- Analysts at MoffettNathanson met with T-Mobile’s CEO and other top management this week
- It just so happened the meeting occurred on the same day a report surfaced that CEO Mike Sievert might make an early exit
- Their big takeaway: Despite distractions, T-Mobile’s leadership is laser focused on its core mobile business
Analysts at the equity research firm MoffettNathanson found themselves in the enviable position this week of having a previously scheduled meeting with T-Mobile’s senior leadership team on the same day a German newspaper reported that CEO Mike Sievert is considering an early exit.
They didn’t necessarily learn a lot beyond what’s already been reported about Sievert’s status, but they were impressed by the management team’s commitment to its core mobile business as opposed to what the analysts consider side quests like fiber and fixed wireless access (FWA).
“We’ve periodically criticized T-Mobile for what we might call ‘distractability,’ or a focus on ancillary issues like a fiber strategy that covers less than 2% of the country, or even an FWA strategy that accounts for just a few percentage points of revenue,” wrote analyst Craig Moffett in a June 10 note for investors. “Far more important, and sometimes lost amid these ‘distractions’ is, in our view, the core of T-Mobile’s value proposition: the best network at the best price.”
People in the industry will quibble over “best network” and “best price,” but suffice it to say, Moffett is a believer that T-Mobile's unique advantage is being the best in both worlds.
T-Mobile CEO’s response
Moffett said their discussion started with Monday’s report by the German newspaper Handelsblatt that suggested Sievert is planning to step away from the business prior to the end of his contract, perhaps later this year or next.
According to Moffett, Sievert declined to either categorically confirm or deny the report, saying only that “I love my job” and that “this team loves working together,” and beyond that, “it is unproductive to comment on the press.” Those comments echoed what a T-Mobile spokesperson told Fierce after the news broke.
But Sievert did remind them that his contract is public, the details of which can be found here.
“While investors will almost certainly latch onto the fact that Sievert ‘didn’t say he’s not leaving,’ it’s not quite that simple,” Moffett said. “His admonition to look at his contract makes things less clear, at least with respect to timing (if it is indeed his intention to step down.)”
Said differently: “Even if the reports of Sievert’s intention to step down are accurate, we have no idea when that might occur. Notwithstanding, the enormous rewards Sievert has already accumulated over his very successful career thus far, the amounts involved, and the incentives to not step aside precipitously, are considerable,” he added.
Sievert’s heir apparent, T-Mobile COO Srini Gopalan, was also in the room, and understandably, he didn’t provide any further commentary on the day’s news. Gopalan did, however, remind the analysts that while relatively new as an insider at T-Mobile, he's gotten to know the company by serving on the board of directors since 2021, in addition to his experience running T-Mobile parent Deutsche Telekom’s operations in Germany.
'Unicorn' status
Moffett said the focus here will surely be on parsing Sievert’s words to gauge if and when he plans to step down.
However, “what we took away from the meeting is something entirely different,” he said. “T-Mobile sounds to us to be fully re-focused on what matters most: taking share from AT&T and Verizon in mobile.”
Besides Sievert and Gopalan, the meeting included CFO Peter Osvaldik; President of Marketing, Strategy and Products Mike Katz; Consumer Group President John Freier; Business Group President Callie Field; President of Technology Ulf Ewaldsson; and EVP and CTO John Saw.
Moffett said every member of the team repeatedly returned to T-Mobile’s mantra of “the industry’s best network and lowest prices.” In Gopalan’s words, T-Mobile is a “unicorn” by virtue of this dual advantage.
T-Mobile talks up T-Life
One surprising emphasis of the conversation, according to Moffett, was on T-Mobile’s digitization strategy and the company’s use of AI to anticipate and prevent customer pain points.
The T-Life app plays a major role in that; it’s been the most downloaded app over the past few weeks, with more downloads than TikTok, he said, citing 65 million downloads and more than 20 million active users engaging with the app seven to eight times per month.
No doubt, it’s a major source of revenue growth. The majority of people upgrading to higher priced plans are doing so via the T-Life app.
Other notable bits and bytes from the MoffettNathanson report:
- If EchoStar’s spectrum were to become available, the expectation is that each of the big three mobile network operators would focus on their preferred bands. But it’s not a lot of spectrum; EchoStar’s spectrum is equal to about 15% of the total spectrum ownership of the Big Three wireless operators.
- T-Mobile believes the Starlink relationship puts them far ahead of anyone else in the direct-to-device (D2D) space; they currently have more than 600 satellites in orbit. Most of the traffic for T-Satellite is in national parks; about 500,000 square miles of the U.S. that can’t be covered by terrestrial towers.
- T-Mobile insists it’s not pursuing a “convergence” strategy. They have some appetite for additional fiber transactions but don’t think such deals are necessary to defend its customer base. There’s little evidence to suggest that customers make their mobile decisions based on who their broadband provider is.
All told, “T-Mobile’s senior leadership team was laser focused on pressing their advantage in their core mobile business. It was, to us at least, an impressive and welcome focus,” Moffett concluded.