irev210

Whether or not you intended it, you just supported my point.  VZW and AT&T both have scale.  T-Mobile does not, and that is why its "4G" deployment is available in urban islands but has long been limited to that archipelago.

 

AJ

Hey now, in one year from now, they are going to have 300 million pops covered with 4G LTE (scratches head).

I have no idea how they are going to do it... but it will be interesting to see if they can pull it off.  Given their previous track record, it seems likely that they can pull it off.

Son is so wealthy, the risk of losing 1B is well worth the reward of a merged company in his eyes. Betting 1B on a play that could be wildly profitable is equivalent to one of us taking, oh, say 2% of what we're worth to a casino.  And whats to lose?  Well, if his dreams of a merged company don't play out, Sprint's spectrum holdings and potential still make it valuable enough to dump, perhaps leaving him with little or no loss. There is another billionaire out there with hoards of liquidity just dying to make a play... 

Well, it's a calculated risk-reward.

If the merger is approved, cha-ching, guaranteed profits for decades to come in the grande finale of wireless consolidation in the United States.  Decades of 40+% margins will shower Son with billions.

If not, he eats $1 billion, probably learns a lot on how T-Mobile's management team functions, tries to copy that with Sprint... life goes on with T-Mobile and Sprint making 20-25% margins and dragging AT&T and VZN down to 30-40% margins over time.

Should be interesting to watch, either way.

Thanks for the update.. clearly I am one step ahead of Google, hah! I've been testing the .13 radio on 4.4.2 tonight, the app seems fine. The reset function is finicky on many rooted devices if it doesn't get su access immediately; it's a glitch in the root library.

 

Seems like LTE reception with the .13 radio is comparable to .23, but (hopefully) with the added benefit of seamless Spark. I haven't connected to any B41 yet, but I don't know if the sites in my area that are supposed to be live by now are actually online yet.

 

-Mike

For me, it is better than .23, no doubt.  On .23 I would fall back to 3G all the time at home, on .13, I stick to 1 bar of LTE just like .15.

I also connect to band 26 now with .13 - something that wouldn't happen with .15.

I'll keep testing throughout today but I can't see why anyone wouldn't want this over .15.

If that is the case I may just stick with .15... I have been pretty happy with it.  Just fastboot flashed boot, system, and radio now so I will find out first hand after ART rebuilds.

For me, .13 is just as good as .15 in terms of reception.

I'll keep testing.

An FAQ list for T-Mobile employees cited a situation in which a new T-Mobile customer took advantage of the operator's early termination fee credit, trading in more than one AT&T Mobility AT&T (NYSE: T) phone at a T-Mobile store. The customer subsequently complained that their residential coverage was worse with T-Mobile, but T-Mobile no longer had the customers' AT&T handsets and, thus, could not return them to the customer.

 

This is very interesting.  Again, I think it is important we watch T-Mobile churn.  How many are lured from AT&T only to be unsatisfied with the coverage.

How could it not be? It's simply not sustainable. They're doing it to boost their subscriber numbers despite the fact that it's destroying their margins. It's a strategy to make them more attractive as an acquisition target, period.

It would be more additive if you would explain why it is destroying their margins.

100 million in 1Q... to have more gross adds than all other carriers combined. There is a reason why other carriers knocked the program off.

As far as promotional, they have said it is not ending any time soon. Promotional was what Sprint and ATT were doing.

I am just baffled that you think that it is destroying the margins. Why do they need 50% margins? What margins do they need and why can't they offer this etf offer long term? Why do you think it costs them a lot of money?

The strategy is to add subscribers. Their goal is to maximize shareholder value. More subs do not make them more attractive... It's unattractive because it will cost Sprint more to bid on them if they decide to.

This is just measuring smartphone additions in one quarter... Obviously T-Mobile is going to have higher numbers for a while with all of their special promotions. Their ETF promotion is allowing millions of people to buy new smartphones much earlier than they would be able/willing to without it. Since the promotion is insanely expensive (up to $350 per switcher), T-Mobile will not be able to offer it for an extended period of time, and their smartphone sales numbers will fall back in line with their subscriber numbers.

You realize it's not a promotion right?

The page you listed doesn't even mention the international roaming. I just set up my in-laws with a new Simple Choice plan for their three week trip to Europe next month so I know what I'm talking about. The only way to get the included international roaming is to have T-Mobile run your credit and then sign up for Simple Choice. The no credit check and prepaid accounts don't have this add-on. They may include free international texting from the US to other countries but not the free data which is what Mike really wants.

Good catch, that's pretty confusing.

Like our Simple Choice options, Simple Choice No Credit options offer unlimited talk, text, and web while on our network, however certain features like JUMP!™ and international roaming are not available.

Tmobile's prepaid plans don't include the free international roaming. This is the Q&A, fourth down on that page:

 

How much will global coverage cost?

Nothing – it is included in your rate plan monthly charge for all Simple Choice customers (excluding no credit plans).

 

The simple choice plan does but only if you apply for it using a credit check. For just a quick trip I wouldn't want to take a hit to my credit score just to save a few dollars. So for me I would look for a cheap prepaid sim instead once you get there.

http://explore.t-mobile.com/simple-choice-no-credit

Looks like you don't need a credit check for family plans right now.  I guess if you are getting two lines, it might work.

It's an extremely sad proposal.

I hope everyone is writing the FCC and donating money to entities like the EFF.

While netflix pretends to be a victim (lets face it, they buy capacity from cogent and cogent oversells capacity but keeps selling it anyway and netflix keeps buying because they are cheap) - the proposal is very scary.

I imagine a world followed by cablecards - where yes, cablecos are required to offer cablecards but make every effort to not to.

Sorry, but being a truck driver without "the luxury of an office" does not entitle you to special wireless data privileges.  You will not get much sympathy for that here.  Millions of truck drivers before you survived on AM/FM and CB radio.  So, with the new throttling policy, you may have to curtail your usage or have it curtailed for you.  Those are the breaks.  And if significant data access is that important to you, you may need to reconsider your chosen profession.  People do that every day.

 

AJ

Actually, it does entitle him.  It's somewhat profound you feel otherwise.  He is entitled to exactly what he signed up for - regardless of your moral issues surrounding unlimited data.

I think what he was outlining why unlimited data, a service that was offered to him by sprint, was important to him as a Sprint customer and why he was a Sprint customer.

Perhaps his point was - under the new data throttle policy (TBD on how it will exactly work) he will no longer be a Sprint customer and perhaps choose another wireless carrier that fits his needs.

What's interesting is that you constantly police S4GRU users into how they should use their unlimited plans (I am baffled that you would suggest he make a career change to access the internet).   If Vince was illegally tethering, I could see your point - he would be using the service in a way that Sprint did not intend and cannot support. 

If you feel Sprint shouldn't offer unlimited, perhaps you yourself should switch carriers.  Verizon does a good job of supporting the number of subscribers they have with enough capacity and data buckets to provide fairly reliable speeds.  Your carrier selection would more accurately reflect the way you feel the wireless industry should allocate capacity.

AJ - Sprint set a policy/plan to attract subs.  Now they are probably figuring out that the small portion of subscribers are causing extreme network degradation and that data usage trends are growing faster than the network can support.

I think the real issue is what what Sprint will do to manage the network over the coming years.  Will it always be 5%?  Will it morph into an actual GB limit similar to how AT&T killed unlimited (3GB then you are throttled)?  I think these are the questions we should be asking/discussing.

Normally, I wouldn't be this direct but I have a family member who is a truck driver.  It is an extremely tough job but some people really enjoy it.  I take great offence that you would actually suggest he find another job or use AM radio for entertainment when he has downtime.  He is doing absolutely nothing wrong yet you blast him on how he uses his sprint plan.

I do not know if he's "unmotivated" now. But he sure seemed like it when he was at Clearwire directing network management. But plenty of Clearwire folks jumped the ship when the deal closed, and several Sprint folks did, too. Senior people, even!

Conan - I think if you take a closer look at what happened, the "unmotivated" people seemed to be forced out of Sprint.  Saw seemed to be limited by the realities of a capital constrained company.  Perhaps you should take a look at what he was actually able to accomplish with the amount of resources he had.  When you look at it that way, it's actually pretty amazing.  Listening to Saw speak over the years, I always walked away thinking he was pretty motivated but restricted given Clearwire's financial situation.

So basically anyone who is not for the merger ain't welcome here

Nobody is bothering me - I'm very against the merger because I believe it will lead to less competition and higher prices.  I've explained my position multiple times and while some might not agree, I haven't received any push back.  I don't think you can just talk about what happened to Sprint 5 years ago - that's a different world.  Focus on today, Son, Hesse, Saw, etc.  It's an extremely capable company that's really starting to turn around.

The narrative that four carriers have Done anything to reduce price for consumers is something that can be substituted. There has been a shift in how the wireless industry opperates but not in the end price the average consumer pays.

 

The arguemsnt Softbank is making is that we have a duopoly that drive the industry and has all of the industry's profits. By creating a third player with the same scale you are turning a duopoly in to a three players oligopoly. I am starting to by the idea.

I think we've seen it on the fringes.  Discounts in the form of retention offers and port-in offers for new subs.  Also, the question you aren't asking is - how much higher would prices be?  Right now carriers are investing a lot moving to LTE.  If it wasn't for T-Mobile/Sprint, how much more would VZN and AT&T be charging?  What has competition done to limit price increases?  I know Sprint wants to raise prices but it's very difficult for them to do so because of T-Mobile.

While we can't answer all of these questions, I can say if you look at what the industry is doing, it's giving people the choice to pay less by moving the phone subsidy out of the top line - this allows people to pay less if they want to go a bit longer without upgrading.

Could be any number of reasons including:

 

No reason to,

Things work fine as they are,

IPv6 is more of a novelty type thing right now than anything,

etc etc

You could say the same thing about any new technology.

With that sort of mentality, you could say all of s4gru is a novelty, LTE is a novelty, every sort of new technology is a novelty, etc etc.

This is an entusiast forum, what do you expect

I just noticed that comcast upgraded my CMTS to support IPV6 so I was curious and noticed that s4gru.com isn't supporting ipv6

Any reason why not?

^^ THIS ^^

I thought that churn would tick up with these etf promos but that hasn't happened. I just can't figure out how churn is so low.

20%EBITDA. How long do you think that shareholders or parent companies would put up with that? Yeah the two could survive on that, but could never thrive. You need 35-40% at least to thrive and to pay off the kind of debt load that Sprint has. That's why Sprint should have acquired T-Mobile before the two began their LTE deployment. The two could have shared the network buildout costs.

It's a good question.  Do some research - 40% ebitda margins are not the norm.

Granted, telecom industry is very capex heavy, so you need reward.  Plus, the barriers to entry are very high.

As a customer, I want good price (low margins).  You get low margins with high levels of competition.  Less competition means higher margins which means higher prices.

Your cherry picking here. You can't look at arpu and say they are lowering price because the new arpu doesn't include handset subsidies( a year ago a much higher portion of their customers where on older plans that included subsidies). When you add the cost of equipment that customers now have to pay that is worth over 4 dollars. Further The problem with editda is that it ignores the ongoing capital costs in a very capital intense business. This is where the merger makes sense to me. The larger companies have a huge advantage in being able to spread the fix costs over a larger sub base.

Completely agree that combined they would have a larger base of customers to spread fixed costs.  That is the same reason why AT&T and Verizon have insane margins.

I think that would just mean Sprint/T-Mobile would slot in below AT&T/VZN and not really save customers money.  No doubt it would be great for Son/Softbank/Sprint to making more profit in the US but as a customer I want better value.

Only because they think that there is an increased possibility that Sprint will acquire them.

that's definitely some of it - shareholders would expect sprint/softbank to pay a premium to be acquired.

20%EBITDA. How long do you think that shareholders or parent companies would put up with that?

TMUS stock has doubled in 12 months, seems like shareholders are loving it.

The only major problem with the ARPU metric is that it doesn't count in money coming in through EIP (a term TMUS first coined, but now everyone uses). It's basically the equivalent of "below the line billing" for accounting purposes. Because the revenue required for subsidies was built into the base rate, it's fair game for ARPU. But EIP isn't, so it's factored out. Realistically, you need to have some sort of average billing per user to make up for this deficit. Verizon and AT&T have the advantage of ARPA (average revenue per account), which allows them to combine the total revenue on an account basis (including EIP) and divide it by the number of accounts. Thus, their ARPA numbers are higher. T-Mobile and Sprint can't use this metric because they don't use shared data plan schemes.

Yes, EIP is a good scheme to get away from the "new iphone launch" problem that AT&T has had.

I suspect that all subsidies will eventually get moved below the line as banks step in to provide financing.

I was wrong about the churn numbers but Sprint and tmobie lost 151 million net. And T-Mobile raised prices Which goes against the narative of four carriers lower prices. In fact T-Mobile hasn't really changed prices, they have Changed the business model (ie more away from subsity) but not really price.

No problem - we can chat a bit more about how I measure "profit" or "profitability"

I think you should focus on more relevant numbers.  When you look at net you are including depreciation and amortization (not a cash expense), one time impairment/restructuring costs, interest expenses which can be shifted, and tax implications (can be a benefit or expense).  What does NET income tell you?  Not much - nothing about how profitable the core business is, that's for sure.

I don't want to get into a Finance 101 class but we should all compare the carriers using the same metrics.  If you want to see how profitable they are, look at their adjusted (gets rid of one-time expenses so it is apples to apples) EBITDA margin.  How profitable is a carrier based on its current financial structure?

Next, let's look at pricing.  In fact, T-Mobile has lowered their prices.  This is measured by ARPU, which is an apples to apples measure of how the industry measures pricing.

T-Mobile's postpaid ARPU 1 year ago was $54.07 while today it is $50.01.  They've lowered prices by 7.5%!

Tmoble still lost money and their churn was over 2%, well over twice that of AT&T and Verizon. Further T-Mobile had to raise prices!

The thing that is winning me over is T-Mobile and Sprint need about 60000 cell towers each which is the same number as vzw and AT&T but they only have half the customers to pay for it.

I'll post up some numbers - this will make it more helpful.

What is "lost money"? 

First off, you are probably looking at total churn not postpaid churn.

For example, AT&T had postpaid churn of 1.1%, Verizon 1%, and sprint 2.2% for the last quarter of 2013.

Prepaid churn is completely different because of lower ARPU and the lower subscriber count of prepaid customers that AT&T and Verizon have.  While both have their place, compare postpaid (valuable customers) to postpaid.

Sprint's postpaid churn 1Q14 was 2.11% vs. T-Mobile of 1.5%.

Look at EBITDA margin which is a MUCH better metric to look at profitability for wireless carriers.

For AT&T we had 37.4% in 4Q13, 14.5% for sprint, 47% for VZN, and 24% for T-Mobile.

Sprint increased ebitda margin to 25.3% for 1Q14 and T-Mobile fell to 20.4%.

T-Mobile is being more aggressive with price, so margins are falling.

We can discuss in much more detail if you would like but I think it is important to focus on real numbers.

I don't know.  I think you make the assumption that 4 national carriers can actually survive independently in the long run.  I'm sure that's the case.  There might only be room for 3 competitive national carriers.  If there is a 4th, it will probably be reduced to no more than a glorified regional carrier. It'll be there but really not be much a factor in the market.  

Really?  Considering the margins in the wireless industry, I would argue that there is plenty reason to assume that 4 national carriers can actually survive.

He's said as much, if you read between the lines. He says that two smaller competitors cannot take on their two larger rivals because finances will never allow it. If we want more than two fully national providers, we will need to make a change, like allowing a merger/buyout. If we are happy with the status quo, two big and two little, then leave things the way they are.

 

I think the question that is the most profound to ask is this...which would AT&T and VZW prefer? I believe it is a resounding NO MERGER. And then you all have to ask yourself, why would the duopoly be against a merger. Because they'd be scared that they truly would have someone other then the other to compete against.

 

AT&T numbers have shown they have largely deflected the Uncarrier moves, just by simply lowering prices. Why go to inferior coverage Tmo if AT&T is the same price? Tmo and Sprint are just taking the same customers back and forth. And that's the way it will always be until someone can really start to take on the duopoly.

 

Tmo or Sprint could take on the duopoly organically. They don't have to consolidate. But it's much harder. And will take much longer. And take lots of capital. And it may take longer than most investors are willing to wait for. CCA is their best bet apart. However, VZW already is buying out a CCA member. How many have they bought the last 4 years? How many more will they be able to buy out? All of them, maybe?

 

Robert via Samsung Note 8.0 using Tapatalk Pro

If you are trying to sell to a regulatory agency, what else are you going to say?  That you really want to buy T-Mobile so you can have higher margins and complete much more comfortably by taking out your closest competitor?  Son is trying to sell this deal to regulatory agencies - take what he says through the lens of a regulatory agency coming from a competitive businessman.  He is looking out for his shareholders.

As for AT&T and Verizon - they would probably support a merger.  New AWS up for grabs and a comfortable/predictable landscape for the bells to compete in.  Like I said - you would have them comfortable at their 40-50% margins while softbank/sprint would slot just below that.  The current size of the duopoly would make them stick with their current margins while keeping sprint just below them.

I don't think it is harder for Sprint/T-Mobile to take on the duopoly.  I think T-Mobile's current quarter of record low churn, insane adds, and 20% adjusted ebitda margins shows that you can take on the duopoly while not needing to consolidate.

If you are a sprint/softbank shareholder, no doubt you would want T-Mobile to merge with Sprint as the entire wireless industry in the US would become more profitable.  If you are a customer, I don't think you would see much disruption.

Just my humble opinion based on profit margins, size of Sprint and T-Mobile, and how much they can do to attract customers.

The only win for Sprint I see here is one that hurts all of us -- namely, that Sprints biggest competitor will no longer exist. Folks can hate on T-Mobile all we want, and a lot of it is totally justified, but having them gone won't do good things for Sprint users in the long run, in terms of pricing and policies.

Bingo - Son would LOVE to get rid of Sprint's biggest competitor.

Son is not all for competition and low prices.  He is here to make a profit and taking out Sprint's largest competitor is the way to go about doing that.

T-Mobile is driving down margins, taking sprint customers, etc.  Softbank has the cash to take them out.  It's common sense from a business perspective.  From a consumer perspective, we'll just end up with higher prices and more profitable wireless carriers.

I have no idea how anyone on this forum could support that.

No one in government has signaled this plan would be approved. Sprint/Bank is just going to end up giving T-Mobile some more network expansion money.

Actually, if you followed the news, you would realize that this is not the case.

Son has essentially stated that he would not provide a big breakup fee and that a big breakup fee would lead to regulatory agencies saying no to strengthen t-mobile (a stretch).

Son is probably getting frustrated.  The longer Son waits, the more expensive T-mobile is getting.

Total net adds of 2.391 million and postpaid churn of 1.5% (lowest ever).  T-Mobile is absolutely positively crushing it.

I hope that DOJ and FCC stops this.  Having four carriers is nice - it really gives customers choice.  Having three choices would just be choosing AT&T or Verizon (essentially priced on parity) or Sprint/T-mobile, which will be priced just below them.

Of course Son wants to buy T-Mobile.  It would make it 1000x easier for sprint to compete.