T-Mobile Doesn't Expect FCC To Clamp Down on Binge On, CEO Says

T-Mobile has been “very clear that we’re pro-net neutrality, all of the things associated with Binge On” are pro-open Internet, Legere said. “We’re content neutral,” he said. “There’s no charge to providers or to the customers.” Binge On is “an ingenious realization that the device that you hold in your hand doesn’t need ultra-HD in order to watch very high-quality DVD video.” An FCC spokesman said Wheeler has made clear the agency is monitoring Binge On.

Legere started the day with an earnings webcast and then went on a succession of financial shows, where he slammed each of the carrier's three major competitors.

T-Mobile raised its forecast for subscriber growth after adding more than 1 million monthly users for the 12th straight quarter. The carrier said it expects to add 3.2 million-3.6 million new subscribers this year. T-Mobile also said it's becoming more profitable, with service revenue up 13.6 percent to $6.6 billion and adjusted EBITDA up 98 percent year-over-year to $2.7 billion. Net income was $479 million in Q1, said a news release. Branded postpaid phone churn was 1.33 percent. Branded prepaid net adds were 807,000 for the quarter.

Legere took a swipe at AT&T and Verizon on Bloomberg TV, calling them “Dumb and Dumber,” his favorite name for the nation’s two largest carriers. The two are “just not adapting to the uncarrier revolution and the things that we’re doing to change wireless for consumers,” he said. T-Mobile’s growth “can and will continue because we won’t stop,” he said.

Verizon was the first of the major carriers to report quarterly earnings (see 1604210043). “Verizon’s earnings could be summarized as ‘we lost top-line revenue, we lost postpaid phones, we walked back on 5G and we are still longing for millennials,” Legere said. He said many customers are still considering the move from “Dumb and Dumber” and “even Yellow,” his name for Sprint, to T-Mobile.

Legere said AT&T and Verizon are making the wrong moves to stay competitive. “All content is going to the Internet and all Internet will be viewed on mobile devices,” he said. “AT&T and Verizon are trying to use their balance sheet to drive, in a wholly owned way, into a continuum that they’re not successful in yet.”

“The discount carrier’s CEO is offering business tips to the best wireless service provider in the nation?” a Verizon Wireless spokesman emailed. “Haha. In 2015, Verizon spent $11.7 billion improving our wireless network -- T-Mobile just $4.7 billion. They sure won’t catch up spending less to support their customers.” AT&T didn't comment.

Legere called the TV incentive auction an “historic opportunity” and said T-Mobile would “participate with a successful outcome.”

T-Mobile has raised $9 billion going into the start of the forward part of the incentive auction, said Chief Financial Officer Braxton Carter in a call with analysts. "We're in the quiet period on the auction and really not in a position where we can discuss anything” beyond previous comments, Carter said. "But we were very clear in our public disclosure leading up to this quiet period about what our total envelope was.”

“What did you say in the earnings call that made it so that the stock went down?” asked CNBC’s Jim Cramer, who hosted Legere in a second interview. “It was going up before you started talking.” T-Mobile stock closed down 4.5 percent at $39.33.

The stock price has been “moving up nicely,” Legere responded, saying he made clear on the call that the numbers are looking good for T-Mobile. The carrier had 2.2 million net additions in the quarter, he said. “These are real customers,” not hub attachments or connected cars, he said. All of the other major carriers are “donating” customers to fuel T-Mobile’s success, he said. Legere credited part of T-Mobile’s success to Binge On and its zero-rated music streaming service.

T-Mobile’s Binge On program, unveiled in November, allows subscribers to stream video from a wide number of services without that usage counting against the customer’s monthly data bucket (see 1511120045). Industry and FCC officials say Binge On could be in the FCC’s crosshairs as “throttling” prohibited by the 2015 met neutrality rules (see 1604050053).

The T-Mobile executives were asked on the analyst call if they're considering making a play to become the primary carrier working with FirstNet on its national public safety network. Chief Technology Officer Neville Ray said the carrier is focused on low-band spectrum and the incentive auction: "Timing isn't great for us ... when we're driving so hard on low-band roll out." Ray said "it's probably doubtful" the company will be a "significant player" on FirstNet.

AT&T Also Reports

AT&T saw continued growth in Q1, driven by its work in Mexico and sales by low-cost subsidiary Cricket, the carrier said in its quarterly earnings report, released after the close of the financial markets Tuesday. “It was a good start to the year,” AT&T CEO Randall Stephenson said in a news release.

AT&T CFO John Stephens said on a call with analysts that AT&T plans to shut its remaining 2G network by the end of the year, re-farming the spectrum to help meet increasing data demands. Much of the spectrum has already been repurposed, he said. Operating "even a piece" of the 2G network is expensive and AT&T is anxious to cut those costs, he said.

The carrier said it added 712,000 branded postpaid and prepaid phone net customers in the quarter. Of the net adds, only 129,000 were postpaid, including 344,000 tablets and computing devices, which means a net loss for smartphones. Postpaid churn was 1.1 percent, AT&T said. The IoT played a big part, with 2.3 million North American wireless net adds driven by connected devices. AT&T said it had more than 500,000 wireless net adds in Q1 and launched service in Mexico City. Consolidated revenue rose 24 percent to $40.5 billion versus the year-earlier quarter, “primarily due” to DirecTV revenue, AT&T said. Net income attributable to AT&T rose about 15 percent to $3.8 billion.