Verizon, T-Mobile Executives Say They're Slowly Reopening Company Stores
Verizon is reopening many of the company stores shuttered due to the COVID-19 pandemic, Chief Financial Officer Matt Ellis said at a MoffettNathanson virtual conference Monday. The carrier was down to 30% of stores open, which increased to 40% last week and is expected to hit 50% in June, he said. T-Mobile executives also said more stores are coming online in some locations based on state guidelines. While 80% of T-Mobile and 70% of Sprint stores closed, business as usual will return at a different rate in different parts of the country, said CFO Braxton Carter. The two companies combined earlier this year.
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Verizon doesn’t expect a slowdown in 5G deployment because of COVID-19, especially for its enterprise customers, Ellis said. “If anything, businesses understand that they will need to keep getting more and more efficient as we come out the other side” and they see 5G helping with that, he said. “We are cautiously optimistic” companies will invest in technology despite the economic downturn, he said. More industrial customers want to automate the factory floor and will look to 5G, he said. Verizon is still focused on the high-band spectrum, the only place to get enough bandwidth to get all the advantages of 5G, he said.
Verizon is interested in the C-band auction to start in December, Ellis said. “We’re very happy with the spectrum holdings we have,” he said: “Our strategy is based” on “the spectrum we have.” T-Mobile has “a lot of work to do” to integrate Sprint into its network, which experience shows will “take two to three years,” he said: “That’s if you do it right. … While they’re doing that, we’re executing our strategy.”
Since mid-April, the number of subscribers upgrading devices has increased slightly, either because of stimulus checks or because people are becoming more comfortable with the pandemic, Ellis said. More subscribers are shopping for devices online, he said. More are likely to upgrade as 5G is deployed, he said. Verizon expects 20 5G devices to be launched on its network this year, he said. The question remains how comfortable customers will be going back to stores as the economy reopens, he said. If they do, Verizon will likely have “strong handset volumes” in the second half of 2020, he said.
Verizon had a significant increase in wireless traffic due to the pandemic, but the location and timing of calls shifted, Ellis said. Conference calling tools, gaming and video streaming also saw big gains in usage, he said. Verizon saw the increase at the start of the pandemic and those trends have been steady, he said. Daily calls are twice the peaks normally seen on Mother’s Day, he said. “The network has performed phenomenally well."
Carter said Sprint integration will likely take three years and could go faster since the company got started before the deal closed. “There’s only so much you can do premerger,” he said. The pandemic gave T-Mobile extra time to prepare its national marketing push, which was always going to take time, he said: “We’re anxious to get going.”
“Certainly, this country is not going to be normal next month or the month after,” Carter said. The reopening will be regional, but “everything we do is really national in positioning,” he said. Stores that reopened are already getting some customer flow, he said. There’s “no question” the U.S. economy is in a recession, he said.
Because T-Mobile isn’t cutting off service for nonpaying customers due to its pledge to the FCC (see 2004300044), at some point those customers will be faced with bills that have stacked up over several months, Carter said. Given current unemployment levels, “that is obviously a problem,” he said. The company expects have up to $125 million in bad debt on top of normal rates when the pandemic is over, he said.
Chief Technology Officer Neville Ray said the time it took to get the takeover approved meant better planning, and 80% of former Sprint customers now have compatible handsets. Two-thirds of roaming by those customers on the T-Mobile network is in urban and suburban markets: “Where the Sprint network goes away, then you come onto the T-Mobile network.”