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

All right. Welcome, everybody. It's great to welcome back to our Communacopia + Technology Conference, Mike Sievert, the President and CEO of T-Mobile. Mike, thank you so much for being here with us.

Yes. Thanks for having us, and thanks for doing this in San Francisco. That's awesome. It's only an hour away for us. Usual stuff, I might make forward-looking statements, and actual results could vary, and please rely on our publicly filed statements not just my commentary.

Okay. Good. Let's jump into it. So had some news last week, the Board authorized management to repurchase up to $14 billion of stock through September 30 of next year, and that could include up to $3 billion through the remainder of this year. So that was great. I think the 8-K also said DT, your controlling shareholder, has no present intention of selling stock into the program. So the question I have is why was the Board comfortable approving management to pursue a buyback program now instead of waiting into 2023, which was the time line you kind of originally had targeted.

Thanks, Brett. This is just a great milestone for us. Our investors have been with us on a fantastically successful journey. And our aspiration, as we expressed it last year, was to begin a process of returning that value to them. And we indicated generally that it would start around the beginning of '23, but that it could start earlier. And I think what you see from us is a Board that's just very confident in how this plan is unfolding. And if you just think about it, it's just that -- it's astonishing, and we're less than 2.5 years into the completion of this merger. And as we sit here today, we have substantially decommissioned the entire Sprint network, a goal that was supposed to have been achieved more than a year from now and that we recently indicated we'd wrap up this quarter. That's substantially done as we speak today. We have delivered consistent, reliable growth that's profitable and accretive through the period, 13.2 million postpaid net additions since the creation of the merger, more than AT&T and Verizon combined. We have substantially completed other aspects of our merger integration that allow for the line of sight to significant post-integration cash flow production from this business, just like we talked about when we laid out our 5-year business plan. And because of all that, we've achieved corporate family investment grade ratings from all 3 major ratings agencies, which gives us access to capital at competitive rates. And so you look at all this coming together, consistent, reliable performance from a team that one of the things that I think differentiates us and certainly gives confidence to us as a Board is that this is a team that puts careful, thoughtful study to business plans in the marketplace and then delivers on them consistently and reliably. And now that we've got enough of those quarters behind us, consistent, reliable performance, beat and raise, we decided it's time to begin that return to shareholders.

I believe when you had talked about buyback potential at your analyst meeting, I think it was last year, you said you expected to be in a position to be able to buy back up to $60 billion of stock during that sort of 3-year period of time. And you've kind of indicated it was reasonably aligned with the 5-year cash flow forecast that you put out for the company. And so the question I have is, is it still appropriate to think about $60 billion as the buyback capacity of the company as we look out over the next 3 years or so? And if that is the case, why did the Board decide to authorize a smaller amount over a shorter period of time?

The second question first, it's just a typical process. We're following traditional norms of taking this in bite-sized chunks. But I could say nothing has changed, but everything has changed. And there have been plenty of tailwinds and headwinds and changes versus what we thought. But generally speaking, that basic thesis is fully intact. And so yes, you should continue to think about the potential being right there for that $60 billion target. And we're very pleased by that. And so we thought we would just get started and get started early and get started in a magnitude that shows everyone that the confidence that we feel in the size and scale of this business plan as the post-integration cash flows of this business begin to arrive. And always, when we express this, if you looked closely at it, you could see that we had planned to slightly front-run the share buyback to the production of cash flows. And so this week, we were able to complete, consistent with that long-standing intention, a debt raise that was wonderfully successful using our new corporate family IG facility, and it was oversubscribed by 7.7x and really came in at a very competitive rate. So we're just pleased with how everything is executing against that big bold aspiration that we put out there. You have to remember, we put that aspiration out there less than a year after forming this new company. At the height of a pandemic, we combined these 2 companies on April 1, 2020. And then a year later -- less than a year later, had the confidence to communicate a bold, audacious 5-year plan that since then we've done nothing but outperform.

All right. And so just to sort of wrap it up on the buyback topic, it sounds like as you work through the program, the Board is going to look at it and they'll decide how to think about supplemental authorizations, but that $60 billion concept is still a great guideline for investors.

It is.

Okay. You guys had a point I was going to ask you about it, it sounds like you were very much on track to meet your goal to have substantially shut down all the redundant Sprint sites really by the end of this month. And so the question I have is in terms of integration, what's left to do?

The next phase is billing, and it's really the last substantial phase, and it's been significantly derisked by the way we executed this. Prior mergers, you had to move customers all at once, their brand, their billing relationship, their network, their device, all those things had to happen at once. And what we've been able to do is separate this out at the convenience of our business model and at the convenience of the customer, and it's fantastic. So the main thing that's left now is billing. And our intention is to make that opaque to the customer. Ideally, they don't even really see it happening. So we -- eventually, what we call streaming conversion. We moved Sprint customer billing over to the T-Mobile systems. Their rate plan doesn't change. The look and feel of their bill doesn't really change, and then we shut down the Sprint biller. And that's the last piece. And we've already streaming converted proving our software effective hundreds of thousands of customers, and we've manually converted millions. And so we're well on our way on the billing piece as well.

All right. So you'll get that done, and that will basically mean you'll have spent 3 years very heavily focused on a significant integration. It sounds like it's gone as well, if not better, than you would have hoped. So then the question is what's next? What are the key priorities for T-Mobile as you look beyond that?

Profitable growth. One of the things that I think we expect of ourselves and investors expect from us is consistent reliable outperforming growth. We need to do it smartly. And hopefully, you give us credit that we've done it very smartly. We know we're stewards of this industry now at our scale, and it's our house. We're not going to burn it down, but consistent, reliable, outperforming growth. And what differentiates us there is that we have, I think, really significant, credible strategies that are vectors for our growth that most people, if they stop and think about them, really understand. Despite our market share and position in the overall market in vast swaths of this country, in rural and smaller markets, not real small markets. I'm talking about like 40% of the country. Our market share is in the teens, not 40% like in the big cities, but in the teens. And so executing our small markets and rural area strategy is a huge tailwind for our business, and it's going beautifully. We can come back to that if you like. Enterprise and government, another 10 share or low -- just into the low double digits, fantastic opportunity for us. And the 5G lead that we were able to create for ourselves has changed the relationship that we have with enterprises significantly. So now we've got corner office relationships that are emerging, and they're very interested in whether or not 5G advanced network services could change their business. And as a part of that, we're able to win market share in the core. And the core is a really profitable important business to be in. It's exciting to talk about 5G advanced network services. Our competitors talk about it ad nauseam, but the core that we're all in is an important, viable, profitable business and we are taking share there, and that's a big one. Home broadband and business broadband, 5G broadband, when we set out that aspiration last year, and we told people without a lot of evidence that we could do 7 million to 8 million homes, a lot of them didn't take it serious because they thought those claims were kind of like what they've gotten used to, executives throwing out spit-balling aspirations. But when we put that goal out there, we did it after a studied effort to understand how our excess capacity would open up opportunities and a studied effort at segmentation. Remember, home broadband, broadband customers are not a homogeneous group that all have the same needs. There are millions and millions of people who, for what we offer, our product will serve their needs for years to come. And so now, of course, we're well on our way, and next year is a big year on that front. Churn, another big tailwind to our business. In '21, our competitors were feeding on elevated Sprint churn. In fact, they've been feeding on elevated Sprint churn for years. And last quarter, we delivered 0.80 in churn, postpaid phone churn, including Sprint, lower than Verizon, including Sprint for the first time in company history. And so we talked last year about a worst to first playbook that had already resulted in Magenta becoming the lowest churning business. Now our aspiration is for the combined company to be the lowest churning business in this industry, and that's a tailwind we're seriously focused on. And then there's one more. You asked what we're focused on for full year, right? So the fifth growth tailwind is what I call network seekers in the top 100 markets. We're already the leader in the top markets in this country, certainly in the top 50, the top 100 who are vying for leadership. And yet tens of millions of people never gave us a serious look on that run to #1 because what they care about most is the network. And back then, we didn't have it. Now we have a chance to open up that switching decision for tens of millions of people in the network, in the cities where we are already strong. So we're not defending a castle in the markets where we're #1. We're interested in extending it.

So we have a lot we can follow up on. And before we do, I do want to ask you a little bit about the economic backdrop that you're going to have to try to do some of this at least over the near term. Because you're a very large company, you touch a lot of consumers, a lot of SMBs, a lot of larger businesses, and I guess the real question is like what are you seeing in terms of how the current economic climate is impacting your customers and subsequently your business?

What we're seeing is different than what we're looking at and watching for. Obviously, we have our eyes open to this space. But you asked what we're seeing. What we're seeing is not a lot of change. I mean what we're seeing is vital demand for our category. Active switching that's up year-over-year last quarter and looks like again this quarter. We see interest in high-end phones like the new introductions from Apple, not just the basic phones that are very exciting. We see sales of our highest-end products, not our lowest-end products being our most popular, Magenta MAX, and continuing to be the case. So far -- you asked what we're seeing. What we're seeing is there are no signs of concern. Now obviously, the macroeconomic picture for many is concerning, and we have our eyes on it, too. There are plenty of potential issues around costs. But there are also opportunities for us. Remember, among the big scale providers, we have lasting fame as a brand for being the best value. That's tough to take from us, and we've earned it over years and years and years. In fact, twice as many customers give us credit for being the best value than any of our competitors, twice as many. Look at network equities, where Verizon still edges out the other 2 on network reputation fame, but it's like real close. But in value, it's nowhere near close. We have undisputed fame there. And look, we may be entering a period where there's a flight to value. And if there is a period where there's a flight to value, I'm making sure our company is ready to stand up and serve the American consumer when they need us with a great value and a great product. And so there may be pressures that are coming. Bad debt, for example, is on the rise, not quite to pre-pandemic levels, but up from a year ago, doesn't look concerning to us, but we have our eye on it. Other inflationary pressures in our business are actually pretty muted because of our long-term agreements, tower costs, backhaul costs. Equipment contracts are multiyear in nature. Our debt structure is entirely fixed and the towers are nicely spread out. So like systemic inflationary pressures on our business are not that big of a concern. We have labor questions like everybody else. But what I'm focused on is we'll go through all that, and we'll manage it carefully. I'm focused on whether or not there may be an opportunity for us to serve the American consumer in a bigger way through all this. And if there is, we will be ready.

So really, one of the primary ways or one of the initial ways, I guess, that you earn that reputation for delivering great value is through your Un-carrier initiatives. And you haven't stopped. The 2 most recent is the inclusion of Apple TV+ with Magenta MAX and a partnership with SpaceX. And I think I'm going to start with the SpaceX one because that was probably the most interesting and surprising. How does that partnership that you've announced factor into some of these underpenetrated market segments that you've been talking about, particularly with rural and particularly with business.

I'm so excited about this. We've been working on this for a long time, and it could really change things. This is a vast country, and it has millions of places, hundreds of thousands of square miles, where there's no signal from any cellular company. And that's important to people. What people want is signal everywhere they might need it, whenever they might need it. And then, of course, they want a signal that has fantastic scale and capacity. We've won the scale and capacity game. We're the clear demonstrated 5G leader. But what people may ask about us is whether or not we have signal everywhere they need it. We've arrived at the station of parity on that front, but this is a chance to leap out in front. And this could save people's lives. This is reaching emergency services. It's reaching friends and family. We're going to be starting, if everything goes to plan, late next year with the beta, centered around a messaging service not just texting, but messaging apps as well with real time back and forth ability to send messages, send pictures, that kind of thing. But our aspiration is that the technology should eventually work for voice and data as well at, obviously, lower data rates than what a 4G or 5G network can provide.

Any sense for how long it might take to go through the FCC process on this?

Not really. What gives me confidence here is that the FCC has been very clear that one of the priorities that they have is making sure that reliable connections are available everywhere, disaster recovery, post-disaster connectivity, covering up empty holes so people can reach public safety. These are things that they've said are important. And what this essentially is doing is creating a cellular service where the cell tower is in the sky instead of on a tower. But otherwise, it doesn't really walk and talk from a technology standpoint, much different than the rest of our technology. It's just a lot more advanced that most of the technology is being put in the satellite itself with antenna technology that should be able to seek and find an ordinary cell thumb. And that's cool stuff. But I don't think it should raise a lot of questions from a regulatory standpoint.

All right. And then on the Apple TV+ offer, how do you think about assessing whether this is an accretive decision, to put something else into your plan, whether it's Apple TV+ or something else because it's an obvious incentive for someone to up-tier, meaning if you pay more, you'll get more, but it's also costing you more. So how do you determine that these things make sense for T-Mobile?

We've got nearly a decade of experience with this. We -- to your premise of your question, we started making these Un-carrier moves in the spring of 2013 and -- with our first big move. And we've done many, many moves since then, all with a really studied effort at understanding what will the cost be and what are the benefits. One of the benefits is people moving up to our most popular plan, Magenta MAX, but they're share-taking benefits, there's churn benefits. So they're across these reputational benefits intangibles. And then there's the cost. And we struck a great win-win deal with Apple that they're happy with and we're happy with. It's not retail pricing. We'll pay only when someone is a happy active user. And when they're a happy active user, that means they appreciate this. And so those benefits I talked about become real. A typical Magenta MAX account has between 2 and 3 lines. And so you're only paying that once across multiple lines. And so the math, we've done a lot of these things. We're experienced at it, and the Un-carrier movement has resulted in this company we're now talking about. So it's a success strategy that we're confident in.

Well, the momentum in the postpaid phone business has just continued to be excellent. You added over 1.3 million postpaid phone subs just in the first half of the year. You increased your guidance. Your guidance implies that you'll probably be as good, if not better, than the 2.9 million that you added last year. You said earlier that it sounds like activity levels still sound quite strong in the industry. So the question is how are things tracking as you're in the second half of the year?

Well, switching in the industry continues to be up year-over-year this quarter like it was last quarter. And for us as a net share taker, that's an opportunity. And it's -- we feel like we're in a really good spot. We're trying to be really smart. One of the things that's different about us is that we have a differentiated story that goes beyond just slashing the price of a smartphone that you can get from anybody. And that's -- it's tough to hang your hook on that as differentiation because it's, by definition, not differentiating. So we have competitive device offers. Our customers are delighted with the offers we just launched on the new iPhones. But what we do is come out with things that solve pain points that people feel in the industry and claim fame for that. You mentioned our Un-carrier moves. One of them we did in June was called Coverage Beyond, and this was the ability for us to be the first one ever to provide high-speed data worldwide, 220 countries around the world -- 210, I think it is, around the world, with nothing to sign up for, automatically built into our most popular plan at 4G and 5G speeds if that local network can handle it. No one's ever done anything like that before. And by the way, while you're flying across the U.S. to start that trip, your WiFi connectivity on all of the major airlines is on us, not as a promotion, but an Un-carrier move that's here to stay. And so these things -- people hear about these things. I still meet people. It's been nearly 10 years since Un-carrier 3.0 in October of 2013, when we first launched our global move, it was low-speed data back then. I still meet people that say, I found out about T-Mobile and switched to T-Mobile because of your global differentiation. And so we've done a dozen -- a couple of dozen of these now. It's not the only piece of differentiation, but it's a strategy. And it's a strategy that's meant to drive fame on value. And fame on value is a moat around our business that it's hard to take from us.

You mentioned earlier the last thing you have to finish up here is the billing migration, although that really should be transparent to the legacy Sprint customers. You had talked in the past as Sprint customers really fully transitioned into T-Mobile customers, you were just seeing the churn in those cohorts coming down. They're pretty fully blended in now. Is there still any excess churn headwind out of the customers who came into the merger with Sprint? Or has that mostly been whittled down?

Well, I don't think we will be in a position to fully declare success until overall T-Mobile churn is the lowest in the industry. And that's certainly our goal. Overall, Magenta churn got there, and I'm hoping to get overall T-Mobile blended churn to the best in the industry. We offer the best value and the best network. I know we have some additional work to do to make sure everybody understands that best network part, but it's true. And not just best 5G network, that's hard because people at 5G, they're not sure what it means. Everybody is screaming 5G, my competitors are all saying they have the best 5G. But overall, what people want is coverage and capacity that will power their smartphone and all their devices the best and be everywhere they need it to be, and we're arriving at the station where our superior assets have us as the best network overall, not just the best 5G. And when you combine that with the best value and our Un-carrier movement, we should arrive at the station of having the lowest churn. So I'll declare success when we get there. We got some room to run.

All right. But just to sum up, industry switching up, usually good for you, usually a good leading indicator for your gross adds. Churn has already shown improvement, and there's more room to run on that. That all sounds pretty good for the net add trajectory of the company.

Yes. And it takes time. It takes time, but I like the broad trend lines.

All right. Investors constantly ask about the competitive environment in wireless, and one of the ways they frame the question is we've had 20 consecutive quarters where industry-wide postpaid phone subs have grown faster than the population. I think we're just below record levels, which you saw last year in terms of net adds. And so the question is how is T-Mobile going to perform when we inevitably see industry-wide growth accelerate? How do you think about your positioning? And do you think you'd have to change the way you go to market if the underlying industry tailwind were not as great?

I keep referring to the entirety of the Un-carrier movement. I'm starting to make myself sound like an old man, but I have been doing these financial conferences for T-Mobile for a decade now. And I've been asked this, isn't competition too much question, every single time the entire journey, starting when we were a distant #4 rapidly shrinking to right now. And I would say the same thing I've been saying, which is a part of this intense competition comes from us, and we're comfortable with it. We are the creators of it. We do it smartly. I hope you give us a little credit for how we do this because this is a house that we are very interested as a healthy place, a healthy category because we know that's to the benefit of us and our customers ultimately. But it works for us. And you can see that in our results. One of the things that gives me comfort is all those growth strategies and tailwinds that I outlined for you a little while ago that allow us to put our heads down and execute with a differentiated story. And customers, they're noticing and they continue to notice.

We talk a lot about competition and yet your 2 biggest competitors raised price this year. You're not allowed to raise price at least not until we get past the Consent Decree period, and yet your ARPU is still growing. What's the tailwind that's driving ARPU higher? And how do you think about the ARPU potential for this company going forward?

On the Consent Decree, we actually have more flexibility than your question implies. But that being said, we don't raise prices because it's not our strategy. And our strategy is something that we're confident in and comfortable, profitable, accretive growth over the long haul, driven by a differentiated value. And so for us, maintaining a price envelope superiority versus our principal competitors has been a key ingredient of that all along. We have a more efficient capital structure. We have a superior spectrum portfolio. We have structural reasons why we can, over the long haul, sustain lower prices, and we intend to defend that position. We don't intend to exacerbate it, we intend to defend it. It's a position that we have famed for and that we've very smartly navigated towards in an environment where the overall category is really healthy. We have to sort of step back, again, against all these questions about, isn't it crazy town competitive. You have scaled competitors across the board that are highly successful, very cash flow positive, healthy margins. And at the same time, you have customers benefiting from a category that has low prices and vast capacity far-reaching networks that have changed their lives. And so it's a win-win for shareholders and for customers that's really working. And so you can get down in the weeds and say, "Yes, but those iPhone promotions are value-destroying." I don't know. It's working for the category, and it's gotten a little more expensive. But as you said, ARPUs have risen to compensate, so.

Let's get in to some of these, I guess, the newer growth categories for T-Mobile. And I want to start with fixed wireless. You have -- as of the second quarter, you had 1.5 million fixed wireless customers, most of which you added this year. And I think that was a lot better than a lot of investors had expected. This is a roomful of people who I'm guessing obsessively look at Sensor Tower data. And if they do, they know it looks pretty good so far. Can you give us an update on how your fixed wireless customers performed?

I don't know what that data is. What's this -- what's the...

100 people are about to send it to you. Download data...

All right. Yes. Yes, if you talk about the app download data, it's -- remember, we have trial programs out there now, and it's going to be hard to use that. But it's going really well. It's a strategy we're confident in, and we're taking share. And what's interesting about it is, as you saw in last quarter's numbers, it's coming from sort of across the board, T-Mobile customers and new to T-Mobile customers. Suburbanites on cable, but also greenfield kind of rural areas. And so it's -- and it's because what an awful lot of people want is a great connection at a fair price from a company that will treat them right. And that doesn't mean they need a race car that goes 200 miles an hour. They want to know. Will my Netflix run without interrupting at high def? Yes or no? Will I be able to do my Zooms with my grandkids? Yes or no? Will I be able to do my social media and upload and download pictures with no delays? Then is it $50.00 with no taxes and fees? I'm in. There are millions of people that will look at that value proposition of an offer that's not burdened by capital because of its excess capacity business plan and say, that's for me. And as I said, we put that business plan out there after studying this carefully and said, we think we could do 7 million to 8 million. As you saw from Q2 results, we're well on track.

And there is still a pushback on that number where people will concede, okay, they're doing better now than I would have thought. But it just means the network is going to get jammed sooner than I would have thought. How can investors get confidence that T-Mobile actually has the capacity to grow into this service?

Because we don't approve any home broadband applicants in places where that can come true. So in other words, the only approvals that we grant when somebody puts their address in are addresses where our forecasts say no normative amount of share taking and success, like I just laid out that you should expect and growth in mobile per phone, mobile usage, will ever soak up the capacity of this network we've built in any reasonable time frame. And that's where we give a yes. And every place else, we give a no. And we carefully studied all the places we would give yeses in the 5 years and then assumed we wouldn't win them all obviously, because we're not that good, and then we pick the 7 million to 8 million. And so it's -- and by the way, if there are places where the capacity is giving a no today, it might give a yes tomorrow. Because remember, our 5G network, as we sit here is -- we've deployed about 110 megahertz against 235 million POPs. We're going to 200 megahertz from 110 against 300 million POPs end of next year. And so it's not just about how many people you read, how many POPs with your ultra-capacity network, it's about the size of the spectrum that you're putting behind it. As we mine spectrum from 4G and from the decommissioned Sprint network, we will be able to add it to 5G and that obviously just continues to expand the capacity.

I want to talk a bit about another growth opportunity in the business segment. Last year, you set a target of roughly doubling your enterprise market share over the next 5 years from what was less than 10% at the time. So I think, nearly 20%. The first question is how are you tracking versus this target? And why do you believe you're better positioned in this segment than you had been previously?

It's all about network. And what's different about the enterprise customer than the consumer is that they don't go purely on reputation. Like I said, if you look at the TV commercials, it's kind of hard to figure out who has the best network because everybody runs an ad that says, we do. And -- but what's different about an enterprise customers, they check out 100 phones and say, see you in 2 months, and then they grant an RFP winner. And we're winning. Our competitors are reporting elevated churn. We're reporting big new logos. And so it's just -- they want a great value and they want a great network. And in a lot of places, when they have a studied head-to-head comparison, they realize that we don't just have the best 5G network, which most have understood for a while. We have the best network. And that's not true everywhere, but it's true in a lot of places, and it will soon be true across the board.

Verizon and AT&T would appear to have the largest market share in the business sector from a wireless standpoint. It's not surprising, they are the 2 biggest or 2 of the biggest providers of wireline telecom. They have very large sales forces selling into that enterprise customer base. Do you need to scale up in a certain way or find new partnerships or even make acquisitions in order to really gain scale in that market?

Well, one piece of scale I don't think we need to serve the enterprise is to be their corporate campus fiber provider. These are discrete decisions. But there are solutions that center around 5G and wireless that we're building and that our CIO customers demand, not just around mobile device management, around billing solutions, around managing their portfolio. But we think that 5G advanced network services are not just a potential new business that I know our competitors breathlessly talk about and hope our multibillion-dollar businesses, maybe they are. But they are also door openers for us to win share in the core. And remember, the core wireless connections of your tens of thousands of employees with your tablets and your smartphones, that's also a profitable business. And it's one that where when we win the corner office relationship by being the most advanced in 5G and helping them with mobile edge compute solutions or network slicing solutions with our only and -- first in the market, only in the market, stand-alone 5G core, we are able to build a potential new business, but we're also able to win the core, meaning win the smartphone and the tablet. And that's where so far all the money in this category has been made.

I'll just pivot and talk about the rural opportunity, another area where you alluded before you're very underpenetrated. What response are you seeing from consumers when you enter a rural market for the first time? How long does it really take to build up brand equity around the T-Mobile brand?

I'm not exaggerating that there are -- there have been store openings in some towns where the mayor and the high school marching band come out. So it's like we've been warmly welcomed. American consumers love competition and many rural customers have simply never been the beneficiaries of competition. And they've seen our ads on TV for years on all the stuff they can't get. And so it's -- we've been warmly welcomed. That doesn't mean it's hard work. It's not hard work. It is. We have to have great distribution. We have to have clever marketing. But the team is performing really well. And one of the ways that we measure this is we look at -- we've sliced and diced all of this 40% of the country where we have the lower share into 775 markets. And we've evaluated everyone as to our network competitiveness and our distribution competitiveness. And as of the last time we updated you a quarter or 2 ago, about 30% of those markets, of the POPs in those markets did we think we were -- we had a license to play or license to win. That's where we're focused. And what's interesting is when we have those conditions, network and distribution readiness, we're already winning the switching decisions at the rate that will get us to the goal we publicly articulated to you. So it's just really a matter of, hopefully, we can continue to get better. We don't need to. But it's a matter of getting that license more of those markets to fully competitive as we continue building out this ultra-capacity 5G network that we're 2 years ahead of our competitors.

And that target is a 20% share in the broader rural market by 2025. Even if you hit that, you'll still have a much lower share in those markets than you do in most of your other markets. So just based on what you've been seeing so far, how much confidence do you have that you can ultimately scale up to something that's more historical for you?

Well, I assume someday, we'll do an Analyst Day that covers years beyond 2025. I don't have an aspiration to articulate for you today. But we're not a company that is sort of genetically engineered to be happy about 20% market share.

Got it. And one of the ways you position yourselves in those markets is with Walmart. I think it was almost exactly a year ago, you announced distribution with them. How critical is that to meeting that rural penetration target you've talked about? And then what have you learned about other distribution opportunities you might have outside of your traditional markets?

Well, when I said it's hard work, I mean that's part of it. What you have to do in rural and any place else is meet the customer where they are. And Walmart is one of the places where they are. By the way, digital and online is one of the places where they are. It might sound counterintuitive to urbanites. We tend to be a little bit myopic, but urban customers are very advanced digital shoppers for what might seem obvious reasons once it's pointed out. And then having our own distribution and partner distribution. Like I said, we plant T-Mobile flags in these towns. And still today, that's an important part of our formula as well. So it takes all of that working together. And like I said, the math is showing us that all that stuff working together is already producing SOGAs and switching decisions at a rate that will get us to where we need to go.

You had an early mover advantage with your network in 5G, the first time T-Mobile really ever had an early mover advantage on a generational cycle, really racing ahead of AT&T and Verizon in 5G coverage, 5G mid-band coverage. They both have had opportunities over the last year or so to pick up more mid-band spectrum and they're seriously trying to catch up. What gives you confidence that you can not only kind of maintain the improved brand perception that you've achieved, but maybe get ahead of them in a way that's -- where the perception of it is actually finally aligning with what you know is the performance of it.

Yes. It's -- because it's going better than I would have guessed. And brands are powerful, but eventually, the truth wins out. And so one of the things I said 2 years ago is that we're 2 years ahead of them in the 5G race and 2 years from now, we'll be 2 years ahead of them in the 5G race, and that's panning out to be true. Yes, they're scrambling to catch up, but we're moving at pace as well even faster. So look at our goals for next year. And by the way, we're a company that has over and over again shown that goals are thoughtful. We expect to have deployed 300 million people with ultra-capacity 5G against 200 megahertz dedicated to ultra-capacity 5G. That's something that is -- neither of our competitors has even expressed a long-term goal of achieving that. And so yes, they've scrambled to catch up to where we were back then. And look, for me, what it should translate into over time is our ability to have a stronger, better signal at the moment of truth when you're comparing signals with your friends and it kind of comes out, geez, T-Mobile keeps on having the best signal, whether we're at the beach or the national park trailhead or inside a big building in an urban area or out on the highway, and those moments of truth start getting around. And at first, you arrive in the station, and we've definitely arrived, where people say, "You know what, they're all pretty good these days. T-Mobile is faster, but maybe there's some farms where Verizon has better coverage, et cetera. But they're all really good." And that's where our not even close lead on value and customer centricity wins the day. And we -- last quarter, as a demonstration of our switching decisions, we brought in 338,000 new net postpaid accounts, and that was the highest postpaid account quarter ever in our history. And it shows that what's happening is people are starting to rethink this network question because network is the #1 purchase driver in our category.

Mike, we're out of time. Thanks so much for being here.

Thank you. Appreciate it. Thanks, everybody.