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Challenges Ahead

T-Mobile CEO Says Carrier Is Doing Its Best to Prevent Future Data Leaks

T-Mobile confirmed it added a net 927,000 postpaid phone subscribers in Q4, and 3.1 million for the year, more than both AT&T and Verizon. CEO Mike Sievert promised T-Mobile’s growth will continue in 2023 despite what he predicted will be a challenging year. Sievert also defended how the carrier handled a recent data breach, which the FCC is investigating (see 2301200047).

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The wireless industry “as a whole” is having “moderating growth and potentially a challenging macroeconomic environment,” Sievert told analysts. “Our unique, high-quality position is proving remarkably well-suited to the times,” he said.

The investments the company made in cybersecurity last year “showed up in a critical way a few weeks ago,” Sievert told analysts. “After identifying a criminal attempt to access our data through an [application programming interface], we shut it down within 24 hours,” he said: “More importantly, our systems and policies protected the most sensitive kinds of customer data from being accessed.” T-Mobile reported Jan. 19 it became aware Jan. 5 of a breach that began Nov. 25.

T-Mobile takes security “very seriously ,” Sievert said, expressing disappointment a perpetrator was “able to obtain any customer information.” T-Mobile is committed to becoming “second-to-none in this area,” he said.

T-Mobile is considering launching wireline operations to complement its wireless but would likely do it as part of a partnership with another operator, Sievert said. “If we did, it would be because it's a good business” and “not because we feel like there's some flank that we have exposed that we need to protect,” he said. T-Mobile’s “mission” will remain “to become the best in the world at wireless,” he said: “I personally have no interest in having some kind of major change to our strategy.”

T-Mobile added 524,000 high-speed internet customers in Q4, to finish the year with 2.6 million.

Most of the fixed-wireless customers T-Mobile is adding are switching from cable or another provider rather than being located in rural areas that previously had no service, Sievert said. Fixed wireless “has less overall potential for capacity than a strand of fiber, which is patently obvious,” he said: "It's perfectly suited to what people want" and “radically simple at low cost. It's transparent. It's portable within tens of millions of households."

T-Mobile reported service revenue of $15.5 billion in Q4, with net income of $1.5 billion. For the year, net income of $2.6 billion was down 14% over 2021 due to tax and Sprint merger-related costs of $3.7 billion and a loss tied to the sale of its wireline business of $815 million. Revenue for the year was $61.3 billion, a “record high,” T-Mobile said. Free cash flow increased 96% year over year to $2.2 billion in Q4. Postpaid phone churn was 0.92% in Q4, 0.88% for the year.

Prepaid net adds were 25,000 in Q4, 338,000 for the year. Prepaid churn for the year was 2.77%, which the company said was the lowest ever. The company predicted 5 million-5.5 million postpaid net customer adds in 2023, with EBITDA of $28.7 billion-$29.2 billion.

The guidance on adds and EBITDA follows a standard pattern,” New Street’s Jonathan Chaplin told investors: “T-Mobile usually raises guidance on adds a couple of times during the year and then beats it, while meeting on EBITDA. Investors usually react with disappointment when guidance is announced. We expect a similar pattern this year.”