing capabilities that allow them to complete a number of tasks in the fixed amount of time that the airplane is there. And that -- and those are the kind of similar use cases that we're seeing from a lot of enterprises. They want the network reliability, performance and confidence that they can perform their tasks in an acceptable amount of time or an acceptable speed. So we have a lot of these trials going. We also have a lot of partnerships. We haven't announced all the partnerships that we have, but we have a number of them. And we think that taking a lot of these use cases to market is going to require an ecosystem of partners. One partnership we have announced and talked about is our partnership with Lumen. And we do -- we have a really great partnership with them. We are working on 5G and mobile edge compute use cases with Lumen. We've got a number of customers that we're deeply in trials on and some really interesting product -- excuse me, in some industry categories like logistics and transportation. We've got a really interesting retail use case that we're working on right now. But the other thing that we're seeing with Lumen is our partnership has expanded beyond just the work that we're doing on mobile edge compute. We've worked together with Lumen to bring a fixed wireless access service together on our GSA contract for government, and we're starting to bid jointly in those opportunities together. And then in Q3, we won together a big project with USPS that's focused on strengthening and modernizing its network infrastructure, over 32,000 post office locations. So the Lumen partnership has definitely yielded some more of these opportunities, leveraging our unique 5G capabilities, but it's also bearing some additional fruit. And that's one of the things that we're so excited about with these advanced 5G network services overall as we think they can be a real flywheel effect not just in monetizing the services by themselves, but by also continuing to push -- or excuse me, to expand our core connectivity business because as we deploy a private network or a mobile edge compute solution, we think it puts us in the driver seat in terms of being able to provide all the connectivity endpoints that an enterprise or government customer is looking for. So we think there's a real flywheel effect that occurs when we are selected and deploy these services for our enterprise and government customers.

And you know what's interesting, Simon, is that Mike mentioned why we're so competitively positioned with the network architecture to win a lot of these opportunities. And the guidance that you mentioned early on that we gave at Analyst Day didn't contemplate this. Anything that we win from an advanced network services, mobile edge compute slicing, commercial IoT is all upside to the plan and the targets that we put out there, where you know how we operate, we're always very prudent in terms of the targets we put out there. And as this business develops, Mike and team are just doing tremendous work around it, that presents, of course, potential upside to all of those planned targets.

Right. Well, Peter, we heard from Mike a lot about fixed wireless and the interest from the business use cases there. I think both you and Verizon provided some more disclosure, you've got well over 100,000 adds this quarter. I guess the question is -- for me is how are you releasing the capacity into that opportunity? Because I think you've been very kind of measured earlier in the year in terms of making sure that you were matching the supply and the demand and not wanting to overstimulate the market. You had some router inventory issues. So how -- what's the reality on the ground today? And how should that evolve over time? Because it seems like supply is as much the gating factor here as demand.

Yes, absolutely. Early in the year, as you mentioned, we definitely had some supply chain issues with regards to the routers, and we're pretty much past those. So despite those challenges, Q3 was just phenomenal. It was a record quarter for us, as you mentioned, more net adds than Verizon. And yet we commercially launched this product in Q2. So very, very happy with the progress there. We did say 2/3 of the activations were from cable entry, right? So you're seeing a lot of customer interest in this. I think we're well on our way to our target of 500,000 subscribers at the end of this year. But really, the exciting opportunity comes as this network build continues. This 200 million covered POP target was a tremendous first part of it as we decommission the sites for Sprint and are able to harvest and refarm all of that spectrum onto the Magenta network on our way in the end of 2023 to have 300 million covered POPs with Ultra Capacity and 200 megahertz of mid-band spectrum, which is another differentiator. It's not just the coverage in terms of 300 million covered POPs, but it's also the amount of spectrum that we're putting to work. Both of those elements are significantly more than AT&T and Verizon. So as that capacity continues to expand at breakneck speeds with what Neville and team are doing, that opens up more capacity for home broadband. And so we really see with the momentum that we're gaining, a lot of optimism for 2022 and beyond. And the customers that are coming, we're seeing tremendous NPS score improvement relative to their prior provider. And remember, 2/3 of these are from cable entry already. And we're also seeing the recent PCMag awards, customer choice awards, where customers' opinion of this product were above that of cable. So I think just everything is lining up tremendously well. And as we build this network out over the next 2 years and to now more of the smaller markets and rural areas where there's an even broader and better value proposition relative to what you're able to get in those places. So we see a lot of demand for this product. The network build is opening up more and more capacity. And as we've said before that also the beautiful part of this business model for us is you're building all of this capacity for all of the mobile phone traffic. And of course, Mike Katz's enterprise space and IoT and postpaid other, all the wearables. But in so many of these areas because of just how much spectrum we're putting to work, there's excess capacity. And that allows us to have a business model with fixed wireless that is using excess capacity that's already built to really go out and sell and have great value propositions for customers. You see our price points with taxes and fees inclusive as well as the router in and of itself for $50 with AutoPay. And that's not capital intensive for the business because we've already put all the capital to work to support the great growth opportunities we have on the mobile side. So tremendous goodness in gross margin falling down to the bottom line with the fixed wireless space. So -- and I tell you, it's something we're tremendously excited about. In 2025, what we put out at Analyst Day is 7 million to 8 million subscribers, which is really a single-digit number of households. And if you think about the value proposition, not only in suburban and urban, but also as this network builds over the next 2 years in smaller markets and rural area, I think that is really an achievable target for us. And hopefully, have some upside.

Right. And on refarming spectrum, are you still looking at a first quarter for the CDMA network?

Yes, absolutely. And the CDMA network, as you know, all 3 carriers will be shutting down their CDMA network. And that's important to do that we sunset these legacy technologies and are able to put that spectrum to work and get into the hands of customers, handsets that are really on the latest generation and allows all the goodness for them and really bridging the digital divide and bringing all of the goodness to consumers. We did announce that we are extending the CDMA shutdown through the end of Q1, and that was in discussions with the DOJ. As we were having those, we decided voluntarily to make this move to enable some of our partners the time that they've said they needed to complete the transition. So right now, Q1, end of Q1 is the CDMA shutdown timing that allows, as you said, all of that decommissioning and the refarming to continue.

Okay. Great. And I know it's less impactful for you, but this FAA concern around C-band deployment or at least the initial C-band deployments. Any clarity on the ability to resolve that quickly? How do you see that playing out?

For us, we believe that it will be resolved by the time our tranche of C-band -- remember, we played it all in the second tranche, so all of our C-band clears at the end of 2023, and we believe all of these issues will be resolved by then. So we don't see it impacting T-Mobile and our plans.

Great. Mike, you talk to a lot of enterprises and small media businesses. How are things out there? We hear a lot of scary stuff about the supply chain. And presumably, if they're investing in new networks, they need to get the automotive you talked about and getting the cars, getting the chipsets, et cetera. So how is that impacting your business with them? And then another question that I think where you have an advantage maybe is on international roaming rates. I know certainly, on the consumer side, that's been a big part of the sales packages. But how is that resonating with your customers?

Yes. Maybe I'll take the second part first. I think we have a really unique value proposition that's resonating against all consumers, but I think particularly with enterprise and government customers that we talk to. Because as you've heard Mike talked about for the -- really for the first time in our industry, customers don't have to choose between best network, best service and best value. And the combination of those 3 things, customers can have -- they can have all 3 of them, they don't have to make a choice. And that's really, really helped our momentum in our customer conversations. Clearly, it all starts with network for us, and we talked about that at the beginning. We have to demonstrate that we have a network that will work for our customers and that is as good or better than the incumbents are. But I tell you, service really matters to the customers that we work with. Because at the end of the day, the services that they're buying for us are for productivity and for running the operations of their company. And they want to know when something isn't working, are you going to be there to fix it for us. And we think we've built a company culture and a set of resources around enterprise and government from all the presale activities from when we get customers set up and deployed, all the way through their life cycle with us, where we can give them the confidence that if you need us, we're going to be here for you. We have multiple touch points including dedicated team of experts for business customers. And then I think on value, we're -- we think we offer more for business customers for the price than anyone else. And I think the biggest thing that we offer them is simplicity. And something we talked about at the beginning of the year that oftentimes, this category feels intentionally complex. And when you're dealing with enterprises that have thousands or tens of thousands of connections, intentional complexity multiplies. And we see these companies oftentimes have entire departments or third-party resources that are brought in just to manage the complexity of wireless. And what we try to do in international roaming is a great example of it, is make wireless simple. You pay us and all the things you need, you get, they're included in the plan. Whether it's international roaming, whether it's unlimited data, whether it's unlimited voice, those things are included. And believe it or not, even unlimited data and voice oftentimes aren't included in a lot of the incumbent plans. So we've really seen enterprises have a lot of utility for that. One last thing on this before I answer the supply chain question. One of the big opportunities for us, and it's both -- it sounds like a little bit of a bummer, but it's also a big -- it makes me really excited because it's such a big opportunity is enterprises still don't know that we compete in this category. We've got the lowest awareness that we are a competitor for enterprises in this category. We've had a really focused effort on that over the course of the last 18 months, and we've made some good progress. We've closed the awareness gap relative to AT&T and Verizon in the last couple of months, but we still got work to do. And what excites me about that is we have so much momentum. We've outgrown Verizon over the last 18 months, and that's with a big deficit in awareness relative to them. And so I see as we continue to close that gap more and more and more opportunities. On your supply chain question, we haven't really materially seen it impact our business, and we don't expect it to through this quarter. We have -- a lot of the business that we do obviously involves smartphones and other connected devices, of which we, I think, did a great job of forecasting and have adequate supply. We also do a lot of business in SIM-only and connecting devices that enterprises already have, whether they're smartphones, tablets or other connected devices. And so we haven't seen a material impact across our B2B business because of supply. And I don't know, Peter, if you want to comment about TMUS overall.

Yes. Yes, absolutely. I think if I look at supply chain, I think about it in really kind of 3 vectors. First is network. And what Neville and team did in being first mover there and securing significant contracts with the large OEMs and planning significantly ahead of time with tremendous precision around the network build means we haven't seen a disruption from a network build perspective, and that's why we can put up the numbers that we have and continue to do so. We talked about home broadband. That's the second one where we did have some supply chain disruption from the router perspective. And we believe we're past that. And we did have some challenges in Q3 with one of our OEMs in particular. But I think that we're past that. They've really stepped up there, and we're seeing great supply to meet the demand that we forecast to achieve what we need to from a Q4 perspective. Certainly need to continue to launch it and our global supply chain is far from fixed as we know, but we're feeling very good about Q4 at the moment.

Great. And Peter, following up on your comments on the synergies being accelerated and the network migration being accelerated. That then brings the free cash flow, the acceleration of that. So you've made good progress on the balance sheet already. Help us understand your kind of framework for thinking about recommending to the Board the -- starting that $60 billion program?

Yes, absolutely. And you're right. I think even in Q3, we talked about the progress that we're making on integration as well as just the core business outside of integration with the growth that we've seen in a very profitable manner is making us very excited about it, in particular, free cash flow and the trajectory that we're seeing in '21 and into '22. And you even saw us, the ability to take that free cash flow that we're unlocking and do things like $1 billion prepayment on one of our MLAs to secure better terms is just phenomenal for us, right? And those are the kind of things that give us a lot of optimism into '22 and free cash flow. As well as, of course, the continued growth story that we have here with T-Mobile. But with all of that, we've always said, if we're overdelivering against the plan, we'll do 2 things. One is we'll always look at other opportunities in front of us, be it spectrum, M&A, other things as any prudent management team would do to say can we deliver more shareholder value. But if we're delivering and executing against this plan, it is definitely a potential that we will bring to the Board earlier a recommendation for a stock buyback.

Okay. Great. And we're running out of time here. But Mike, maybe coming back to the mobile edge compute, and you have a relationship with Google and Google Cloud, and perhaps just talk about how you see the opportunity to work with them and with your customers to deliver the power of the cloud at the edge?

Yes. I think there's multiple opportunities for us to do that, including some more direct integrations with Google and other cloud providers directly into our MSOs so that we can post both single and multi-tenant instances within our facilities and a lot of the processing to happen there. And like I said, because we have so many of them, we typically can do that closer to customer applications than others. But I think there's a lot of other opportunities with all the cloud providers, including Google. Google has got a really interesting suite of cloud applications and cloud software for business. And I think there's a lot of opportunity for us to partner with them to bring potentially a bundled proposition to business customers that offer a bunch of different services from security services to productivity services. So we've got a great relationship with that team. And I think there, both in the 5G advanced network services, but also in some of these other categories, I think we've got an opportunity to do more to bring more value business to customers.

Great. Well, unfortunately, we're out of time. Mike, Peter, great conversation. Thank you so much for joining us today.

Well, thank you so much, Simon. Really appreciate it and allowing us to talk about this story that really is unprecedented in terms of 5G, the network rollout and what that means in terms of growth opportunities for us as well as defending and growing where we've been successful to date, that really is differentiated in this industry. And of course, the synergy-backed model that at the same time allows us to grow and deliver this tremendous free cash flow. So just very excited about T-Mobile, our prospects. I'm very, very happy to have you invite us to your conference.

Great. Thanks again.

Thank you.

Thanks, Simon.