WEBVTT - T-Mobile CEO  Mike Sievert Talks 'Monster Q4'

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>It is Earning's day here. It's another big earnings day

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<v Speaker 2>is in addition to being a fed day. One of

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<v Speaker 2>the compans reporting Earning studay was Tea Mobile put out

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<v Speaker 2>some really good numbers, stock up eight and a half

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<v Speaker 2>percent on the news. Mike Shaver joins us. He's the

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<v Speaker 2>CEO of T Mobile. He joins us here in our

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<v Speaker 2>Bloomberg and Directive Broker studio. Mike, thanks so much for

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<v Speaker 2>coming here. Thanks for having me.

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<v Speaker 3>Guys.

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<v Speaker 2>What does the market like about the results you put

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<v Speaker 2>up today?

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<v Speaker 3>Well, look, we're just consistently outperforming expectations, and that's what

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<v Speaker 3>the market looks for in a business like ours. We're

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<v Speaker 3>taking share, we're growing, and then across the board we

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<v Speaker 3>beat expectations. We just finished the strongest growth here ever

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<v Speaker 3>in our history. And that's saying something because we have

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<v Speaker 3>a story to growth history in this company and a lot

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<v Speaker 3>of people wonder is the big growth you know, run

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<v Speaker 3>behind us, and we just demonstrated yet again. No, it's not.

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<v Speaker 1>It's hard for me to get really excited about my

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<v Speaker 1>mobile service provider, but your customers it's like they were

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<v Speaker 1>in a cult. What's the secret sauce. That's my softball question.

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<v Speaker 3>You know, our value, our corporate values start with this

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<v Speaker 3>basic idea, love our customers, you know, give them more,

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<v Speaker 3>ask less of them, and they notice. That's just a

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<v Speaker 3>huge part of our brand. And we have this thing

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<v Speaker 3>we do called T Mobile Tuesdays where every week customers

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<v Speaker 3>come to our Tea Life app which has fifty million users,

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<v Speaker 3>and they engage to find out how are we rewarding

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<v Speaker 3>them this week? Do you know what this week's was?

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<v Speaker 3>We gave away a Shack Burger, like the world's best

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<v Speaker 3>burger for free to every single Team Mobile.

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<v Speaker 1>Reflix to you.

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<v Speaker 2>Absolutely so, Mike, this is you're in a competitive business.

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<v Speaker 2>I think about the wireless business, the barriers to change

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<v Speaker 2>are pretty minimal. Churn is always an issue. Your competitors

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<v Speaker 2>are depocketed, they're good competitors. Is it just you guys

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<v Speaker 2>switching customers all the time just for deals. Talks about

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<v Speaker 2>the churn for your company.

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<v Speaker 3>Your business well churns out historic lows across the industry,

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<v Speaker 3>not just T Mobile. We just had our churn year. Ever,

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<v Speaker 3>so people aren't switching a lot when they are switching

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<v Speaker 3>the net share takers T Mobile. So this is a

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<v Speaker 3>great trend. You know, I don't need for others to

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<v Speaker 3>fail in order for us to succeed in our business.

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<v Speaker 3>This is a great neighborhood. We just happen to be

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<v Speaker 3>the best house in the neighborhood, and so we're out

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<v Speaker 3>growing everyone. But this is a healthy, vibrant sector. Everyone's

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<v Speaker 3>you know, growing and making money. I think that's great.

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<v Speaker 3>Part of it is people can't get enough of the

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<v Speaker 3>service that we all offer at T Mobile. You know,

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<v Speaker 3>we just guide it again to a big year of

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<v Speaker 3>revenue gains per customer. And that's not because of pricing.

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<v Speaker 3>It's because customers are self selecting up our rate card

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<v Speaker 3>to our higher priced offers because they see the superior

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<v Speaker 3>value and they want what we have to sell. That's

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<v Speaker 3>a great dynamic, not just for T Mobile, but for

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<v Speaker 3>the industry.

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<v Speaker 1>The growth strategy is organic or M and A or what.

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<v Speaker 3>It's organic principally, I mean, we do have a number

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<v Speaker 3>of M and A deals in the pipeline that we're

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<v Speaker 3>intending to close this year, centered around fiber, centered around

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<v Speaker 3>you know, other add ons. We're also in you know,

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<v Speaker 3>acquiring a cellular company, US Cellular. So but by far,

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<v Speaker 3>the growth is an organic growth story focused on taking share,

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<v Speaker 3>adding revenues, deepening relationships with the existing customers that now

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<v Speaker 3>number well past one hundred million.

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<v Speaker 1>Of those I don't understand, like outdoor advertising, What does

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<v Speaker 1>that have to do with your business.

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<v Speaker 3>Yeah, we just announced the acquisition of a company called Vistar,

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<v Speaker 3>and you know we are in We're a billion dollar

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<v Speaker 3>advertising support company already, so it's a significant business for us.

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<v Speaker 3>We call it marketing services for marketers buy marketers. T

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<v Speaker 3>Mobile is a very famous marketer, and marketers want services

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<v Speaker 3>from us, so we provide that already. But our Tea

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<v Speaker 3>Life app. Part of what it does is it asks

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<v Speaker 3>customers buy the millions, whether they would like to opt in.

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<v Speaker 3>Opt in to make their digital life better and their

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<v Speaker 3>advertising more relevant. And then we can use data to

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<v Speaker 3>provide marketers with an ability to put advertising in front

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<v Speaker 3>of customers that they will actually appreciate. And our dream

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<v Speaker 3>with places based marketing outdoor marketing, that's the Vista acquisition,

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<v Speaker 3>is to do that for the first time ever in

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<v Speaker 3>outdoor advertising, so that for the first time outdoor advertising,

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<v Speaker 3>place based advertising can become an addressable market.

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<v Speaker 4>Yeah, it's interesting. I love the outdoor business. You can't

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<v Speaker 4>switch channels on that. I took all those companies public

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<v Speaker 4>back in the day. Apple, Mark German Bloomberg News. Apple

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<v Speaker 4>has been working with SpaceX and Tea.

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<v Speaker 1>Mobile on starlink. What is starlink?

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<v Speaker 3>Okay, So this is the ability to connect your mobile

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<v Speaker 3>phone directly to satellite service. This is a huge breakthrough.

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<v Speaker 3>We announced our intention to partner with SpaceX over two

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<v Speaker 3>years ago, and now finally it's coming to market with

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<v Speaker 3>opening of our beta a couple of weeks ago. We're

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<v Speaker 3>bringing on thousands of users and soon way more than that.

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<v Speaker 3>We're going to throw the doors open on this thing.

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<v Speaker 3>If you can see the sky, you're connected.

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<v Speaker 1>That's our visuals the iPhone app. That's correct.

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<v Speaker 3>These are lower th orbit satellites, so they're easier for

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<v Speaker 3>your phone to find and vice versa. But this country,

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<v Speaker 3>you guys, has five hundred thousand square miles uncovered by

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<v Speaker 3>any cellular network and it's a massive part of our

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<v Speaker 3>land mass and we're about to close that coverage.

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<v Speaker 1>Okay, So if I uh on my bucket list is

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<v Speaker 1>a trip to the South Pole, I don't need cellular

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<v Speaker 1>service down there. I could just use a T mobile

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<v Speaker 1>iPhone starling.

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<v Speaker 3>Well, I'm gonna have to check on how good the

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<v Speaker 3>L EO coverage is. But one of the things you

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<v Speaker 3>point out and very quickly to follow our terrestrial coverage

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<v Speaker 3>across the continental US and big parts of Alaska is

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<v Speaker 3>the world's oceans. That's a big piece of this because

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<v Speaker 3>you know now you'll be able to not right away,

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<v Speaker 3>but as soon as we are able to turn it on,

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<v Speaker 3>you'll be able to get your service across the US

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<v Speaker 3>and as you travel around the oceans outside the reach

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<v Speaker 3>of any cellular site.

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<v Speaker 1>It's in beta testing right now. It's just confined to messaging.

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<v Speaker 3>Hundreds of satellites are in the air where we have

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<v Speaker 3>a free beta service going on. We're starting to let

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<v Speaker 3>people into it. Right now it's text messaging only, but

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<v Speaker 3>fast to follow will be light data services and eventually.

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<v Speaker 1>Voice so I can get rid of my satellite phone.

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<v Speaker 1>We don't need that anymore.

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<v Speaker 3>I think the time will come when that's the case.

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<v Speaker 2>Top line growth four to five percent for you guys,

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<v Speaker 2>That's how I think about the wireless business. Is that

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<v Speaker 2>all pricing? If so, how do you think about the

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<v Speaker 2>pricing environment.

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<v Speaker 3>It's sharetaking and self selecting up our rate card. You

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<v Speaker 3>know very little pricing, and so those are the big dynamics.

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<v Speaker 3>Postpaid service revenue growth eight percent, more than double the

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<v Speaker 3>rate of our peers. And so this is, you know,

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<v Speaker 3>a dynamic that makes T Mobiles so different in this

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<v Speaker 3>space because we're not only growing the top line, but

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<v Speaker 3>we're translating it into financial growth on the bottom line

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<v Speaker 3>twenty five percent year over year growth and cash flows

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<v Speaker 3>seventeen billion dollars, our highest ever.

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<v Speaker 1>Now, how do you raise prices? You sort of touched

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<v Speaker 1>on this briefly before, but how do you raise prices

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<v Speaker 1>without scaring away your cult members?

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<v Speaker 3>Cult members? Well, one thing is people. You know, we

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<v Speaker 3>have a rate card with a variety of options, and

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<v Speaker 3>people choose at an increasing rate the prices that are

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<v Speaker 3>higher up because they want what we have to sell.

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<v Speaker 3>Do you know that sixty percent of our new customers

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<v Speaker 3>coming in the front door choose one of our two

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<v Speaker 3>most premium plans because those are the ones that are

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<v Speaker 3>most packed with value. And they know they're here for

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<v Speaker 3>a reason. They want more data, they want the experience

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<v Speaker 3>that T Mobile can provide with the world's best five

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<v Speaker 3>G network.

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<v Speaker 2>Subscriber acquisition costs, how are they trending for you, guys?

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<v Speaker 3>These days, they're pretty flat and that's good. We're very

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<v Speaker 3>comfortable with this business model. It's a high CLV you know,

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<v Speaker 3>value exchange. One of the things about this business it's reliable,

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<v Speaker 3>it's predictable. We do what we say, we try to

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<v Speaker 3>exceed what we say, and it's growing and that's one

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<v Speaker 3>of the things that really distinguishes us in a group

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<v Speaker 3>of peers, not just in the US, but around the world.

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<v Speaker 1>There is a FED meeting today. Can you tell me

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<v Speaker 1>how if it all rates affect your business.

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<v Speaker 3>Well, we're a big debt issuer, so obviously it's relevant

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<v Speaker 3>in the long haul.

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<v Speaker 1>What's the debt right now?

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<v Speaker 3>With two point five leverage against EBITDA, so it's you know,

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<v Speaker 3>it's very significant eb as in the thirty one, you know,

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<v Speaker 3>very significant debt. But it's also a stack that's you know,

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<v Speaker 3>investment grade, it's long term, it's you know, spread out,

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<v Speaker 3>so it doesn't affect us in an immediate way, but

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<v Speaker 3>in the long taul of course, as a debt would

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<v Speaker 3>you like that leverage ratio to be right where it is?

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<v Speaker 2>Okay, market structure in the wireless business three main players?

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<v Speaker 4>Okay, is there room for fourth?

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<v Speaker 2>And I think about my old friend Charlie Oregon, I

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<v Speaker 2>have for the last fifteen years. I had no idea

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<v Speaker 2>what he's doing with a spectrum, and I don't think

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<v Speaker 2>the market knows either.

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<v Speaker 3>Well, he's operating, you know, a major brand and Boost Mobile.

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<v Speaker 3>And the other thing is the cable companies Charter and

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<v Speaker 3>Comcast taken together, who don't overlap, kind of constitute an

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<v Speaker 3>additional carrier as well. And you know, they are really

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<v Speaker 3>growing their mobile service at a significant pace, not as

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<v Speaker 3>significant as us. We're the growth leaders, but it's you know,

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<v Speaker 3>it shows that this is a vibrant market with a

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<v Speaker 3>lot of competition.

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<v Speaker 1>In the smaller markets. That's a big deal for you too, right.

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<v Speaker 3>Yeah, forty percent of the country everything that's not the

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<v Speaker 3>top one hundred markets we call smaller markets in rural areas.

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<v Speaker 3>It's a huge source of our growth right now.

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<v Speaker 2>And so on a revenue per user, how do you

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<v Speaker 2>guys stack up to your peers.

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<v Speaker 3>They're both above us, okay, you know, and it shows

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<v Speaker 3>that there's room to run for us, because you know,

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<v Speaker 3>we came from a place that is much more value oriented.

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<v Speaker 3>We're never going to give up those value roots. I mean,

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<v Speaker 3>the lower prices and better deal is a big part

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<v Speaker 3>of who we are. But at the same time, last

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<v Speaker 3>year we addressed some very outdated rate plans that just

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<v Speaker 3>don't make sense anymore after a decade, and there's more

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<v Speaker 3>opportunity like that as well, as long as we're true

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<v Speaker 3>to who we are, which is a great value. It's

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<v Speaker 3>the biggest.

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<v Speaker 2>Challenge to face going forward right now.

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<v Speaker 3>Well, it's demonstrating to people that this is not just

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<v Speaker 3>a present growth story, that it has legs. And that's

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<v Speaker 3>a big piece of what I spend my time on

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<v Speaker 3>is making sure that you know out in twenty six,

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<v Speaker 3>twenty seven, twenty eight that this growth keeps right on

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<v Speaker 3>rolling in and you see that in our organic strategies

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<v Speaker 3>but also some of the inorganic things we've talked about.

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<v Speaker 2>All right, Mike, thanks for coming in. Really appreciate it.

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<v Speaker 2>Mike Sievert, he is the CEO of T Mobile.

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<v Speaker 4>Again.

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<v Speaker 2>The company just reported earnings today beat earnings on the

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<v Speaker 2>top line and the ibitha line, which is where Michaels

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<v Speaker 2>seeing a lot of these investors look and right now

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<v Speaker 2>we got to stock up about eight and a half percent,

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<v Speaker 2>So a good day for Timo