T-Mobile US Stock

Great. Wonderful. Well, good morning, everybody. Welcome to the T-Mobile session at the Goldman Sachs Communacopia and Technology Conference. My name is Mike Ng. I cover T-Mobile and media, cable, telecom here at the firm, and I have the wonderful privilege of introducing Srini Gopalan, who's the CEO of T-Mobile. First and foremost, thank you so much for being here, Srini. It's an absolute pleasure.

It's great to be here. Thanks for having me.

Great. So, Srini, you're a couple of months away from completing your first full year as CEO. What has surprised you the most? How has it shaped how you think about the company's longer-term strategy? And I was wondering if you could also just talk a bit about some of the recent news as it relates to your CFO and whether or not that changes anything in your mind.

Great. Just before I get started, I need to draw your attention to the safe harbor statement. We just pull that up or -- it was just on. It was just on. Okay. Just to make sure that I'm covered on that because I will talk a bit about the future and use some non-GAAP measures. So, let me start with your question of has anything surprised me, kind of, almost it's a year in. Not really, because I've been associated with the company for nearly 10 years now.

I must say, though, what has impressed me is the depth and width of our strategic moats, because I tend to think of most businesses and industries is what makes them sustainable is the quality of the moat that you have around you.

And I think about our moat, kind of, in 2 ways. The first is the growth portfolio and what growth it enables. And the second is culture, because in a company like ours, the 2 of them are, kind of, inextricably linked. Let's talk growth first. So, when I look at what we have, and I'll start with consumer wireless, our biggest business. Consumer wireless, we're unique because we're the only carrier who can genuinely say we offer the best network, best value, and best experience.

Let me spend a minute on best network first. And in many ways, when we talk about best network, where we are at this point in time uniquely feels a bit like being back in 2020, where you have some players talking about how network doesn't differentiate, which shocks me a bit because that's your core product. Others deploying capital into other businesses, right? And we are, kind of, ruthlessly single-minded focused on building the best network and enhancing it. We're already the best network. Now we're really working hard at how we enhance it.

And let's put some facts behind that, right?

We rolled out our 5G standalone back in late 2020. It's almost 5 years ahead of the rest of the industry. And we're continuing to double down on our network, and we're seeing big payoffs on that. I mean quarter 2, our port-ins had a 20% higher ARPA than our port-outs. Our premium plan loading ratio is in the 60s as against the base, which is in the 35s, mid-30s, right?

And we're seeing that consequent doubling down on best network, really, really paying off in terms of the quality of customers we're attracting.

The second leg of this, which is best value. Now that's something we've historically been really famous for. And we define best value not just as best price, but the best value to break through customer pain points. And we just launched our Nothing plan, which addresses a significant pain point. And the way I think about value is, again, this is partly what you offer the customer, partly what your economics sets you up to do.

I mean, again, we're unique in that our front book is -- or our new customers are actually higher-priced than our base, which gives us enormous flexibility in terms of how we price, but also means we're probably the only player in this industry where when you see growth in net adds, it also means growth in revenue because the math of it is ridiculously simple, right?

If you're losing customers at a much higher value than what you're gaining, then you need more than positive net adds -- to dig yourself out of the revenue hole. We're in the very fortunate place where -- and we will zealously guard that -- where our best value position is not just about what we offer the customer, but also a fundamental flywheel in terms of how it drives our economics. Best experience, great people, and I'll talk a bit about that when I double down on culture, now fueled by T-Life, more than 30 million monthly actives. And I know we'll come back to talk about AI, but now fueled by AI and the huge strides we're making on that. So, all of that really covers off why I'm super excited by growth in consumer wireless.

Now the big thing is it's not just consumer wireless, because you look beyond consumer wireless, you look at our broadband business. We've created the FWA category, and we just upped our guidance a little while ago from 12 million to 15 million customers by 2030. You add on 3 million to 4 million fiber customers, and we're talking about doubling a business in the next 4 years, right? And that business came from a standing start in '23. So, when you're thinking growth, huge upside there. And then you look at T-Mobile for business. More and more businesses are going wireless. More and more businesses are recognizing that if your business depends on it, there's really only one wireless network you can count on. And we have 10%, 12% share when you look at the bigger businesses, lots of upside there.

And what's even more exciting than that is physical and edge AI. And you just had Jensen on stage, and he and I have spent a lot of time talking about when AI becomes kinetic or mobile, when objects with AI are more than, kind of, places you write poetry, but things that move, having a low-latency 5G SA going on to 6G network is absolutely critical. And then the latest addition in our growth portfolio, financial services. We launched credit cards back in November, and Capital One is already calling it one of their most successful co-branded launches.

So, I look at that portfolio, and it's hugely exciting. When I've, kind of, seen the business from the Board, but I think the thing that has surprised me to some extent that has impressed me is the depth and the width of the moat, because these are not individual pricing strategies or tactics. These are real sustainable, defendable positions. And the number that captures a lot of it for me is an NPS of 46, which is the highest amongst the Big 3 ever, right?

The other big bit of the secret sauce that I think is totally unreplicable is culture, right? And that's a big part of what T-Mobile has been. The way we -- and that culture plays very closely to customer experience, right? And that is all about being completely obsessed about that. The way we articulate it is "frontline first and the customer is why." And we've doubled down on that. I've doubled down on that over the last 3 to 4 months. We've, kind of, got 3 big programs going. One of them is the Magenta AI Institute, which is we're spending more than $100 million over the next few years, really -- and this is a bold claim, to be the best in the world at preparing our people for the future, because we believe that, that is critical to who we are.

Second bit of it is pretty unique. It's called Frontline Connect. This will make you laugh because, I mean, lots of companies have these things where you get senior management to go spend a day or 2 in the field in stores or on the network side, et cetera, et cetera. Frontline Connect is unique. 750 managers, everyone Director Plus, will spend 2 days. And here's where the rubber hits the road: you don't get your annual stock bonus unless you make a commitment on how you will improve the life of the frontline and the store manager or the frontline person signs off that, that commitment will make a difference to their life, and that includes me, right?

And last but not least, there's Value Share, which is as we look at all this growth, we will create enormous value. And we're committed to sharing that with our employees. So, we've announced a $12,000 multiyear grant based on performance to all our employees, every one of them. So, that's close to $1 billion investment in doubling down on our culture. So, I put those 2 things together, and that's really what the moat looks like. A big part of culture is also leadership team. And we've been very thoughtful as a company in how we've planned transitions. You saw the Mike-me transition. There was no, kind of, surprise.

And we -- I've now got a management team and a leadership team that I feel balances the depth of experience at T-Mobile. So, you've got people like John Saw, Jon Freier, Deeanne King, Mark Nelson, together more than 100 years of experience at T-Mobile. And then you've got Chris Sambar, very excited about that, especially given our enterprise plans and our physical and edge AI plans, so Chris will run all of our enterprise businesses. You've got André Almeida. André has, kind of, worked in 14 different markets, and he will drive a lot of our marketing, brand, a lot of our thinking there and strategy.

And I'll come to Peter, my good friend who's here, right? So, Peter and I have known each other for a long time. And in fact, about the time that he became CFO. And when Mike and I started talking about the transition, it was already clear at that point in time as I think September '24 was the first 8-K that Peter wanted to put his feet up and, kind of, go do a bunch of other interests he has, including philanthropy and the rest. And the planned timing then was mid-'26. And one of the first things I did when the transition plan between Mike and me was, kind of, laid out was sat down with Peter and had a conversation with him, which is I really needed him to stay through the CEO transition.

And I'm delighted and grateful that he has, which is then what led to the September '25 8-K, which looked like a planned transition that he'll make coming summer '27. And what we talked about at that point was we would do the transition at a point when we felt the business was in good shape and we found the right person. And in Jessica, I'm delighted that we found the right person: huge amount of experience, super bright, very consistent with our culture, humble, lets her do the talking, and somebody who's got experience that's extremely relevant for us because she's managed a complex -- at Shell, it was the most diverse portfolio -- a complex retail business, which is probably amongst the biggest retailers in the world to, kind of, allocating capital to things like oil exploration, right?

And so that's a wide portfolio. Delighted to have her on board and really excited about getting here to meet all of you. So, that's how I think about those pieces. But I think the important thing is we -- I see those 3 components as the same thing: the growth portfolio, the culture, and the leadership team, all of which contributes to a strategic moat.

Great. That's very clear and a fantastic overview. I'm sure we'll get into a lot of that. Maybe just to start out, I wanted to ask a couple of questions around consumer wireless. We're a day away from the recently announced new iPhone. You've been very clear about wanting to pivot T-Mobile to have a more holistic value proposition relative to what's historically been for the industry, one that is emphasized on device subsidies. So, could you just expand a little bit on that? How does the switch to more flexible 36-month equipment installment plans fit into the broader strategy? What has the customers' reception to some of the changes been to date?

Sure. I think there's 2 cornerstones of how we think about value rather than purely pricing, right? Cornerstone 1 is what are the big customer pain points. Cornerstone 2 is CLV, right, which simplistically put is, will customers love it, will we make money out of it, which are the fundamentals of running this business, right? When I think about customer pain points, one of the things that we heard a lot from customers, including well-qualified prime customers, is, look, I'd love to get a new phone, but there's all the taxes and fees upfront. That means I have an out-of-pocket straight upfront. And that causes friction in the switching process. And as you know, we love switchers, right?

And so taking that friction out is a big part of the product we offer now, which is zero-down if you're well-qualified, right? And we roll the taxes and fees into the broader EIP. Moving to 36 months is simply a reflection of the device life cycle being larger. And those 2 are obviously very CLV accretive. When we think about subsidies, we use the same lens, which is what does the customer want. Now there's going to be promotions at periods in time because you get different waves of switchers. And the first little while tends to be the most sensitive switchers. So, there's lots of jump balls, so you'll probably see more promotions there.

But, kind of, from a medium-term perspective, we're very guided by CLVs. CLVs have been super strong. Quarter 2 was up double digit in terms of CLVs, and we feel good about that. We also are very clear, and I've said this before, that when you look at the business model, as device prices go up, you're going to have more of that cost being paid by the customer. And that probably summarizes where we are.

Very clear. On postpaid accounts, the company obviously has postpaid account net addition guidance for the third quarter, 250,000 and for the full year, 950,000 to 1.05 million. T-Mobile talked a little bit about some of the heightened churn going into the third quarter because of some of the changes on rate. I was just wondering if you could talk a little bit about how the company is pacing against those guidance numbers. How would you describe the current churn and gross add environment?

Firstly, I'm not going to do an intra-quarter guidance on where we are.

I was hoping for one.

Yes, I can send you the spreadsheet tomorrow. But no, look, where we are is we're feeling really good about both volume and value this year, right? We guided to 950,000 to 1.05 million. Halfway point, we were at 500,000. We're feeling very good about this quarter. So, it's -- there's nothing here that's different from what we were expecting. And when you look at churn, right, I just reflect on the fact that last quarter, we were 85 bps, 5 bps down year-on-year.

And I know we love obsessing about tactics and the immediate, what is the competitive environment? How is this -- right? There's a lot of focus on what was today's price versus yesterday's price. Honestly, you've got to pull back and look at this in terms of the direction in which the water is flowing, right, which -- and that's what the moats do for us, which is there's a fundamental pull of demand that comes as a result of being best value, best network, best experience. And we're riding the coattails of that, and we're doubling down on that. So, I feel really good about not just the volume we're bringing in, but also the value. I talked about 20% higher ARPA for port-ins than port-outs, talked about CLVs being up double digit. You've seen what's happened with churn. So, we're feeling really good about the mix we're bringing in.

Great. Turning to broadband, if we can, starting with fixed wireless. You mentioned some of the targets that you have through the end of the decade. Cable and fiber are out in the market launching very aggressive offers. Maybe you can talk a little bit about your outlook on T-Mobile's fixed wireless business. And whether the customer satisfaction scores, right, the capabilities that you've been able to deliver in terms of speed is what's critical here?

Yes. So, fixed wireless for me is just an incredible product, right? You talk about NPS. It is the highest NPS product we have. It's higher than fiber as a category and it's higher than FWA as a category, right? And there's a reason for it, which is this is not simply about price. It's great value, yes. And most importantly, it's a product that's incredibly easy to set up and gives you -- and this is what I love about our newest routers. It gives you higher speeds than fiber when used over a WiFi router, which is the way the vast majority of customers experience it, right? It certainly gives you, kind of, comparable speeds to fiber depending on the router that you land up using.

Now, I'm not here to claim that technically, it is exactly the same product as fiber. But you've got to look at it in terms of what it does to the experience: higher NPS, comparable speeds to fiber. That's pretty awesome for a product, which was written off as "cell phone Internet" when it started, right? And it is now a premium product, which is growing substantially, taking share. It's today very focused on urban and semi-urban areas, driven by our fallow-capacity model, which ensures that we have a lot of runway to go.

And a fallow-capacity model is something we obsess about because we actually plan that at a hex-bin level, which is 36 million of them, making sure that we have enough capacity for our wireless to then create the fallow-capacity for fixed wireless. The remarkable thing, of course, is even as we've grown to close to 10 million customers, we're seeing speeds on wireless and on fixed wireless go only one way, and that's sharply up.

Great. And then pivoting to the other side of broadband, fiber. I think T-Mobile recently mentioned that it's been approaching 20% penetration within the first 12 months of deploying fiber in a market. What's the ultimate penetration that T-Mobile is targeting for fiber? Where do the fiber customers come from? Does it funnel in from the FWA base? Or is it just taking share -- from competitors? And maybe you can just talk about your wireline strategy more broadly as well.

So, when you look at fiber, right, firstly, 20% year 1 for a greenfield build is phenomenal, right? And that's a lot of the thesis on how we got into fiber, which is the thesis that the brand, the distribution, and our ability to execute would count in fiber as well. And that's clearly coming through, as you can see from this. The way we think about FWA and fiber is the overlap is pretty minimal, and they're fundamentally complementary. And where there is and where there is overlap, what lands up happening is an FWA customer moves to fiber, that just frees up more seats on the FWA bus, right? And so we look at it as fundamentally complementary categories.

Great. Shifting gears, this is a technology conference. I have to ask you something about AI. But I think there's 2 dimensions that I feel like a lot of people have been focusing on, which is what does AI mean, from a customer demand perspective, for you in terms of needing more network capacity? And then secondly, how is T-Mobile using AI internally to drive operational efficiencies?

Yes. So, on the first, on the demand side, the piece -- I mean, look, we haven't yet seen any fundamental shift in demand in terms of either wireless growth. The piece that excites us most, though, is the possibility of physical and edge AI. As you get into a world, as you look at things like manufacturing returning onshore, as you look at humanoids and, kind of, every form of drones, every form of connectivity actually having AI on it. I think you get into this choice of do I put AI on the device, at which point the device becomes too expensive, right, and runs into battery problems.

Do I let all my AI stay on the cloud, at which point you have a latency problem? You have, kind of, robots running into each other in factories, right? Because the signal just takes -- the round trip is just too long. And I think what we're finding more and more is huge appetite for a low-latency solution with edge inference. I'm not claiming we're going to host huge LLMs at the edge, but edge inference is really exciting. And that combination of being able to deliver low-latency connectivity, having inference at the edge, now increasingly being able to supply voice that you can do only through a wireless network.

You put all of that together and you have a compelling TAM opening up for edge and physical AI. And as the only real game in town from -- on being able to provide all of that and piloting that at scale with bigger AI, we feel incredibly bullish about the TAM that this will open up. I think this could be, kind of, game-changing in terms of the size of the opportunity ahead of us. And that's really, really exciting. And Chris and his team are working hard at that. We've got some big things signed up already in terms of driving forward on that.

When you look at the internal use of AI, been passionate about 2 things. One, that we need to use AI to differentiate our experience, not to, kind of, salami slice cost at the edge, right? Because I come from a huge conviction that cost comes out when you improve the experience. When you go at it purely from cost, all you land up with is causing more problems, right? Whereas you start with how do I prevent the problem from happening, how do I equip my agents to deal with it better. And the second big belief we have is scale, which is we can demonstrate lots of cute pilots, but they're not needle moving, that's more, kind of, attempting to ride the coattails of an AI wave rather than really using it to fundamentally change our business.

Think there are 3 or 4 places where we've seen huge value. Number 1, care. We committed to a 75% reduction in our calls in our '24 Capital Markets Day, and we're well on track. And AI is a big part of that. We have a whole set of tools which help our agents, but importantly, also proactively address our customers. Again, this all goes together, right, with 30 million T-Life monthly active users and this, you're able to proactively reach customers and prevent the call before it even happens and then deal with it as it happens. So, care and service is scale, and we put out a number of $2.7 billion, which we feel really good about in total.

The other big piece we're seeing is coding, which is as the windows, as the context windows on these LLMs and AI as a whole has widened, our ability to, kind of, replace legacy software with AI coding is game changing in terms of the impact it's had. And obviously, from a customer experience perspective, it allows us to move faster, build digital assets quicker, et cetera, et cetera, legacy systems become much less of a constraint in that world. The third piece is the network and our whole customer-driven coverage, which really focuses on not playing a vanity game of the number of POPs covered but focuses on what's the incremental CLV I create through a network investment. What's the incremental NPS I create through a network investment is completely AI-driven and fueled.

And the last piece of it is something that we're now scaling, which is something we call IntentCX beyond the care center. If you want to simplify it, it's think of a world where you're able to actually have a CMO of 1, where you're able to deal with each individual customer and with agents, you can actually do that. And we've seen some really promising early results from that. So, we're all in from using AI to transform our enterprise, but for the sake of the customer.

That's fascinating. Shifting gears, maybe just talking about capital allocation. Last quarter, T-Mobile raised its free cash flow guidance. You also recently closed on the spectrum sale to Grain. So, how do you expect to deploy some of that incremental cash? Maybe talk about your capital allocation strategy more broadly as you balance shareholder returns and investments in the business.

Yes. Michael, I'll probably give you a boring answer, but that's a good thing when it comes to capital allocation because it means consistency, right? We will -- our capital allocation framework hasn't changed. We start with determining what the right level of leverage is. We think 2.5 is the right answer for now. Then we go through all of the big significant investments that we're looking to make to run the business. Spectrum is one of them. We've walked away from spectrum auctions or spectrum deals that we thought were bad, EchoStar being a case in point -- we just thought it was too expensive.

And AWS-3, where we acquired quite a bit of spectrum, but at very, very affordable prices, right? Because we're really good at working through this piece of how do we do the trade-off both on build versus buy, on densify versus buy more spectrum. And you should absolutely expect us to continue doing that even as we go through, kind of, 2.7 and C-band auctions, which thanks to Chairman Carr, we're really excited about the spectrum portfolio, both 2.7 and 2.0 are adjacent to holdings that we have. So, we're excited by that, and we will be rigorous. We will go look at specifically what's the build versus buy.

And out of that tumbles, kind of, shareholder remuneration. That's been the way we've thought about it right through: start with leverage, prioritize big strategic investments for the business, then out of that tumbles shareholder remuneration, and that's what we've consistently done. You shouldn't expect anything different. The way we'll allocate the cash from Grain is exactly the same. We've got a way that works. We like that because we think that balances all interests, and that's what we'll focus on continuing to do.

Great. And could you just spend a minute talking about the spectrum portfolio and whether or not you feel like there's sufficient capacity to support your growth plans from here on out?

We think there's definitely enough capacity. I mean you look at our wireless growth and our FWA growth, our FWA, and we talked about this, I think, when we shared the FWA numbers, we're -- in our current 15 million, we're assuming no incremental spectrum. We're assuming also no spectral efficiency gains, which we're seeing already, right? And so we feel good about the spectrum that's coming on board. And we will, as always, allocate capital the way we always have, which is look at the build versus densify argument and see where -- what spectrum we need to buy.

Great. If I can ask about wholesale revenue. There's been some headwinds there from DISH and TracFone rolling off as expected. But how do you think about the potential tailwinds from like new MVNOs ramping to reaccelerate and potentially some of the benefits from advertising and cable B2B?

So, the way we see it is '25 and '26 is the trough years because you'll have DISH and TracFone probably rolling off a little quicker. You'll have advertising compensating for that. You'll have also new MVNOs like our Comcast and Charter, the cable MVNO focused on B2B. You'll have that coming in. So, we'd see '25 and '26 really as the trough years. There may be a hidden question there on new MVNOs. Just to put this beyond doubt, we don't see the value of doing an MVNO with a LEO operator because our MVNO strategy has remained consistent and coherent right through. We look at places where there is an incremental TAM to be got either because of distribution or brand or access. And we just don't see the case for that.

And I guess that justifies a natural follow-up just on Starlink more broadly, right? Like obviously, a lot of attention being paid to Starlink's ambitions to create a direct-to-consumer mobile service, whether that be from satellite to mobile or femtocells or an MVNO. But I just was wondering if you could just expand on the risk of another competitor coming in like that.

So, starting off with, we know quite a bit about this category. I mean, with our partner, Starlink, we pretty much created this category from scratch. So, we understand this business way better than a lot of speculation. The physics of this means this is a really complementary category in places like national parks in edge cases, right, which is why it is 0.0003% of our usage at peak and 0.0002% at a normal, right, which is what you'd expect in a category like this.

The physics constraints of direct-to-cell from satellite are huge, because you use your phone indoors or outdoors. Indoors, right, you're getting a signal that's 350 kilometers away versus 1 kilometer away from a cell tower. Signal strength goes down by the square of distance. So, you're getting a signal that's 100,000x weaker, which means it's not going to get indoors. Outdoors, it's like flashing a torch light from space. It's a beam size issue, right? Typical beam sizes right now are large -- many times larger than Manhattan and can support about 10 concurrent users, right?

Now, yes, beam sizes might shrink a bit. And by the way, none -- getting more spectrum doesn't change constraint A or B. So, we view this very much as a complementary edge use case, which does good things for customers in that edge use case, but it is nowhere close to a substitute in the vast majority of America.

Great. As we wrap up and in the last few minutes here, I was just wondering if you could talk a little bit about key priorities, milestones that you're looking to achieve over the next year or 2.

My perspective, look, I think we've got an incredibly clear strategy, which, as I said, is characterized by driving forward on our growth vectors and feeding our culture. Those 2 give us an incredible moat, right? And when you think about what drives our growth going forward, consumer wireless, 20 million families and businesses, accounts, in other words, are network seekers. These are people who chose Verizon or AT&T in the 4G era, right? This is -- these are 20 million not with us. They chose Verizon or AT&T in the 4G era because they thought it was the best network, and they were right then. It's not true any longer.

We're adding about 1 million accounts a year. That's 20 years of runway on growth for us, just in consumer wireless. You look at something like small markets and rural areas, 40% of the population of America. We have 24% market share there. Now, yes, you can say we went from 13% to 24% in 5 years, but it's still 24%. There's a huge opportunity of growth there. You look at enterprise businesses, we're at 10% share, right? Massive growth opportunity there. FWA broadband, we're doubling, right? There's not many people who can say that. I mean just look at our last quarter results, right? There's not many companies of our size and scale who've seen 9% growth in service revenue, and 12% growth in EBITDA, right?

And then you add on to that, all of the upside that comes from just having the opportunity in financial services, having the opportunity in physical and edge AI, and I spend a lot of time on why I'm truly stoked by those. But I think the central priority is feed the culture, widen the moat, because that moat lies at the heart of continuing to drive this growth. And the moat is really important to us because we don't think of this business tactically as here's the new pricing plan, what's the net add that I've added. Those are important things. But ultimately, what drives success in this business is the quality of your strategic moat. And that's what I will focus on feeding and driving because that will create the growth.

Srini, thank you so much for participating in our conference. It's been a privilege to have you on stage here today.

Great. Thank you so much. Thank you.

Thank you.

Great. Good morning. And before we begin, disclosures are available at the registration desk. For those of you I haven't met, I'm Mike Rollins, I cover communication services and infrastructure for Citi. And it's a real pleasure to welcome the T-Mobile team back to the conference. So to my right, we have Chief Operating Officer, Jon Freier; Chief Financial Officer, Peter Osvaldik; and Chief Commercial Officer, André Almeida.

Thank you.

Thank you guys for being with us today, for having us.

Great. Thank you for having us.

So maybe just to get started. Peter, some recent news for you. You announced you'll be retiring at the end of your contract mid next year. Just maybe share with us why now.

Sure. And let me -- before I jump in, of course, we're going to make forward-looking statements subject to risks and uncertainties, speak about non-GAAP financials, and please refer to our SEC filings for risks and the reconciliations. Sorry, I have to do that or I get in a lot of trouble. I think it's important partly to always frame up what's a motivator of individual decisions. And for me, retirement, kind of, goes way back to I immigrated with my parents to this country when I was six from a communist country. We definitely lived very frugally. I'm more than grateful for all the opportunities that I've had and been given.

And also then for me, what was really important, and I started talking to Mike Sievert about this about 3.5 years ago, is I'd like to step away from the totality of the corporate world. Otherwise, I'd be right here and focus on things like family, philanthropy, start giving back as a result of all the luck that I've been given. And that wasn't a very successful discussion. As you can see, Mike is a great salesman. And so here I was. But we did put in place a 3-year contract with the intent that it would be a retirement post then. And then when we knew that there was a CEO transition happening, I had worked with Srini in the context of the Board, knew him well. I was super excited to have him join. I think he's exactly the right person for this next era of growth, which is going to be even more exciting. I'm sure we'll talk about that a lot.

And so it was -- I convinced my family and we extended a year -- but that's, kind of, been like it. We've chatted a lot. Srini has tried to get another extension out of me. And if I was staying anywhere, it would definitely be right here because you can see -- we love the team. We actually love working together and how we tackle problems, and that's a big part of -- if you're working long hours, you better like the people you're working with and be successful. So that was primarily the motivator. But there were 2 things as I step back that we'll get into today that were very important for me.

One of those being the business had to be in a place that I saw a massive opportunity for the next 5 and 10 years to continue the growth that we've been seeing. And the second one, of course, is you've got to have the right person to come in and be the successor. And I think in Jessica, we found somebody absolutely fabulous. Yes, outside of a telco, but a lot of parallels in terms of thoughtful capital allocation, the way we do it around spectrum and network builds -- she's very much a proponent of the culture. I think these guys have spent a lot of time with her to make sure she meshes because of how we work together. And she brings also, just as importantly, more than just the CFO skill set.

She's been a President at GE Vernova, scaled smaller scale businesses to something more significant, was focused on AI adoption. And so those are the things that I think really endeared her, too. This is going to work great because we work as one team. It's a lot different than other teams in the telco space. I think Jessica is going to be fabulous. So those were the motivators for me. I know we'll get into the business side of it a little bit more. I'm not going to pop up anywhere else. I can guarantee you that, not in a full-time role. Else I'd be right here.

Well, we're glad you're here and take advantage of your insights along the way. So maybe that takes us to maybe the wireless industry backdrop. And it feels like this industry has traded one uncertainty for another, right? The question of what DISH is going to do into the industry to Starlink. And so how do you view the possibility of competition expanding in this category over the next 5 years? And how does that inform T-Mobile's operating and financial strategies? You look across all the things you do from the mobile value proposition, convergence, broadband costs, et cetera?

Yes. Well, I definitely acknowledge the overhangs that are sitting on the industry. But from where we're sitting, we don't see those as being the real overhangs and so it really hasn't changed the nature of how we're operating or what the strategy is. And we'll get into DISH, obviously, and EchoStar, that's put to the side and bed, and we'll get, I'm sure, into SpaceX in a little more detail as to why we're so convinced that this really isn't a competitive threat, particularly in the wireless space. So what we're continuing to focus on is what sounds really simple, but is actually uniquely differentiated. And we keep repeating it because it's really just a consistent approach to deliver the best network, the product at the best value, what you get for what you pay and make sure you're doing it with a focus on the best customer experiences.

And when you focus on those 3 things, which are really actually difficult to achieve, and there's very few instances where you have the best product at the best value with the highest customer NPS score as we do in this industry, but we're leveraging those to really focus on where the growth opportunities are for T-Mobile. And if you think about the core business itself, one of the things that we've been able to unlock with the leadership in 5G and the consumer perception around network quality starting to dramatically change and will be a tailwind for a long time is what we call network seekers. And we've, kind of, sized this opportunity based on all of our work at about 20 million families and accounts -- sorry, business accounts.

So that's accounts, not lines, obviously, way more than that in terms of lines, but 20 million accounts where their top motivator for switching and selecting a wireless provider is network quality. Of course, they want value and they want the experience, but the top motivation is network quality. That's exactly where we're going. We're there. The consumer sentiment is catching up. We've got all the ingredients to continue this leadership across not only the balance of 5G, but also accelerated into 6G that's going to be a tremendous tailwind for us. Of course, you've got beyond just network seekers, the continued opportunity in smaller markets and rural areas, which are about 40% of the U.S. population that we're now roughly last reported at about a 24% share that includes the UScellular acquisition, but continue to see significant growth with what Jon and team are doing there. That's the core business.

We've got T-Mobile for Business, where we were always a stalking horse, kind of, not taking seriously in enterprise and government. But when you suddenly bring completely differentiated network capabilities that do more than connectivity, but they solve real business problems. We got a lot of examples around. PGA is a great recent one that we did. And now suddenly, they don't have to show up at courses for weeks in advance and run cabling everywhere and be stuck with, "this is the place I've got to take my camera shots from." No, I can actually have a 5G network slice, quality of service that's guaranteed, come in there, change the angle. So you've solved the problem for me, you've taken cost out of my business. That means not only will I pay you for that, but I can then give you the core connectivity side of the house.

You've got broadband, both fixed wireless, which we'll get into a little bit more today, such a tremendous opportunity. We took this business from nothing 5, 6 years ago to now total broadband is near 10 million subscribers, and fixed wireless being the main portion of that on a product where the network technology and the CPE technology is rapidly evolving and now on our latest gen device delivering download speeds over WiFi near fiber-like with a trajectory of the tech going like this. So we put out guidance around 15 million 5G broadband subscribers by 2030, 3 million to 4 million fiber subscribers. And that didn't include, of course, the benefit that we can get from any incremental spectrum acquisition. That's all incremental fallow capacity. So that's a fabulous continued growth avenue for the business.

And then you've got what really, really excites me are 2 adjacencies. So you're going to continue to see tremendous growth from there. Again, differentiation is the big driver, but 2 fabulous growth opportunities, one being financial services. And you may ask yourself, well, why in the world is T-Mobile getting into financial services? Well, the reality is we have relationships with a trusted brand with 1/3 of Americans. We have data that can actually create differentiated and beneficial credit decisioning on our existing customers. We've proven that to ourselves over and over again. And of course, we have distribution, both in the form of physical distribution, but now on T-Life, 30 million monthly active users that go there for way more than account maintenance. It's Magenta Status, all the benefits. It's becoming a lifestyle app and it allows you to have interaction and touch points with customers that trust you.

So what we did in financial services, and if you think about financial services, it's actually an industry ripe for disruption. And you have great ideas from certain fintechs out there that are trying to disrupt this massive industry, their biggest problem is customer acquisition cost. If it costs you as much as it does for a new fintech with great ideas to acquire a customer, then the economic model just won't work to create differentiated products. So what we did is to say, well, let's test our thesis that we can dramatically lower our CAC as a result of the relationships that we have, digital and physical and start with a co-branded credit card. And it, while never achieving what we want because we always want more and we're never satisfied, is one of the most successful co-branded launches that Capital One has ever seen.

And so the thesis is proving out on CAC and just wait, there's going to be a lot more disruption as a result of that in financial services. And then the last one to me that can really, really -- as I think about 2030 to 2035, it's physical AI, where network leadership, including into the 6G space, suddenly AI, if you believe that AI is going to move from where it is today into the physical realm, then networks and particularly T-Mobile, who's so far advanced in terms of technology, are suddenly going to be at the center of value creation around physical AI. We can actually -- the famous mobile edge compute that never came to be from Verizon's billion guidance way back in the day is actually, in a way, a little bit different because it's going to be way more tech-oriented and advanced, going to come to fruition.

You can actually help and offload some of the processing from physical AI units onto the edge of the network with a universal clock that allows them to see, as Dr. Saw would say, space-time coherency. That means you don't have to put as much GPU processing power on the unit. It doesn't drain as much battery. You're suddenly creating value for the manufacturers of physical AI because you're offloading processing. The clouds can't do it. Too much latency, too far away. They don't operate on a universal clock. It's just -- to me, this is going to be a TAM expansion for the industry and us as a leader since we're multiyears ahead of the runway, that could be even bigger than the entirety of the core wireless businesses today.

So there's so much opportunity ahead of us. And it's heads-down continued strategic focus because we don't really actually see disruption from SpaceX. I know we'll get into that a little bit later. But sorry, I get really excited about all the opportunity ahead of us.

We are done.

No.

All right.

That's all we have.

There's a lot to unpack there. So maybe -- because -- and we got a lot of things to get through today, as you mentioned. So maybe just one more quick one to bring it to the numbers. Do all these opportunities give you an opportunity to sustain mid-single-digit top line service revenue growth and then grow the EBITDA, grow the free cash flow underneath faster? That...

Yes. And without issuing multiyear guidance here, absolutely. And I think it also because of other ways that we're approaching, for example, efficiencies from a customer centricity lens means margin expansion on top of the service revenue growth.

So convergence is a big topic, and T-Mobile's had a differentiated perspective on how you're looking at convergence relative to the industry. And so André, I'll throw this to you. Of course, welcome feedback from all 3 of you. But if your competitors are more successful with these offers, what are the impacts to the industry? Does it shrink the switcher pool? Does it shrink the revenue pie? And what does it mean for T-Mobile?

So first, you said it, so I don't need to repeat it, but we have never subscribed to the theory of convergence as a stand-alone, sort of, market-defining force. And the reality and the concrete of what's happened over the last 5 or 6 years, which is how long convergence has been available widely in the market. If you think about 85% of U.S. households have access to at least one convergent option for more than 5 years. And throughout that time frame or any time frame you want to split the numbers, we've led in mobile growth, broadband growth, service revenue growth, ARPA expansion growth, financial success. So we don't subscribe to the principle not because we have a conceptual problem against it. It's just we don't see it.

And I don't think anyone actually sees them because if you would, just think about cable as being one of the first comers into convergence, their results from both a financial and churn perspective have not gone positively, I would say, over the last 5 years. So we just don't see those forces playing through. What we do see playing through is just the strength of our -- as Peter said, our advantage in terms of technology, our investment into features around 5G and what that has brought to us in terms of our ability to continuously grow the market. And if anything, we're more excited now, just given what we've seen also others say about how they look at their network investment in the future than we've ever been before.

So to answer directly to your question, do we see like CLVs or ARPAs or pool, we don't see it, right? We -- you saw our results last quarter, 277,000 net accounts, ARPA growing 2% year-on-year, 3.7% organically. I think it's the 18th quarter in a row where we've led the industry in broadband net adds. So I just -- we can discuss conceptually and theories around this, but the reality of the numbers seems -- points and it is clear that that's not happening.

Just following up on that with -- you mentioned the success you're having growing broadband. Curious, and you're welcome to throw in, I think, the movie term for this is Easter eggs. Feel free to throw in some Easter eggs of how the fiber business is performing relative to the fixed wireless business and what you're seeing from each of those?

Yes, we're so far away from Easter. But let's start with, I would say, the first part of it is the way we look at the business, right? And so we look at broadband overall. We actually don't have this logic of how does fiber perform against FWA because we see them as complementary products and complementary strategies within the market. We have -- and we have talked about it extensively, a close to nationwide coverage of FWA and have invested in fiber in areas where we believe that the shareholder returns are significant and are outsized.

Two, FWA, and Peter has mentioned it, has been -- we were always very hopeful and we were always very, I think, strategically convinced that it was a great product and it would be a market-changing force unlike convergence. But if anything, we've been positively surprised with how fast the technology has evolved from mobile networks being able to provide broadband services because that wasn't something that both from a radio access network and from a device perspective, that wasn't something that was in focus either of the large RAN manufacturers or the large CPE manufacturers 5 years ago.

I think we -- just given our size, our scale, but also what happened afterwards with players like Jio stepping in also in FWA, this is an industry that has developed significantly, and it has evolved leaps and bounds faster than what you see in DOCSIS, even what you see in fiber. Now, obviously, fiber being optical cables are, sort of, from a data transmission perspective, it will always be the best technology. But Peter mentioned a couple of things that -- a couple of numbers that I think are very interesting. Number one, in our latest generation routers and with the advancements we've made in our mobile network, today from a WiFi experience perspective, in our latest gen routers, the average download speeds of FWA are very close to fiber, which means that from a lived experience, but from a customer perspective, FWA is now one of the fastest broadband products in the market, right?

Think about it. 5 years ago, when we started to launch the product, there was always a comment and the concern that this was very focused on the low-end segment of the market, right? And therefore, it would have a natural limit. As the technology has evolved, this has become a product that can serve any family in America. And therefore, it's really, really exciting if you think about what's still ahead of us, right? As the product keeps getting better and better, we have more -- if you think about it, it's a bit counterintuitive. We have more customers in the network and the product is better, performs better on average than it did a year ago and 2 years ago and 3 years ago. So that's, I think, one piece for us that's very, very important.

We're obviously extremely excited about the future of 5G broadband and FWA. The second thing you mentioned fiber, right? So again, as I said, fiber for us is a complementary product. And one of the reasons why it's complementary is the way we look at FWA is as fallow capacity model. And that means that specifically, when we add a fiber customer in a specific area, we're actually freeing fallow capacity in FWA to sell to other customers. So it actually is really complementary. So we're not competing these 2 technologies. Whenever we sell a fiber customer, that means we can sell FWA. The radius of sales in wireless are usually larger than the sales of fiber. So we're actually freeing capacity elsewhere.

Now, the way we've always been very clear on how we look at fiber, right? We look at fiber as one way -- not as a strategic necessity of hitting a certain number of homes or a certain number of customers. It's an opportunity to generate outsized financial growth and outsized returns for our shareholders. So your point is how do we look at these? Yes, when there are opportunities, not just to acquire companies, but also the way we look at our own expansion within the assets we already have, we look at it, does it generate returns for our shareholders because we're not bound or held by we need to hit a certain number of homes. We've said, sort of, what our targets are. But again, those are subject to being able to deliver financial returns.

One more on this. So the team expressed its interest in the upper C-band on the 2Q earnings call. When you look at the opportunities from that, is it really about turbocharging fixed wireless? Or is it about something more than that?

I think we can let -- do you want to start...

No. I mean the thesis around fixed wireless continues to be, as André said, a fallow capacity model. So what we look at in terms of any, sort of, spectrum acquisition, third party or an upcoming spectrum auction, be it C-band 2.0 or 2.7, is what does it do for the mobile business? And yes, there's a little bit of a catch-22 in your logic of, yes, but if you have more fallow capacity, you get more 5G broadband, and that's true, and that's part of the thought process. But it isn't -- we are in no place buying spectrum or rolling out network CapEx simply for the purpose of fixed wireless. It is a fallow capacity model. That's what makes it so marginally attractive.

Jon, coming over to you, maybe we could talk about the latest rate plan updates that you've implemented, front book, back book and the decision -- significant decision to extend the EIP plans to 3 years.

Yes.

What that means for you?

Absolutely. So we did take a series of actions this summer around really, kind of, simplifying a long tail of legacy plans. And we took these plans and updated them and moved people from 3G and 4G-like plans to today's modern and contemporary 5G plans. So we went through that effort, kind of, announced it at the end of June, started rolling that out to customers throughout July, a little bit of August. And all of that has gone exactly how we thought it would go. And there was some temporary churn associated with that, as Peter mentioned in the Q2 earnings results, and that's reflected in the 250,000 overall postpaid account net additions for Q3. And all of that's gone incredibly well.

What we try to do on these things is give a more for more. So we want to give customers even more value, even more capability because what you're enjoying on your 5G device today is certainly different than what you enjoyed on a 3G or 4G device years and decades ago. So that's number one. And number two, it's easier for our frontline to serve customers that like if you're somebody that's starting with T-Mobile either in retail or in customer care, and I'm having to learn 15 years of rate plans that change every 2 to 3 years, that's really difficult to serve customers in that way. And it also contributes to how we digitalize, moving everything to a T-Life-centric environment that we can digitalize and digitalization is foundational to simplification and the rate plan lineup. So that's gone extremely well.

We worked with our customers to work them through that, and that's gone as we planned. On EIP 36 -- or we launched some new Experience 2.0 plans that basically birth 36-month financing. One of the things that we try to do as a company is really listen to customers and help them in every way that we can and pay attention to what they need and as the market changes. These devices today that Apple, Samsung, Google are making are incredible devices. They last longer. Customers are enjoying them longer. You can see with our upgrade rate, we have a little bit less of an upgrade rate than our competitors. We think that's attributed to the overall network performance associated with those devices.

So what we wanted to do is to be able to have a 36-month agreement, lowers the monthly payment for customers on EIP across 36 months versus 24 months. And then the big innovation is bringing EIP Flex to the market. Because when you really think about some of the pain points that are out there, prime families, near-prime families, families of 4 switching to T-Mobile, you're still at hundreds of dollars out of pocket between sales taxes, between what we call device connection charges. All those things are like big dollars out of pocket, it's a pain point.

And what we try to do is take out every morsel of friction in the switching process. And that was a huge piece of friction for prime, near-prime families. And we addressed that. And so we launched that at the beginning of August. That's gone incredibly well. Our teams are really excited about that. Customers are loving it, and that's just the latest innovation that we brought to the marketplace.

So we're about 3 hours and 45 minutes away from the next smartphone cycle, but who's counting?

Exactly. There's a little company in Cupertino. Is that what you're -- yes.

Yes, there's some company out there that -- and so curious from your perspective, like, what are you seeing in terms of more broadly in the industry, upgrades, device replacement? Is this a source for churn coming down further for you in the industry? And then as you think about it near term, how does that relate to then digesting maybe some of that churn push from the recalibration of the rate plans?

Yes. It could be. We'll have to see. We'll see what Apple announces. We aren't entirely sure. We don't know until they announce -- and so we have our suspicions, but we'll all find out together in 3 hours and 45 minutes on what they're announcing. And a couple of things. One, if there's a lower overall switching and, kind of, upgrade environment, we benefit from that. And we have a playbook for that, so we can benefit from that. But if there's a higher switching environment, we benefit from that, too. We like more jump balls and more opportunities for switching moments. So where that market goes, we'll have to see and how much it might change depending on what Apple announces, but we're prepared to win in any environment that comes about.

Earlier in the year, the management team made a specific point at your, kind of, analyst meeting, 4Q earnings, that you wanted a more disciplined environment around device subsidies. What are you seeing competitively? And how do you feel that T-Mobile is participating in this?

Maybe I can lead off. And -- but we're very comfortable with our subsidy and our investment today. So whether or not prices change, that's for others to decide on the cost of goods. But our subsidy investment, we don't see that changing. We're very, very comfortable with our promotional constructs based on rate plan, based on trade-in and the amount of subsidy that we're investing in the market. So we don't see that really changing at all. So how that's working competitively, the competitive environment has been remarkably consistent. This is always the second half is a little more competitive as you get into this new Apple product introduction.

As you get into Black Friday and the holiday season, the second half is always a little more competitive than the first half. But we don't see anything that's really changing that's given us any anxiety. That's for sure. It's a great environment. We're winning. We're driving exactly what we said we were going to drive, and we feel great about the overall environment.

Yes. You'll always see, of course, at the announcement date, exciting promotions for a small period of time. It's a little bit hard to discern because you've got to really look at well, what are trade tiers and requirements to really understand the net subsidy. But net-net, one of the things we talked about in both Q1 and Q2 is that we're seeing really favorable ARPA in versus ARPA out trends as well as CLV trends. And so that's the health of the business that we want to do. I think strategically, we're going to look back in 5 years, and there's going to be a really interesting period as you reexamine it. You've got Verizon who has decided their network, the product that they sell, isn't important to differentiate.

Their CEO is saying that. You've got AT&T who has diverted CapEx from the wireless network into fiber and their wireless network quality with third-party data is going down. You've got Verizon who has decided to defeature and basically downmarket their main brand with Simplicity in the hope of just -- which, by the way, has a lot of complexity, but it's taken out all the features out of all the value out of there, commoditize their headline brand in the hopes of getting some more lines. And I bet you it's going to work. I bet you in Q3, they'll deliver more lines and maybe even less account losses, maybe some account nets, who knows. But what it doesn't translate to is value creation, service revenue, EBITDA, CLVs, ARPAs.

That's the important thing that we're focused on is -- it's not just one headline KPI and let's devalue my whole brand. Of course, we have simplicity-type offers are really smart, thoughtful, segmented offers sometimes through certain national retailers like Walmart, take -- and we're allowed to do that because we have the best product now and the best value. So that's a long-run trend I'd look at. But if your 2 major competitors are deciding that their product doesn't matter, that's a fabulous place to be as we look out mid and long term.

So maybe just extending this question on future potential competition. So you referenced earlier Starlink and LEOs, and on the one hand, you've got your direct-to-device partnership with Starlink. And on the other hand, there's the question of whether they're going to become a direct competitor to you, whether they do an MVNO build, buy? What is the risk from that? Like how are you looking at that? And do you have any interest in giving Starlink an MVNO?

Yes. Well, the answer to that is no for all the reasons that we've stated before. I think one of the most fascinating things and, kind of, what's shown you what's really happening there is imagine if we, as a management team over the course of 2 months changed the strategy to how we're going to roll out a wireless network like a dozen times, it would laugh us out of the room and kick me out of the management team appropriately. So when, you kind of, look back, it was, well, direct-to-cell is going to like take care of all terrestrial networks. It's gone. We went out there and helped since we co-developed this with them, understand the physics.

The physics just don't allow direct-to-cell to be a substitute product, right? You're 350 kilometers up -- as we all know in the wireless space, signal strength diminishes with the square of distance. So it's not linear, it's a square of distance. So when you're 350 kilometers away, the allowable power limits and what this device can actually do from a upload perspective means by the time you've gotten to here, you have so little signal strength left or what we call link budget. You can't get through buildings, walls. You can't even get through a Tesla windscreen, right? So that's like it's completely -- you can have 1 million satellites up there with all the spectrum in the world, you can't break the fundamental laws of physics.

So as soon as we, kind of, put that out there, now it's on to the next thing, but we're going to have an MVNO. And I think we certainly put out our rationale and how we think about MVNO partnerships and how this doesn't fit the nature of where we would want an MVNO because we already have the ability to compete for these customers tremendously ourselves. Then it was going to be a backdoor MVNO by buying some other company who I think we're all very clear, there are change of control provisions. That's not a path to do it. Then it was going to be through FCC-required roaming, well, that doesn't work because that's not on data, which, kind of, hard to have a network without data if you only have voice.

And the latest one, which I think everybody is, kind of, in the know, kind of, laughing at and has betrayed the fact that there is no strategy there is the femtocell strategy, where we estimate you'd need probably over 1 billion femtocells to have the equivalent outdoor coverage with all the interference problems, backhaul problems. I mean, it's just not fathomable. And then you had one more in there, kind of, losing track of all the different things that they've said is we're going to build our own network. Well, you have no path to the right level of spectrum assets. You need the layer cake, the low band, the mid-band. You've got to deploy them in a way that we've done and you've got to lead from a tech perspective.

And I would also just -- I stepped back and said, well, hold on, on your earnings call, you're saying, I have AI data centers with a payback of a year to 1.5 years, and I'm going to spend $100-plus billion on building a fourth noncompetitive network. Either I'm the world's worst capital allocator or this isn't really going to happen. I'm going to focus over here. So it's just -- it's not a competitive threat from a wireless at all. On the broadband side, it's a different answer. I think it solves some of these challenges because you have different spectral assets, external powered antennas.

And what we're -- I think, going to continue to see there is them being successful going from the deep rural into suburban fringe, while simultaneously, we're attacking from urban into more dense and midsized suburban. And at the center of it all it's cable with 60 million homes that I wouldn't want to be sitting at as a management team or an investor in.

Very helpful. So we've got a few more questions. We're going to try to do a little bit of a speed round to fit a few in.

Right.

All right. First one, are you seeing any evidence that account churn can start to subside along with user churn as you get to this anniversary of the broadband acquisition?

Yes. Remember, account churn is really what's happening there is a math equation at the moment in time. We gave you color around Q2 postpaid phone churn being down 5 bps year-over-year to 85 bps, fabulous results there. What's happening with account churn is you're seeing a few things. One, more broadband-only accounts as we're growing that business. Earlier in life broadband accounts, so obviously, early life subscribers tend to churn more. And you're going to see just structurally, broadband has a higher churn rate in the U.S. than wireless. So it's simply a math equation. There's nothing to it. I'd expect to continue to see these trends move on.

So we'll fit a couple more. Jon, bold goal, 75% reduction of inbound customer care call target, leveraging AI, the T-Life app. How is that going?

It's going great. We laid out these ambitious targets at our Capital Markets Day in September of 2024 that we wanted to reduce 75% of our inbound customer care calls, thanks to all the advantages of AI. We have reduced 55% of that 75%. We're well on track. Customers are happier than ever, record-setting NPS scores, and I just couldn't be more pleased with how this is going.

UScellular integration...

UScellular is on track. The integration is on track. We closed that transaction in August of last year. The year 2 synergies was about $1.2 billion, $950 million of OpEx, $250 million of CapEx. All of that's well on track against a large, very ambitious set of targets. We couldn't feel more great about how that's going.

Capital allocation, any room to lean further into whether it's the buybacks, you've talked about the possibility of spectrum investments, or incremental network CapEx to drive your advantage?

Yes. I don't see a step change in network CapEx. We're going to be on a natural cycle for 6G when it comes towards the end of the decade. So we're fabulous there. We obviously have the best positioned balance sheet. We've done a lot to get ourselves there. We've got growing core EBITDA, creates capacity. We're going to continue to follow the same disciplined capital allocation framework that we always have, whether that's spectrum assets or anything else. So no real change there in philosophy. It's the one that's created all of this value. It's the one I think that's going to continue to create value.

Last question, and maybe love to get a perspective from each of you. So the thing that you're most excited about with T-Mobile and the one thing that you think is often missed by the market.

I can start. I mean what I'm excited is, kind of, my 15-minute diatribe. All the growth opportunities. It is -- we're coming to a moment in time where the growth opportunities in front of us are much greater than what we've even delivered to date. And simultaneously, our 2 major competitors are deemphasizing their product. It sets you up for phenomenal growth runway. I think what investors miss from that perspective most of the time is put these overhangs aside is what we're delivering in terms of not only margin growth and margin expansion, but also free cash flow delivery and the margin. And I think they don't quite see yet because we have to prove it to them with execution of what these opportunities are and beyond just core wireless and how they're going to manifest themselves into great shareholder returns.

I've been a part of this company for 32 years. So I started in 1994. So between T-Mobile, VoiceStream, Western Wireless. I have never been more excited about our growth prospects than where we are right now. If you think about what Peter just said, everything that we've achieved over the last 15 years, in particular, has come from a position of extraordinary weakness. Just think about what we can achieve from a position of extraordinary strength. So long as we're hungry, so long as we're still, like, fighting in that same scrappy fighting spirit that we have when we're trying to turn around the company and scale the company, that is still here in spades at this company, and I couldn't be more excited about the prospects of the next 5 years.

Yes. I think all of what Jon and Peter said, I just maybe double-click on a couple of topics. Number one, I think we stand in a position and it's difficult for people to, sort of, factor that into their numbers and the way they look at us because it's so rarely happened in the industry that the company has the best network and the best value. So you have the best product and the best value. That's things that usually don't happen, not just in telco, they just don't happen, right? And we've fortunately been able -- because of our heritage, been able to put ourselves in this position due to our heritage being value and the transaction with Sprint and the extraordinary execution of that merger, giving us by far the best network in America.

And I think that's very difficult to factor in. It's both what leaves us extremely excited because we see a path not just to lead in 5G, which we have since the beginning. But Peter mentioned, just because of the natural cycle of capital, we've invested early into the 2020s. That means our natural replacement cycle will be at the end of the decade, beginning of 2030s. That's exactly when everyone expects 6G to come.

So we will be -- just by the nature of where we are, we are very certain, very convinced, very motivated to not just lead in 5G, but lead in 6G. So that will make us the first time that one company leads not one G, but two Gs in a row. And perception lags reality. So our perception of network leadership is increasing significantly, but it's not yet a universal truth. We believe it's going to become a universal truth over the coming years.

Thank you so much.

Thanks.

Appreciate all of you.

Thank you.

Thank you guys for having us.

Good morning. [Operator Instructions] I would now like to turn the conference over to Cathy Yao, Senior Vice President of Investor Relations for T-Mobile U.S.. Please go ahead.

Good morning. Welcome to T-Mobile's Second Quarter 2026 Earnings Call. Joining me on our call today are Srini Gopalan, our President and CEO; Peter Osvaldik, our CFO; as well as other members of the leadership team.

During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We encourage you to review the risk factors set forth in our SEC filings. Our earnings release, investors factbook and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found on our Investor Relations website.

With that, let me now turn it over to Srini.

Thanks, Cathy, and good morning, everyone. We're here in New York City today, excited to discuss our results. Q2 was another extraordinary quarter of executing on our strategy and delivering against the ambitious goals we set out at our February Capital Markets Day update. Our strategy is simple but truly powerful: give customers the best network, the best value and the best experience all in one place. That's how we eliminate trade-offs for our customers, and that's what truly sets us apart. Nothing demonstrates this better than our NPS, a record high 46 this quarter.

Let me pause on that for a second because that 46 represents the highest NPS in wireless ever across the big 3 carriers. And it is, of course, well ahead of the competition. This differentiation is why we outgrow the industry time and time again. And we did it again in Q2. In the wireless space, we continue to see a substantial opportunity of more than 20 million families and businesses who are network seekers and not yet with T-Mobile.

With the best network in America, we have an unparalleled right to win with these customers. This quarter, the highest percentage ever of network seeking prospects ranked T-Mobile #1 on having an extremely reliable network and is a completely trusted brand. This is why we grew our postpaid share of households yet again across every single cohort within the top 100 markets and also in smaller markets and rural areas.

Let me double-click on smaller markets and rural areas. These markets represent 40% approximately of the population. And we have lots of room to run at this opportunity with just 24% total share of households. This opportunity is supercharged by our acquisition of UScellular last year, and the integration is going great.

Our share in T-Mobile for Business gives us that same kind of runway. This quarter, we continue to take share with a network superiority led value proposition. Our nationwide 5G advanced network continue to drive new TAM creation through advanced network solutions, subsequently leading to traditional voice and broadband sales. And I'm also really excited to welcome Chris Sambar to T-Mobile as our Chief Enterprise Officer, who will help further supercharge growth here. Chris will be joining us in August.

Turning now to broadband. It wasn't that long ago, some competitors were calling 5G broadband cellphone Internet. Today, it's the most exciting evolution in broadband technology in a long, long time. It has consistently produced industry-leading growth and we have so much more runway left here. 5G broadband has rapidly become a premium broadband offering in the marketplace. In fact, with our latest generation router, coupled with our network, we're delivering download speeds roughly equivalent to fiber-to-the-home when both are used over WiFi, which is how the vast majority of customers experience broadband. That is truly impressive.

And both the network and CPE technology continue to rapidly evolve. It's no wonder our 5G broadband offering leads the industry in customer experience, including winning J.D. Power's #1 in customer satisfaction. That's also why we've consistently been the fastest-growing ISP in the country, including in Q2. And this industry-leading growth has come with very healthy ARPUs.

As we approach 2027 and '28, there will be even more spectrum availability, reflecting the stewardship of Chairman Carr and his commitment to American 6G leadership. This will unlock even greater capacity that will be deployed under our fallow capacity model.

Putting it all together, our unmatched value proposition drove postpaid net account additions of 277,000 in Q2, alongside 2% ARPA growth year-over-year, a really strong result. We continue to bring new families and businesses to T-Mobile in a durable and profitable way with CLVs in Q2 up healthy double digits over last year. In addition, port-in ARPAs continued to exceed port-out ARPAs by approximately 20%. This is another highlight of our unrivaled value proposition with over 60% of customers on new accounts selecting our premium plans.

Our adjacencies, T-Ads and financial services continue to add incremental growth, leveraging our brand and ecosystem. I'm really excited to share that our T-Mobile Visa credit card launch was one of the most successful co-branded launches for Capital One, and we're on track to rank amongst Capital One's leading co-brand programs in terms of new accounts. Most importantly, we will not stop. We're not standing still. Our network keeps winning accolades from third-party providers, even as we continue to invest in it.

Let me double-click into both. For the third straight time, we won the best Mobile Network by Ookla. We also swept every single subcategory across Opensignal's Quality of Experience and Network Performance Awards, making us their most awarded mobile network over the last 5 years. In addition, P3, a global crowdsource data benchmarking company using real people and real devices, awarded us the U.S. Test Champion, sweeping the national benchmark for all 13 categories tested including AI Services Champion.

Turning now to our ongoing investments into our network. We continue to push the envelope of what's possible. In Q2, we rolled out live translation on beta. This is our first network native AI application, embedding AI models directly into our core. Longer term, we believe our network will become the connective tissue for physical AI with inferencing at the edge. I am so excited by the opportunity here highlighting what a low-latency, high-capacity network can deliver. We continue to partner with key industry leaders here, including Figure AI.

On value, something we guard zealously, we continue to lead the industry while ensuring that customers are able to take advantage of America's best network. Our back book pricing remains a clear advantage to our differentiated growth strategy. We continue to abide by the more-for-more philosophy. One example of this is our recent initiative where we modernize legacy rate plans to ensure all of our customers can benefit from our great nationwide 5G advanced network. On customer experience, we're continuing to meet the customer where they want while driving digital transformation to further enhance the experience.

10 years ago, we launched T-Mobile Tuesdays because we deeply believe that here at T-Mobile, we don't think customers should have to prove loyalty, but rather receive thankings from us just by being a customer. In June, we celebrated that milestone with member month, which was a tremendous success that truly underscored the spirit of the Un-carrier. We rolled out many new member benefits and brought back old favorites from the Delta premium in-flight beverage on us to free DashPass for a year to gas for $1.99 per gallon at select Shell gas stations. This drove record momentum in T-Life usage, and we ended the quarter with over 30 million monthly active users.

Pulling it all together, this differentiation is what drives industry-leading financial growth, and we delivered again across every key metric in Q2. Postpaid service revenue up 13%. Total service revenue up 9%, both at multiples to our competition. Core adjusted EBITDA up 12%, with industry-leading free cash flow margin of 25%. This is what this team does deliver day in and day out. Our results speak for themselves, as you can see with our industry-leading NPS. What fuels that differentiation is the incredible future-proofed asset base we have built and our willingness to continue to invest to build it. And this is only just the beginning.

Peter, over to you.

All right. Thank you, Srini. As you can see, we had a fabulous Q2, which reinforces our strong guidance for the remainder of the year. So let me add some additional color.

Starting with accounts where we continue to expect postpaid account net additions to be between 950,000 and 1,050,000 on the strength of the underlying momentum in the business. As part of our full year plan and guidance, we anticipated our Q3 rate plan modernization would result in a temporary elevated account churn profile and expect Q3 net postpaid account additions to be approximately 250,000. It should be noted that the impact to postpaid phone churn is lower as the modernization impact is concentrated more in accounts with fewer lines.

Now in the first half of the year, we have delivered almost 500,000 net postpaid account additions. So we are well on our way to delivering within our guidance range. This modernization also creates strong value both for customers and T-Mobile and sets us up to deliver against our 2027 guidance ambitions.

So turning to service revenues. We continue to expect to deliver full year service revenues of approximately $77 billion this year, representing 8% growth with Q3 expectations of approximately $19.3 billion or up 6% year-over-year. As part of that service revenue guide, we continue to expect strong postpaid ARPA growth of between 2.5% and 3% this year. We continue to expect core adjusted EBITDA to be between $37.1 billion and $37.5 billion for the full year, representing 10% growth year-over-year at the midpoint. As part of that, we expect Q3 core adjusted EBITDA of approximately $9.4 billion or up 8% year-over-year.

Our expectation for full year 2026 cash CapEx remains unchanged at approximately $10 billion. And finally, we are increasing our adjusted free cash flow guidance to now be between $18.4 billion and $18.8 billion, an increase of $200 million at the midpoint, primarily driven by lower cash income taxes. Our philosophical approach to guidance, as you are seeing play out, is to begin the year with an ambitious and industry-leading guidance range based on our best view at the time targeting to land at the midpoint of that strong guidance range and providing updates throughout the year as warranted.

Turning to shareholder returns. In addition to our dividend, we're also excited to have repurchased an incremental $2.5 billion in Q2 and through July 17. If you step back, since beginning our share buyback program in late 2022, we have repurchased 253 million shares and reduced total shares outstanding to 1.07 billion. While we continue to execute share buybacks this year, including with our previously increased authorization, we are also thoughtfully maintaining a capital envelope that is considerate of upcoming spectrum opportunities in both 2027 and 2028, including C-band 2.0 and 2.7 gigahertz, which represents an opportunity to further cement our network leadership position and provide increased value creation through, for example, additional 5G broadband capacity unlock.

To sum it all up, we continue to see strong momentum in the business and cannot be more excited for the future.

And so with that, I'll now turn the call back to Cathy to begin the Q&A. Cathy?

Thanks, Peter. Okay, let's get to your questions. [Operator Instructions]

We will start with a question on the phone operator. First question, please.

The first question comes from Sean Diffley with Morgan Stanley.

I was hoping you could discuss how you're thinking about volume versus price growth this year? And any comments on the competitive backdrop. Obviously, a bit less volume growth for you guys this year. Obviously, pushing price a little bit harder. But how should we think about the balance through the rest of the year? Thank you for the 3Q update there.

Okay, cool. Thanks so much, Sean. It's not just a question of this year. I mean the way we've historically thought about price versus volume really centers around CLV and the opportunity to maximize the total amount of value creation that we bring through differentiated propositions. And that balance, we titrate that balance very carefully to make sure that we're generating both the right volume as well as the right CLV.

The exciting piece for us is the double-digit growth we've seen in CLVs. And I think it's fair to reflect on the fact that, that's not kind of some independent variable. That's very closely linked to the fact that the perception of our network is at an all-time high. And so we're attracting more network seekers than we ever have before. Again, our port-in versus port-out ARPA ratios, you can see that our port-in ARPAs are 20% higher than our port-out. So it's a careful titration of where we want to maximize volume versus where we want to maximize value, all brought together with CLV.

Peter, do you want to add?

Yes. I think you're seeing, if you double-click a little bit in there, obviously, we have aspirations for both the P and the Q with what you've seen with our now raised guidance since the beginning of the year aspirations. But also what's interesting is, yes, we delivered 2% year-over-year postpaid ARPA growth. However, if you look underneath, remember, last year, we also had the acquisitions of UScellular and entered into our fiber JV with the customers coming on board having lower ARPA.

So you have an interesting comp period here in Q2. And if you look ex M&A, postpaid ARPA actually grew 3.7% on a year-over-year basis. So that shows you the underlying strength of the business. And so we have absolutely aspirations to continue to take volume and continue to see ARPA growth and reiterated what we expect to be very strong, 2.5% to 3% on that ARPA growth for this year.

Thanks so much, Sean. Operator, let's go with the next question, please.

The next question comes from Michael Funk with Bank of America.

Yes. Great. So I wanted to touch on device subsidies. Srini, earlier you talked about less appetite for device subsidies, expectation. We'd see increase in device prices back half of the year in addition to a new iconic device potentially released. So what is your view on device subsidies heading off the holiday season end of the year? And how do you balance that versus the net add guidance that you have?

Thanks for that question, Michael. So when we talked earlier in the year, just to be clear, what I talked about at that point was not moving away completely from device subsidies but more rounding off the value proposition, which is now that we're in a place where we have so many elements to our value proposition, how do we make sure that we have a balanced articulation of the 250 reasons why someone should be choosing T-Mobile.

Now we started off with a big network campaign, articulating the network reasons why. Over the year, we've had member month, which brings together all of the benefit reasons why we're now running the 250 reasons to choose T-Mobile campaign. So our effort really is to broaden out the reasons why people should choose T-Mobile rather than purely a free phone. Of course, we'll be competitive on things like subsidy, but that's not kind of what we're leaning in on. And that was really the articulation of what I did in February.

Now as we look forward, what we're seeing is clearly the memory price increases are resulting in higher prices for smartphones across the board. Our intention, consistent with what we've said is not to increase our subsidy levels. Now that's going to mean that customers will have to pay more. And that's just the resultant of that dynamic. So that's kind of where we are right now.

Peter, you want to add any color to that?

I think that's absolutely it. You're seeing the differentiation, as Srini explained, to come through here. So the ability for us to attract customers beyond a subsidy-driven promotional environment, it's that flow of the current, as you mentioned, because customers see the totality of the value that they're getting, inclusive of more and more so, as Srini commented in the prepared remarks, the network, the significant reliability, the significant network experience and starting to see a flow of network seekers coming our way.

So that's what's driving a lot of the flow into T-Mobile. That's what's driving the postpaid ARPAs being a lot higher than port-out ARPAs. That's what's driving double-digit CLV increases on a year-over-year basis. So we're very excited, and you're going to see us continue to demonstrate to customers the broader base of value that we provide.

Great, thank you. Operator, let's move on to our next question.

The next question comes from Craig Moffett with MoffettNathanson.

So Peter, you talked about interest in upper C-band. And it makes me wonder, your FWA business by our calculations is now consuming most of the capacity or at least most of the usage on your network. And it is extensively a fallow capacity strategy. Can you just talk about how you see traffic growth over the next few years, AT&T talked yesterday about a huge expected increase due to AI workloads. Do you expect the same thing? And if you think about the upper C-band, is that to support FWA? Or is it to support AI workloads? And I'm just wondering how FWA fits into that future and particularly in the context of a sort of fallow capacity model.

Thanks for that question, Craig. Let me kick off, and then Peter and John can add to that. So let's start with wireless as a whole and the evolution of wireless technology. We couldn't be more excited by how much innovation and how much new capacity is being created by all of the innovation in wireless. And when we talk about the spectrum auctions, it's not just the upper C-band, which clearly was a big announcement yesterday, but also 2.7 gigahertz that Chairman Carr talked about.

And where we sit, given the rapid evolution in wireless technology, especially in comparison with other forms of tech that are being used for broadband, we believe this is a time to double down on wireless tech and really build out our network superiority, not just in 5G, but also 6G.

Knocking off a couple of other things that you talked about. Yes, FWA does consume a fair amount of our capacity, but this is where the numerator/denominator issue comes in, right? It consumes a fair amount of our traffic today, which is not the same thing as a fair amount of our capacity because our capacity is several times multiple of the traffic that we hold today. So we feel very comfortable with where we are with FWA today.

One other piece, I think you said extensively fallow capacity model. Just to be clear, it is actually a complete fallow capacity model. The way we think about capacity to go through, something I think we've talked about before, is at a hexbin level, and there's 36 million hexbins. We sit down and forecast the growth of wireless traffic. And then we put a cap on the market share that we're going to be able to get on FWA. And the rest of the capacity is then the fallow capacity, and all of this is done at peak hour. And all of this was done excluding any new spectrum coming in or technology innovation. That's what took us to our guidance of 15 million customers. We feel incredibly good and very positive about that. In fact, all of the announcements of yesterday in terms of more spectrum coming online only makes us more positive about that because our guidance didn't build any of that in. And that spectrum coming in actually creates more fallow capacity as well, apart from improving the quality of our core product.

In terms of expected increase in traffic and the impact of AI, I'm going to hand off to Dr. John Saw. John?

Yes. Thank you, Srini. Craig, just to build on Srini's point, I think we are very comfortable with our capacity situation, especially with fallow capacity. We have an also model that actually allows us to forecast how much runway we have. And remember, every megabit per second of capacity not used is wasted. So that's where fallow capacity come in. And a reliable proxy for capacity speeds. And if you look at all the benchmarks that we have seen, including the latest wins we have, our speeds continue to go up. So we're not concerned about capacity at all.

With regard to AI traffic, I think it's important to understand where these AI workloads actually live. The current growth in AI is focused on model training, large-scale agentic automations and heavy back-end automation. A lot of them actually are confined to wireline transport networks and massive data centers. So this type of compute, we have not seen putting a material strain on mobile networks. So we have not seen any surge in mobile traffic due to AI even though every year, we see mobile traffic going up regardless of AI or not to support our mobility tonnage as well as fixed wireless.

I think if AI traffic continues to grow, especially with the growth of physical AI, I think we are more than prepared and we have sufficient runway to continue to invest in our capacity, both in terms of existing spectrum, and we haven't even looked at the impact of getting new spectrum that Srini was so excited about. Remember, we rolled out 5G Advanced recently and the only operator to do that. And one of the reasons why we do that is that we want to improve the uplink performance, especially with the surge in -- potential surge in AI mobile traffic soon. And with 5G Advanced, we have been able to improve uplink performance with uplink carrier aggregation, uplink MIMO, transmit switching. All that is actually in preparation for not just giving our customers with phones a better experience, but also better uplink for future AI traffic that we expect to be seeing soon.

Thanks, John. So we haven't seen it as yet, but we look forward to seeing it because our network is more prepared than anyone else.

Yes.

Peter, did you want to add to that?

Yes. And just, Craig, I think you asked some great questions just to be clear, what we said that utilization of the network traffic is completely by design from the fallow capacity model and capacity is way in excess of current utilization. In terms of the comments around 5G broadband and both C-band 2.0 and 2.7, just to be clear, all that would be incremental to the 15 million, should there be anything there. And we will not be looking to purchase spectrum strictly for fixed wireless. We're still under the fallow capacity model.

What I wanted to really highlight is just our excitement around an opportunity. If you look back over the last 3, 4, 5 years, I think one of the main reasons that we've been so successful in continually outperforming the competitive environment and delivering both growth and financial results that are multiples of our competitive set and see a future where that is going to be the case for a long runway ahead of us is diligent application of our capital allocation framework.

You've seen us be very diligent, for example, with spectrum purchases. And remember, that framework, as you all know, begins with setting the right leverage and then making sure we're investing the right amount in the business, then looking at accretive M&A opportunities. Certainly, spectrum is one of those investments in the business, and then returning to shareholders.

And we see such an exciting opportunity here both in '27 and '28 with Chairman Carr's announcement yesterday, that 2.7 will be in the 2028 timeline to take this network leadership position, that is now beginning to pay dividends in terms of network seekers coming to T-Mobile in terms of the technology evolution that Dr. Saw has driven and what that's opening up from new TAM environments, both in the enterprise space, physical AI in the future, and take that same diligent approach and apply it to C-band 2.0 and 2.7.

And so we're definitely thoughtfully thinking about our capital envelope and its deployment against those two. It's too early to tell, of course, exactly what those opportunities will look like next year and in 2028. But it's one of the most exciting things upcoming for us to cement network leadership far into the future and have all the ingredients to continue to outperform in this industry and deliver value for shareholders.

Thanks, Craig. Let's move on to the next question, please.

The next question comes from John Hodulik with UBS.

A couple, if I could. First, I guess, for Peter. It looks like the EBITDA guidance sort of suggests growth is going to slow from about 12% in the first half to sort of high single digits in the second half. Any sort of additional color you can provide on some of the drivers there?

And then do you guys have any other detail you could provide on either postpaid phone volumes or FWA or fiber? It sounds like FWA was -- had another strong quarter. So if you have any additional detail, it would be great.

And then lastly, I guess, does the commentary around the upcoming auctions suggest that the buybacks going forward are going to stay closer to this $2 billion level from what we've seen in previous quarters?

Yes, happy. On EBITDA, it's really -- you have to recall, it's a function of when we had acquisitions in the prior year. So you have Q1 and Q2 of this year, of course, that are comping a different environment in the prior year that were pre-acquisition. So we're very confident in what we gave, which is at the midpoint, we're still driving 10% core adjusted EBITDA growth.

And of course, within quarters versus what we had at the beginning of the year from an assumption, there are some timing differences on the edges here and there. That's allowed us to overperform. But from an overall perspective, that's exactly what's driving it, it is simply timing of when acquisitions occurred, but continue to see that strong 10% growth.

From a fixed wireless perspective, we saw another very strong quarter. Total broadband right in the upper 400,000 range yet again, strong ARPUs yet again. Postpaid phone, we're not going to give you the whole spreadsheet, but one thing I can tell you is we had a tremendously successful churn quarter. We had postpaid phone churn of 0.85%, so down year-over-year significantly. And that's, again, the representation of this differentiated formula working for customers as you can kind of see manifest in the NPS score. So outside of that, we see continued growth and opportunity. And across all those segments, Srini mentioned, we had growth across the top 100, and as well as our smaller markets and rural areas. So everything is on fire here, we're very excited about the future.

Buybacks.

Yes. On buybacks, I think what you're going to see every single quarter again is application of this capital allocation framework. So we haven't before, and I'm not here to guide, it's going to be exactly this amount for every single quarter because it's really going to be dependent on what the opportunity set is looking in front of us at that point in time, and we have a little bit more clarity around when spectrum auctions come, et cetera, et cetera. So it's just continued application of that very judicious and I think demonstrably value creating allocation framework for shareholders.

Thanks John. Operator, let's move on to our next question.

The next question comes from Peter Supino with Wolfe Research.

A question for all of you on fixed wireless since you launched the product before the rest of the industry, you've, I think, always achieved superior net add growth, and that's despite launches by your 2 largest fixed wireless competitors subsequently.

I wondered if you could talk about in the last 6 months during the most promotional periods of low Earth orbit satellite pricing, if you could talk about whether that product priced at lower levels appealed to your target market and home Internet? And if that product does become much more available in 2027, how you might see it impacting your FWA strategy?

Thanks for that. Let me pick off and then André, if you can come in. So the way we think about FWA versus LEO at a very high level, firstly, is there is a big enough market for both of us to go after because there is a large incumbent pool of inferior product with inferior pricing, whether it's in urban or rural. Now André will lean into this a little more in terms of the differences on where we are on urban versus rural and our perspective on LEO.

But the one thing I'll leave you with is, ultimately, our product superiority, driven by our network superiority has really been the heart of our success. Our median download speeds have consistently grown over the last 2 years, even as our wireless speeds have grown, our routers are becoming better and better. We fundamentally offer a significantly better product than our FWA competitors or LEO. And it isn't much more complex than that in terms of what's driving success.

But André, do you want to lean into it?

Thanks, Srini. And thank you for the question, Peter. So I think -- so first, let me break it into two pieces. One is why are we outperforming everyone else and why are we doing so well. And it's not, curiously enough, it's not because we went first. It's just because our product is significantly better. This is where our network also shines in terms of the amount of capacity we have and the amount of development we've put into our network. John talked about what we've done with 5G SA, then what we've done with 5G Advanced. We just have a better product.

And I think it was highlighted in the beginning of the call that when you measure speeds over WiFi, our product is delivering fiber-like speeds over WiFi. That means that us, unlike our competitors in some of the space, have graduated from being what was in the beginning perceived as just a discount product towards being a great premium technology product to deliver broadband service. And that, if you want to encapsulate that into one statistic is our Net Promoter Score on broadband is higher than the Net Promoter Score of all the other broadband categories in the country, including fiber. So it's just that we have a better product. The product performs well and it performs, it's continuing to improve its performance over time.

The second thing when we talk about LEO and satellite, just 2 or 3 things I think are important to keep in mind. One is 2/3 of our customers are in the top 100 markets. That's exactly the markets where capacity will be significantly constrained for satellite broadband because of the beam sizes. And so we don't see concerns there. And as Srini said, there's a lot of space and a lot of room to grow. And so I think we're not concerned with that. Our performance, you talked about the last 6 months. The last 6 months have been extremely strong in terms of revenue generation, and they have been extremely strong in terms of net adds. So again, we have a premium product. We're mainly today urban. And if the last 6 months are any evidence of what's to come, then the last 6 months have been great.

And just one -- just to add on what André said, 2/3 of our customers are in the top 100, and our shares are lowest in the top 100. So there's a lot of runway ahead of us on FWA.

Yes. And I'd probably finish, Peter, with I think we mentioned this when we were giving the 15 million target. But not only is it a fallow capacity model, but it also included a very conservative rational market share caps. And so that's another mechanism by why we think it's a very rational 15 million subscriber target by 2030.

Great. Thanks, Peter. Operator, let's do another Q on the earnings queue.

The next question comes from Kannan Venkateshwar with Barclays.

Thank you. So Srini, strategically, when you think about LEOs, why isn't this a bigger opportunity for you to lean into even more? I mean just taking the other side of this in the sense that your peers have plans to build out 50 million to 60 million fiber passings around the country. And building that takes time, cost a lot of money. You have fixed wireless capacity, but obviously, it eats up some degree of spectrum. And if you were to partner with a satellite company and offer a broadband nationally along with wireless, it not only opens up spectrum for you, but it certainly gives you a nationwide footprint to take on your peers without really putting in a lot of capital. So why not lean into satellite even more instead of just using it to backfill some of the less-served areas?

Thanks, Kannan. The heart of this -- well, let me split this into two pieces. One kind of FWA versus LEO. As the technology stands today, uniformly across the country, FWA is a far superior product. And so there is really no value in us beyond kind of backup, which we've used for some of our B2B products to be partnering, right? And that's where the technology is today. And as we see this evolving, we believe that's likely to continue to be true, especially because of beam size restrictions, which John can talk about more eloquently.

So that's -- the way we think about partnerships or any of that is it needs to bring incremental value to us. And that incremental value is typically in some sort of differentiation either in terms of product or in terms of new channels or in terms of new customer bases. And having worked closely with satellite over the last 4 years, we're just not seeing that incremental differentiation. And our product itself more than serves the purposes, especially when you think about even in rural areas today, where some of the -- where our fallow capacity model actually works incredibly well. So we're just not seeing the upside of doing any of that in terms of partnering either in terms of differentiation or customer base.

Thanks, Srini. Thanks, Kannan. Operator, let's do one more question in the queue, and then we'll move over to social.

The next question comes from Kutgun Maral with Evercore ISI.

I want to follow up on broadband. You shared a lot of helpful details on fixed wireless. Maybe shifting gears a bit. Is there any more color you can provide on the fiber side? How are the fiber JVs performing? Are there any updates you could provide on how you see the footprint evolving? And as the competitive backdrop shifts to potentially accommodate more competition, is there any difference in your appetite to expand on those fiber partnerships going forward?

Thanks, Kutgun. We just cover off overall philosophically where we are and hand off to André to talk about where the JVs are in our future plans. On fiber, I think we've been very clear, but it's worth reiterating. We're not chasing some vanity number of homes passed. We think that's irrelevant. We're in this game to create equity value. And that's how we've thought about all of our fiber JVs, and that's how we'll think about things going forward. André?

Yes. So on fiber, and I think we've mentioned before, I think we're seeing everything we expected to see, which is that our brand, our frontline, our ability to provide excellent service and excellent product is translating into fiber very well. So we're very happy with the way the JVs are performing. We're getting to close to 20% penetration over the first 12 months of deploying fiber in each area, and we need to take those 20% in the consideration of we are not overbuilding copper or overbuilding cable. So in a lot of these markets, we start with 0 customers. So all the customer additions we have is actually all incremental in terms of revenue and margin for us.

As Srini mentioned, in terms of appetite for JVs or appetite for rollout, we've always been clear that we're doing fiber because of -- we believe it can create significant shareholder value for us. So we're not chasing any particular number. And we're very careful on making sure that where we build or where we acquire that we use conservative estimates to make sure that we can create that value. So this has not changed. And every area we roll out, every JV we look at, we're always very conservative and considering what's happening in the market today.

I think the other piece on fiber, which is different for us than it is for other players is because of our fallow capacity model, every time we win a customer in fiber, we're creating actually fallow capacity when those customers are in HSI, we're actually creating fallow capacity that we can sell elsewhere. So actually, this is not -- for us, in a lot of these areas, it's not a competition between fiber and FWA. These are actually complementary products because when we can sell a fiber customer, we're actually freeing up fallow capacity to be able to sell in a broader area because the cell radiuses of mobile are actually very large, where we can sell that slot to another customer elsewhere.

Thanks, Kutgun. All right. So going to social, we have a post from Chetan Sharma. What proved to be the most effective tools in your toolbox in dealing with the surge in traffic during the sports-heavy summer this year?

John Saw?

Chetan, good question. You're right. It's a sports-filled summer, indeed. And I think the one network that really stood up and shine through all these sports events is the T-Mobile network. Not only do we just have our names on the posters as sponsors, but we actually did the work to disrupt and change the way how sports events are managed, whether it's using network slicing for live broadcast for the PGA and the U.S. Open Golf events, or to use slicing for wireless terminals and ticket entry. And of course, the big event, Chetan, is the World Cup. And if you look at the Opensignal report in terms of who has the fastest network in all 11 locations where the U.S. hosted World Cup, it's the T-Mobile network.

So coming to your questions on tools. We have a lot of arrows, quiver and tools in our toolbox. Starting from the tried and true small cells and Cellular on Wheels, COLTs on wheels, we do that. Obviously, I talked about slicing. By the way, including T-Priority, which is in every one of these events, we provide a very good prioritization and preemption service for our first responders with a product called T-Priority.

But the one thing that I'm excited about that is fairly new is using AI for a product called Dynamic CX, where it actually works with our self-organizing network to figure out signal conditions, channel conditions when there's crowd surge coming and making network adjustments so that everybody has a good experience. In fact, Dynamic CX is so autonomous that we don't even have to tell it what events to look, it looks into the calendar and figure out where the crowds are going to be and actually make adjustments to cell sites nearby into higher capacity mode.

So we have seen some amazing results when we use that for all the World Cup events, especially at the watch parties, including the big one here in New York and Central Park, and we're very impressed with it. So to your question, a lot of tools, we continue to innovate. And now bringing in AI and self-organizing network is changing the game for us.

Thanks, Dr. Saw. Let's go back to the queue, please.

The next question comes from Michael Ng with Goldman Sachs.

I just had one on the service revenue outlook. It implies, I think, just over $300 million of sequential growth in 3Q and closer to $600 million in 4Q. So in terms of sequential growth. So I was just wondering if you could talk about the drivers of the acceleration in sequential service revenue growth in the fourth quarter. And also given some of the moving parts around postpaid, prepaid and wholesale service revenue. I was just wondering if you could please comment on that and talk about where you see that going for the quarter and the rest of the year.

Absolutely. Great questions. Michael, I'll send you my spreadsheet with all the details a little bit later, but I won't do that. But certainly, you're going to see two things. And you're right, the sequential growth from Q2 to Q3 is excitingly even more than what we just delivered from Q1 to Q2, and that's going to come on the back of certainly, volume as we're continuing to see not only postpaid account volume, a whole new net account switching, but also continued success with 5G broadband into existing accounts.

So it will come from ARPA expansion in the postpaid base. Remember we just delivered 13% year-over-year postpaid service revenue growth, and we continue to see great trajectory in postpaid, the heart of the core business, both in Q3 as well as Q4. And of course, the ARPA growth is supported by all the things that historically it has been, including self-selection up the rate plan, new accounts coming on at -- continually coming on at 60% plus of new lines on new accounts coming in our premium rate plan tiers. So that's fabulously accretive for us 5G broadband success, et cetera.

From a prepaid perspective, I think we'll continue to see exactly what we've been seeing, and I've been talking about the full year. And maybe I'll hand that over to Jon Freier in a second, and let me just touch on wholesale before we do that. On wholesale and other at the beginning of the year, we said it would be probably flat to slightly up. I probably see it being roughly flat for the full year now, and that's from exactly what we expected, which is the roll-off of DISH and TracFone that's been planned for. But now that we have 6 months under our belt, almost 7 months can see that slope a little bit better than we could at the beginning of the year. So wholesale, and that always means wholesale and other tends to be a little bit higher in Q4, and you'll probably see that relative to Q3 this quarter as well.

But maybe on prepaid, Jon, I'll hand it over to you.

Yes. So on prepaid, Michael, it's really interesting what's happening. First of all, as most of you know, we have an incredible portfolio of prepaid brands. The flagship prepaid brand, Metro by T-Mobile. Of course, we have T-Mobile Prepaid, Mint Mobile, Ultra. We have a great portfolio of prepaid brands that's really still really resonating in the market and attracting a lot of customers.

But there's also a phenomenon that's happening, which is really kind of the higher, more premium customers within prepaid are being more attracted to postpaid brands. And that's a good thing for us because we're seeing higher CLVs and overall value accretion as a result of that. And like what Peter mentioned just a few moments ago, on postpaid phone churn for Q2 was 0.85%. So we're seeing really good stability and performance and overall value creation when we're seeing that segment of customers that are migrating. So that's a good phenomenon for us.

Also, for us, we've always had a long-held practice of pre to post migrations, which is attracting customers into the portfolio of brands, graduating them up to prepaid brands, and that continues to be a very strong dynamic in the marketplace.

The other thing, too, is that we see an opportunity within prepaid to further kind of cultivate and grow the segment. When you think about our portfolio of brands, distribution capability, potential distribution expansion in a variety of ways. We see a lot of opportunity that we can really kind of get after prepaid to not only drive the overall prepaid business, but to really have more fuel for the postpaid business over time with those migrations and graduations that I spoke to.

Yes. And I think, Michael, if you're -- because you're probably doing the P and Q math there a little bit. And the reality is you've kind of got me here, we're probably going to be more towards the 3% ARPA growth for the full year than the 2.5% side of the house because we're really seeing strength in the core business.

Thanks, Mike. Operator, next question, please.

The next question comes from Sebastiano Petti with JPMorgan.

Just maybe sticking with broadband for a second here. AT&T says 45% of their Internet customers bundled with wireless. Can you help us think about what is your percent? Why isn't it higher? What are you doing to try to drive incremental bundling to your base? And then thinking about the direct-to-device ecosystem, any update on the JV timing of a definitive agreement there? How you're thinking about your exclusivity agreement with Starlink and maybe leaning into the JV opportunity?

Yes. Let me pick up the JV piece and André can pick up the bundling piece. I'm just glad we're all calling it bundling rather than something called convergence now. So that's what's working. So on the JV piece, the conversations are going really well, and we're progressing rapidly towards the long form agreement. We should have an update for you shortly on that.

André, do you want to pick up bundling and where we are in that?

Yes. As Srini said, I think it's a great moment where everybody is calling it bundling, and we're very happy for that. That being said, so if you were to do the same math of how many of our broadband customers also have mobile within the bundle. For us, that's closer to 70% than it's closer to 45%. But again, we've always taken the approach that this is one of the formats of bundling. We have a lot of just mobile customers that have multiple lines in their bundles, multiple customers that have device and mobile. But if you want to take that stat, there's like one of the stats of one of the bundling cuts that's for us, it would be about closer to 70% and 45%.

Thanks, Sebastiano. Next question, please.

The next question comes from Bryan Kraft with Deutsche Bank.

I guess I wanted to follow up on prepaid. Can you, Peter, maybe elaborate on how much of the prepaid revenue decline is being driven by sub declines versus ARPA declines at this point? And maybe just give us some sense for how much of that subscriber decline is being recaptured by T-Mobile through prepaid to postpaid migration versus going to a competitor? Just trying to understand those dynamics a little bit better.

And I guess I also wanted to follow up on the D2D question. It's been a year, obviously, since you launched the exclusive D2D offering with Starlink. Just wondering how you're thinking about exclusivity at this point and whether you want to go with primarily through the JV going forward and just how you're handling that sort of exclusivity expiration as it comes up.

I'll pick up the D2D piece and then hand off to Peter. Direct-to-cell, it's really a technology that, in many ways, we worked with Starlink to invent. It's the first scale deployment of that. And what we've learned over the last 4 years is it is a complementary category. If you look at our usage in -- the last time I talked about 0.0002% of our network usage. That's 3 zeros and a 2 being on satellite. And in our busiest summer months that went to 0.0003%, right? So it's a really small point as a small percentage of the usage on our network, and it is a complementary service.

You know what we always do, right, which was we future cast the direction of this industry and then work back from that to figure out the right strategy for us. For us, it's clear that with time, this is no longer going to be a differentiation. It's going to be table stakes as a complementary service to have satellite along with your cellular service. And that's what drove a lot of our thinking. We think what's at stake now is to make the experience for the customer agnostic of which provider you're, agnostic of which device you are, and to pool spectrum so that we can actually make this a significantly better customer experience, and that's what drove the JV. So looking forward, the JV does allow for individual operators to have conversations and agreements with other parties. But our expectation is the vast majority will be sourced through the JV. And the other question was on prepaid, yes.

Yes. On prepaid, it's a little bit of both, but it's also a little bit. I mean this, as Jon mentioned, continues to be a tremendously healthy business for us, and it's been one that we've been very successful in taking customers, bringing them through our prepaid brands and ultimately engaging with our postpaid brands. Some are choosing to directly engage with postpaid brands versus us. I think you can see from the total postpaid volume and ARPA delivery and the quality of customers there that we're getting that we're attracting very high-quality postpaid customers in totality.

And on prepaid, what I'd expect from a service revenue perspective, is probably a similar trend, Q2 to Q3 to Q4 as we've seen Q1 to Q2. So you're talking about minimal trends here, and it's more reflective of the overall dynamics. But all the more important that we're delivering really tremendous growth on the postpaid side and still maintaining what is, again, industry-defining multiples of the industry from a total service revenue growth perspective.

Yes, because the proof of the pudding, the way we think of it is what is total service revenue growth. And at 9% service revenue growth, clearly, it's working.

Great. Thanks so much, Bryan. Operator, let's take our next question, please.

The next question comes from Sam McHugh with BNP.

Just wanted to follow up on the 2.7 spectrum. I guess I don't know if you have any early indications on how much might be available and whether that's more attractive to you than the C-band? And how much line of sight do you think you'll have on that auction by the time you go into that C-band auction?

And then just one small follow-up on the Starlink JV or deal you have today. Is the exclusivity period over now or you are still in the exclusivity period with them?

Okay. Cathy, I don't know if we comment on our exclusivity. Cathy, Peter on...

We have said in the past that it does not end this year. So we confirm that.

Yes, I'll confirm that it does not end this year. But you've also heard me talk about kind of where I believe this is going and where kind of differentiation plays versus a complementary service.

On 2.7 versus C-band 2.0, look, it's too early to tell on 2.7. We're excited by both of them. Because when you step right back, we think we're approaching one of those moments. And the thing T-Mobile has been incredible at is waiting for those moments where we think this is the time for us to step in and really take a big lead versus competition. The last time we can remember something like this was around the 5G rollout, where we made a conscious decision to go and drive 5G stand-alone where we made a conscious decision to say, we're going to be the 5G leader, right? We think we're approaching a similar moment here where wireless technology is evolving so rapidly. 6G is not going to just be 5G on steroids, but it's also going to give us all sorts of opportunities like edge AI and physical AI.

And we're in a place where we're looking at this and going, look, this is a time for us to drive this differentiation even further because the last time we stepped in and drove differentiation through 5G, the result is clear for everyone to see. We've dramatically transformed our network. That's driving all the goodness around network seekers, that's driving all the goodness around sustained growth. So we'll get into the specifics of how much C-band, how much 2.7, what's the sequencing of those auctions, how do we want to think of playing one against the other. But the intent for us is we see this as a big point in time for us to step in and drive further differentiation and cement our network leadership.

Great. Thanks, Srini. And thanks, everybody, for joining. That's all the time we have for questions. We're looking forward to connecting again with you soon. Please contact us if you have any additional follow-ups. Thanks so much. Bye.

Thank you.

Thank you.

Hi, everybody. All right. My name is Kutgun Maral. I'm the media, cable and telecom analyst at Evercore ISI, and we're very pleased to have with us at our conference, Peter Osvaldik, the CFO of T-Mobile. Peter, thanks so much for being here today.

Thanks for having us again.

Absolutely. And I think you have some pointing to do.

Absolutely, yes. There was a disclaimer slide. It looks like it disappeared, but there's the legalese, I'll make forward-looking statements, non-GAAP metrics. Please look at our filings for all the risk factors and recons for those.

All right. Perfect. So let's start big picture. I think since the February update, T-Mobile has raised guidance on accounts, EBITDA and free cash flow, and the first quarter results really reinforce the accounts and ARPA framework. From the CFO seat, what are the changes that -- what have been the changes that have given you the most confidence since February to increase that outlook? Is it the demand environment, quality of net adds, monetization, free cash flow conversion or anything else that you call out?

Yes. I mean, fundamentally, obviously, since February, there haven't been any big shifts in the strategy or the operational environment. So it really is just doubling down and executing against that strategy that we laid out, which most simplistically put is the best network, best value and best customer experience strategy. And that's really what amounts to having industry-leading NPS and being able to have a very consistent profitable model that delivers. And really, that's what you saw in Q1. It was really execution against that, that allowed us to put up not only just industry-leading, but really multiples of the industry results, whether that's in postpaid account net additions that were 217,000, whether that was service revenue of 11% growth, core EBITDA of 12% growth or what I always look at, very, very important to me, certainly from a long run perspective is how do you translate that growth into free cash flow margin. And we delivered 24% conversion of service revenue to free cash flow after investing sufficiently in the business. That's important. You can always cut your free cash flow in the short run, but that will hurt you in the long run. So after you've invested to keep the value creation alive, we have 24% free cash flow margin. That was in Q1. If you look across what was the demand environment, we saw strong demand across everywhere, whether it's our top 100 markets when that's cohort 1, 2 and 3, as we kind of sub-segregate the top 100 markets, smaller markets and rural areas, broadband continues to be an absolute area of strength for us, and we grew our 5G broadband product faster in Q1 than we did even a year ago. And our total broadband net additions were over 500,000 for the quarter. And I say that, but of course, we all know volume isn't just volume for the sake of volume. You actually have to convert it into quality. And so when you saw what was going on in Q1 certainly, some of our competitors were going out there with pretty aggressive device-centric promotions. And we chose to not match a lot of those. And when you have a proposition that focuses on value beyond just the device that you upgrade or buy new once every few years, even longer these days, you can actually come up with very effective promotions that don't have to go so deep into the device-centric offers because customers get a lot more value, whether that's the network side or value elements or the experience, again, all manifested in NPS. And what we actually saw is we chose not to match those offers because we saw those as CLV not attractive for us. But what we saw was not only the delivery of the volumes that we had in Q1, but also really encouraging signs like port-in APRAs that were 20% higher than port-out ARPAs in the quarter. And that tells you about the quality of the customers that we're taking in. And we can get into more of that a little bit later. But all of those signs point to the model and the strategy that we laid out, which is, again, the best network, the best value, the best experience coupled with underpenetrated market segments and new opportunities continues to be something that we're very excited about, certainly for the balance of this year, but actually over the long term as well.

That's great. And you talked about this a few times, but let's maybe zero in on the customer lifetime value a little bit because to your point, promos come in and out, and I think from the outside, it's a little hard to figure out how much of any operator's performance is really coming from aggressive promotional activity versus something that's a little bit more tangible and durable as you look out over the next few years. So you gave a few examples. But how do we think about the CLV that you're getting from your new customers? And what are the kind of internal proof points that give you confidence that you're headed in the right direction as opposed to just others maybe [ hitting ] a quarter?

Yes. I think it's important. If I back up a little bit is when I see the most astute investors in this really look at it the same way we do, which is it's not about just one KPI, for example, postpaid phone lines was always the hyper focused on KPI. But it's also what's your ability to translate unit growth on one KPI into actual value creation that matters for investors in the long term. So can you take that unit growth and translate it into service revenue growth? Are you running the company efficiently enough where that service revenue growth then actually accretes down to core EBITDA growth? And of course, are you investing sufficiently? This is -- these are CapEx-heavy industries? Are you investing sufficiently and yet still able to convert that service revenue into free cash flow. And that's where, again, we have fundamentally multiples of what the other competitors in this industry have because we're structurally advantaged and we'll have that for a very long time into the future. So it's -- those are the external things that I would look at as an investor because it's hard to get a sense of, well, what were CLVs of customers. I can tell you, again, internally, what we're looking at, of course, is what are unit economics looking like? What are things like I just mentioned, port-in APRAs looking like, 20% higher port-in ARPAs than port-out ARPAs. From a CLV perspective, in Q1, what we actually saw, again, and this is fundamentally, as you have the best product, the network and more and more consumers are hearing about it, believing it, Q1 happened to be of recent switchers to T-Mobile, the highest-ever percentage of those cited network quality is the reason for switching. So that flywheel of network perception that has a long, long runway ahead of us is starting. But you also have the best value, what you get for what you pay. Certainly, the network is a big part of that, but all the other day-to-day benefits that you get as a T-Mobile subscriber. So those are the things that bring in high-quality subscribers, high CLV subscribers, again, we talked about we'd have to match deep -- what I see as CLV negative device offers because we have all of these other tangible things that are bringing customers in. And we actually saw CLVs in Q1, up double digits year-over-year. And that's actually continued into Q2. So that's the focus that we have. It's not just the volume but value creation for investors. And again, you see that manifest itself in that differentiated service revenue, core EBITDA, free cash flow, those are the things to really focus on.

Yes. And I think you're helping shape the way that investors look at the story by having switched disclosure around a little bit and I think off towards better understanding around the ultimate economics of the business. I think folks are still settling into some of the new account and ARPA disclosure framework. So what do you think that the Street is maybe still getting wrong in some of these as we look into the new disclosure. In particular, how should we interpret account churn when newer accounts, broadband-only accounts and acquired accounts all carry different churn profiles?

Yes. I mean I think what some individuals are still maybe not seeing holistically is just pan out from the hyper focus on one KPI and so much more focus on are you translating that into tangible value accretion, right? Service revenue, EBITDA, free cash flow, the things that we talked about. I think that's the most -- and fundamentally, the most important thing to look at as to, is this the right investment? And how is every company differentially able to create that value. When you look at just account churn, in particular, I know everybody has been used to postpaid phone churn for the longest time, and we did disclose that in Q1. That was only up 3 bps year-over-year as we saw more of a normalization from depressed periods in the past. Account churn is structurally always going to be higher than postpaid phone churn. It's really just a math equation for us. And there's a few underlying reasons for it. One of those being as accounts come on board and tenure, they -- not only tenured accounts have lower churn, but tenured accounts, particularly with MPS being where it is, also tend to grow in size. Certainly, other products beyond phone but also grow phone lines on a per account basis. So what you see happening there is as an account is tenured and churns less, well, they have more postpaid phone lines in that account than a new account that's churning higher. So that's a difference that you see between postpaid phone churn and account churn.

The other thing is the success that we've had with our -- not only our 5G broadband offering, but bringing on Lumos and Metronet customers on board. Broadband obviously has a structurally higher churn profile in the U.S. than mobile. And so that's a math equation of the success of 5G broadband, means you're going to have higher account churn than postpaid phone churn. But it came in exactly as we expected, as we anticipated, it's a trend I expect to continue for the balance of the year, certainly. That doesn't mean that every day, we don't wake up and say, well, how do we get account churn even lower, both short tenure account as well as longer tenure accounts. But I wouldn't read anything more into it than structural math reasons.

Yes. Perfect. And maybe switching gears a little bit to postpaid ARPA. Growth in Q1 was well ahead of expectations. You pointed to a roughly 2% growth in Q2 before reaccelerating in the back half and landing at 2.5% to 3% for the full year. What gives you confidence that the second half acceleration reflects underlying drivers like premium mix, more products per account, the success you're seeing with business, broadband attachment, for example, rather than just some of the easier comps that you have.

Yes, it's -- there's a lot of quarter-over-quarter noise. And again, kind of a function of math and that makes the quarter-over-quarter, year-over-year comparative is a little bit difficult. And that's why it's important to pan out to that 2.5% to 3%. Couple of the reasons why the quarters are a little bit different from a year-over-year perspective are, one, in early Q2 of 2025, we did our last round of rate plan optimization. And so Q1 of this year was the last meaningful kind of year-over-year benefit from that. The other thing that you saw is very highly accretive decisions like acquiring UScellular. That came with mathematically lower ARPA as did the Metronet and Lumos acquisitions of customers as you bring them on and then you can expand that relationship over time. And so until we lap those things in Q3, you're going to see comparatives that are a little bit odd. And that's why the 2% for Q2 fundamentally is the right number when you look at the oddities of the math. But then you need to step out and say, well, okay, what's driving the 2.5% to 3% full year growth? And those are the things that we're most excited about. And some of those are, again, structural advantages that we have. First being our front book to back book advantage. And you know the story. I mean, partly the beauty of having grown up as the value leader, being seen as a far distant third or fourth in terms of network is you had value seekers come to you. People that generally chose you for price. And that means that we have a structurally lower back book than the competitors do. Now that you've arrived at the station where you have the best network and are attracting network seekers that tend to be higher CLV, higher ARPA customers, well, they're coming on board. And so every ARPA account that's coming on board is actually structurally accretive to you because of this back book, front book dynamic that we have. And you see because those network seekers are coming to us, you have really high loading on our premium plans of lines on new accounts that came in Q1, 60% of those continue to be on premium plans, which is about double the base. So that continues that flywheel of new accounts coming on board, increase ARPA.

The second, of course, is if you have an NPS that's completely differentiated and your customers trust you, then you can grow that relationship over time, whether that's postpaid phone lines that are added, whether that's 5G broadband, other connected devices that allows you to grow ARPA over time. And those are things that we continue to see happening as well.

And then third, and probably the least on our waterfall is, we're going to continue to be thoughtful around rate plan optimizations. And under a more-for-more construct, where can we see legacy rate plans potentially moving up from a pricing perspective. And so that's how we think about those 3 items, and they're all -- the first one is certainly very unique to us, having that back book, front book structural advantage, and that's how you get the 2.5% to 3% growth year. So we're very excited about that.

Yes. That's fantastic. And maybe just 1 more on the postpaid side for now. When you think about the next few years of account growth, can you maybe rank the major opportunities between network seekers, small markets in rural areas, T-Mobile for Business, UScellular, broadband, maybe not just by headline TAM, but where you're seeing incremental sales and marketing dollars generating the best returns?

Yes. This is one of the most exciting parts I think about the company is the fact that just like we laid out in February, it's across all of these categories. UScellular is now, we consider it an integrated part of which segment it's in. But there's fundamentally a few things we're looking at that drive growth. One of those being network seekers that we talked about. Now that you're at the point where you have the best network and more and more people out there, not just our customers, but prospect future customers, as we call them, believe that we have the best network, you start getting a flywheel of that's 20-plus million accounts out there that historically chose either AT&T or Verizon because they believe they have the best network. And at the time, they did, we didn't. But we're in a totally different place. We're years ahead. We have all the basically components to continue to be years ahead of that. And so continuing to take network seekers as high CLV, high ARPA customers is a very exciting area for us to grow. And that's across smaller markets, rural areas, our top 100 accounts or markets across the board, smaller markets and rural areas. Now with the acquisition of UScellular, we've hit about 24% share, but there's a long runway there. And what's really interesting, both network seekers and smaller markets and rural areas, if you have 5%, 10% share, it's really actually inefficient to get that flywheel going because you don't have a word of mouth. And the vast majority of customers, when they consider this category and switch are still talking to friends and family as to what works for you where I live, work and play. And when you achieve 20%, plus 20%, now you've got a flywheel of word of mouth, particularly when you have an NPS score that's way above the competitive set, and you have that best network perception catching up and starting to move forward. So it makes it even more efficient. You've got 5G broadband, which is an exciting opportunity. We just upped our subscriber target to 15 million subscribers by 2030. You'll obviously have fiber on top of that. You have T-Mobile for Business, which is just a great opportunity to continue to grow. And it's a great kind of indicator of where the network is because large enterprise, government customers, they test the network. They also want to see more than just pure connectivity of their phones from a network perspective. What they want to see is, are you bringing novel solutions to me that can actually help solve business challenges? And if you do that, then I'll sell you the postpaid phone business too. That's no problem. But I don't want just the postpaid phones switcher [indiscernible]. I mean if I'm a CIO at a large enterprise, why would I do that? What I want you is to solve my problems. And because of where our network technology is, we're able to offer completely unique solutions there. And so that allows a lot of account growth into the future because you win the hearts and minds of CIOs and large enterprises, large government entities because you're solving problems, whether that's automated balls and strikes or what we just did with the PGA Tour. There are so many examples of unique solutions, F1, that we're able to provide to customers to solve real pain points. And then we get the connectivity business with the phone as well. And then beyond that, of course, we're going to look at, to a lesser degree, from a pure account perspective, but how do you grow into smart adjacencies, like financial services, physical AI is a great opportunity for us in the future. That's not even in the plan from a revenue and EBITDA perspective. But those are all the areas we look at. And what's beautiful is we don't have legacy declining businesses that we need to shield. So every area that we're investing in is an area of growth and strength for us, which is, again, one of those unique structural advantages that we have. So we see growth across the board.

And the good thing for my seat is it's not -- these are not plans that you have on a board deck. You've got the success you've already demonstrated in some of these top 100 markets, like whenever I hear the market share for Manhattan, I think it is -- boggles my mind. And when you think about small markets and rural areas, there's no reason why you shouldn't have, at a minimum, your fair share from a market share [ perspective ].

Yes. I mean you mentioned New York where we have over 50% market share and growing, because now we're attracting those network seekers on top of the value seekers that have come to us. And you're right, when you have that formula, the question is, well, why can't you get there? Now that's not our plan. That's not what underpins the guidance that we gave you out there, but it certainly is a long run opportunity for us.

Yes. So we talk about postpaid accounts and ARPA, maybe in the interest of completeness, maybe you could talk a little bit about prepaid and the wholesale markets as well and what you're seeing over there?

Yes. I mean we think of our postpaid and prepaid brands, and I'll get to wholesale in a second. But we think about prepaid and postpaid as very complementary products. We have leading brands in both of those categories. And for the longest time, we've always been able to engage with prepaid customers. And some portion of those customers have always moved into the postpaid brand over time as they saw the value attributes or wanted more of the things that postpaid offers, including more device-centric ability to finance things like that. I think when you pan out, what you're seeing at an industry level is more prepaid customers are choosing to interact with postpaid brands directly than they have in the past. And I think probably they see the value and they're moving there. And so that's why, for us, we step back and say, well, what's happening with postpaid and prepaid service revenue together. And when you see that, I mean, we delivered total service revenue of 11% growth. Postpaid was 15% growth in Q1 on a year-over-year basis. And I expect Q2 from a prepaid perspective, we'll probably see the same dynamic we saw Q4 to Q1 play out in Q1 to Q2. And that's because we're seeing these great CLV accretive moves into postpaid and the postpaid brand. And so that's something we'll definitely continue. And I think it will be an industry trend for a while.

On wholesale, it's playing out exactly as we foreshadowed. And that's fundamentally TracFone and DISH as MVNO partners moving off and then other growth continuing beyond that. So Q2, again, I expect we'll see the same sequential change in terms of absolute dollars in service revenue there as we saw in Q1 to Q4. And then 2026 is the year where it flattens out to slightly starts growing as TracFone and DISH have fully rolled off by then.

Perfect. Okay. I have a few questions for you on the broadband side. So maybe fixed wireless. Over there, you've been very clear that this is a fallow capacity monetization story, not a capacity give away. I think we still get the question of, as usage keeps rising and incremental spectrum supply comes into the market, what are the leading indicators that tell you that fixed wireless can keep scaling without crowding out your mobile economics?

Well, as you know, we apply a very unique model to it, the fallow-capacity model, as you call it, where we project forward in about 36 million hexbins. We disaggregate the country in the 36 million hexbins. And for each of those hexbins, we look at what is the capacity that's going to be created by the network there? How much of that is going to get utilized by mobile phone traffic, both because we have new subscribers coming on, but also mobile phone usage growth. And then where we have excess capacity using that model is where we approved the sale of fixed wireless. And then we further cap it, by the way, for market share, make sure we're basically assuming conservative rational market share percentages. And that's how you get to be allowed to sell fixed wireless in a hexbin. And so what you should look at externally is, well, what are speeds doing? That's the great proxy for capacity. You've seen what the 5G business -- 5G broadband business is done in terms of customer growth, let's say, over the last 2 years, significant growth in customers, yet you've seen speeds on the network increase by 50%. Of course, usage per customer has gone up by about 30%, a little over 600 gigabytes a month, which is exactly what we planned, but speeds have increased by 50%. Coincidentally, they're also faster than -- 50% faster than the next nearest fixed wireless competitor. Now the average download speed we're seeing over WiFi is about 250 megabits a second. But what's really fun is on our latest gen routers because this is a technology, both from a network perspective and a router perspective, that is rapidly evolving. Our latest gen routers are putting 400 megabits a second down over WiFi, which is effectively fiber lived experience over WiFi. This is why it has the highest NPS as a category over all others, including fiber. When you add in the ease of installation, the experience, the value, it's just fundamentally such an exciting business to be in. So look at speeds, look at customer growth and look at continued -- this business, giving us a lot of tailwind.

Yes. It doesn't seem to be decelerating at the moment. You've talked about fiber. And let's talk a little bit about fiber. Even -- I want to get away from the debate that is, at least for now on whether or not convergence is real or is it a myth, we'll get to that in a second. But maybe a more relevant question for T-Mobile is the return on capital that you're seeing with fiber. So maybe you could talk a little bit about what you're seeing on a penetration perspective, customer quality and operating cost that supports the double-digit IRRs in these JV structures that are somewhat unique to you?

Yes. Well, of course, it's early days. We're about a year into some of these. We're seeing, what I would consider very encouraging results, basically playing out the thesis, which was when you combine the expertise of the fiber players and the partners that we have in terms of actually building and laying fiber, coupled with the brand, the distribution, the customer relationships that T-Mobile brings that we'll be able to actually get penetration better and faster over time. And what we're seeing in the early cohorts, again, it's very early, is 1-year 20% penetration rate, which is pretty encouraging for greenfield fiber builds and you're seeing us start rolling out that T-Mobile playbook of, for example, good, better, best rate plan tiers and having customers self-select up those rate plan tiers. You bring them in with the advertising and then they see the value in the higher tiers and self-select up. So again, very early days, but we're encouraged by what we're seeing from a thesis perspective playing out.

That's great. And maybe staying with the fiber conversation. And we've certainly done this. I think everyone has done this in terms of modeling out passings and subscribers. But think for a lot of us, the RetailCo and InfraCo economics are a little harder to translate to consolidated EBITDA and free cash flow. So maybe you could help us think about the biggest swing factors between a fiber JV being strategically attractive and actually being free cash flow accretive for T-Mobile.

Well, there's no, I would say, disconnection between the 2 for us because what we're looking at is what are businesses that can continue to ultimately be free cash flow accretive for us, the ultimate value creation engine for investors. And so when we think about -- well, what does a JV partner have to look like for us to be attractive? And why we've been so disciplined in what we've done here is, one, it starts with geography, like they have to be able to build in geographies that we can get first or very near first to fiber because that allows you to get the penetration rates using the T-Mobile brand, and that's the #1, I think, factor, penetration rates, obviously, in ARPAs in terms of what are your ROIC is going to look like on this.

The second is how can you get the right partners in this space. We're not experts at laying fiber, certainly not yet, right? So how do you partner with the right people? We bring the brand customer distribution marketing know-how. They bring the fiber build know-how and together, it creates the magic that the JVs are, if you have the right partnership model.

And the third to your point is -- and this is unique to the structure, which is, hey, if you're building very early, it's very capitally intensive. So why don't you do a JV like structure? First reason is the partners want to stay in, right? They're excited about the opportunity they want to stay in as well. And doing the JV structure is really smart from an ability to lever up and provide the funding needed for this early build and get again, first to fiber, get the T-Mobile fiber machine working on that to get the penetration rates on it. We're growing very fast now. So obviously, what you're going to see now, like in any subscription business is customer acquisition costs come on board as you're scaling that platform really rapidly. And then ultimately, it turns to free cash flow accretion in the later years. But we think about those, there is no deal that we've ever looked at that says, well, I want this deal for this reason, and it won't be free cash flow accretive to investors in the long run. It absolutely has to be.

Understood. Let's talk a little bit about competition, especially on the broadband side. When you think about Verizon and AT&T, leaning harder into fiber and some of these bundled offers, what are you actually seeing in these overlap markets? And is there evidence that their fiber footprint changes wireless switching activity, churn or promotional intensity? Or is the impact still smaller than I think what a lot of folks assume?

Yes. So you came back to the convergence.

I came back [indiscernible].

What we call bundling. We're not seeing anything different there than I think we've laid out this thesis and you see it play out in the results. This has been in the run rate for years and years and years. It continues to be in the run rate. And you see the differentiated volume and financial results that we're able to put out there. And we've mentioned things like, hey, even in places where our competitors have fiber and are building fiber, our share of postpaid continues to grow. And so those are the things to look at. Nothing fundamentally has changed here at all. We continue to grow. We continue to deliver the differentiated financial results. Customers still feel the mobility aspect of this is the way more considered purchase. And so there's nothing really new here, nothing that's changing any of the elements of it. But -- and if you step back and look at Q1, it's a great example. You've got AT&T who's been touting convergence and the fiber build strategy probably because they don't want to explain that what they're really doing is spending a lot of capital to upgrade legacy tech to fiber, which makes sense for terminal value and getting a slight delta on ARPUs, but you're not seeing it play out in results. I mean they just posted the largest year-over-year increase in postpaid phone churn of anybody in the industry. So it's not really playing out in terms of some sort of benefit to them, and you're seeing the delivery of the results that we have.

Understood. And maybe switching gears a little bit, but still talking about competition. You could fill in the gaps over here, but I want to talk about satellite. And there are certain satellite operators that sound pretty confident in their ability to compete with broadband against -- not with broadband, but against terrestrial providers in direct to sell. Can you help us understand whether there's a real business case for these satellite operators and especially as they kind of move towards their next-gen satellite launches and/or close on some of their spectrum deals?

Yes. Well, the short answer is no. There's no effective way for them to compete with a terrestrial network. And they're not limited by money or number of satellites. They're limited by the laws of physics. And here, let me get into that a little bit more, 2 fundamental things that are the problem. One of those being just signal power. So when you're thinking about a terrestrial network, you've got a site that's probably -- I'm going to go kilometers now for the second, like a kilometer away from you, obviously, has a lot of spectrum and it's putting out a lot of power, compare that to, for example, a satellite -- remember, these are different constellations in the broadband satellite, a satellite that's 350 kilometers up, which is probably as low as you can go. You go any lower, you're going to have a lot of propellent needed to keep the things stabilized, which means you get in the catch-22 cycle of then larger power arrays, which mean more atmospheric drag, which just -- so 350 kilometers is probably the lowest that you can go. So now you're trying to send a spectrum signal. And think about this as like a garden hose, water through a pipe. And you're trying to shoot it 350 kilometers away to a mobile device. It's a lot different than the broadband product, which is shooting to an outdoor large antenna. You're trying to not only shoot a small mobile device, but it's mobile. And the problem is the basic physics of that water through the pipe and through the outlet is what we call open signal loss, right? And this is just the amount of signal loss that you get with no obstruction is not just linear in terms of the distance. It's actually an inverse square. And you cannot put enough power. You can put 100,000 satellites up with all the spectrum of all 3 MNO operators, and you will never be able to project enough power to overcome that open signal loss of 350 kilometers. What that practically means is by the time it down to earth, where the mobile phones are you don't have enough signal to overcome things like roofs, glass, modern vehicles. And so you cannot provide a reliable experience to customers in 70% of the time where they spend is in buildings or in cars, modern vehicles. So you can't service a customer in 70% of the time that they're spending on a mobile device. And again, you can put up all the satellites you want to, the fundamental laws of physics will not allow you to generate a beam signal strong enough to actually overcome obstacle. so that's the first and most basic reason why it cannot be a competitor to terrestrial networks.

The second is capacity. And there's a theoretical limit also to the beam size. When we do estimates around 1 of the operators out there who's going to have a V2 D2C or D2D, however you want to think about it, satellite, that beam size is significant. For example, if you think about Manhattan, New York, where you're in New York a lot, that beam size is roughly multiple, 6 to 15x depending on how you define Manhattan. But multiples the size of Manhattan. And that V2 service is going to be able to provide a decent service, outdoor service, see the previous conversation I had to about 10 concurrent users. So think about that, a beam size is larger than the size of Manhattan that can reliably provide service to 10 concurrent outdoor users. It's just not an experience that customers demand. And so for those 2 fundamental reasons, it's just not an overcomable situation. Now that doesn't mean it doesn't have a place. Like we've long said, it has a great complementary place in outdoor areas, particularly areas like national parks, where the economics just don't make sense to build a terrestrial network, but it can be a great added complementary benefit for customers. And that's where we see it play out. That's where we see the hotspots are. If I look at the last week of data, D2D traffic on our network was -- count the zeros, 0.002% of traffic. And that's because for the first 2 reasons, I said it's just not where 70% of people are, but it does make sense in that place where terrestrial networks just don't make feasible economic sense. And that was the whole purpose of the JV is how do we make this a win-win for satellite operators, for consumers and make it economically viable for the carriers as well. So how do we stimulate competition in this space, give consumers the coverage in those few limited outdoor areas like national parks where, by the way, by pulling our spectrum together, we can take care of the hotspot needs of a Yosemite or a Yellowstone National Park, and have it be a great complementary service. That was the whole thought process behind this. But in terms of a competitor to a mobile network operator, it's just not physically possible. And this is also the reason why we said, well, you've given them an MVNO, So well, it doesn't differentiate you, like there's no differentiation. So no, we're not going to give them an MVNO. It doesn't make sense for us to give them an MVNO. The answer is no.

And despite you saying no, we keep getting the same question around, well, they said it this way and they -- and just very clear that there's no interest in a satellite MVNO.

No, no interest.

Okay. Perfect. I think that hopefully is clear enough for folks. With the time that we have, a few other topics that I want to make sure we touch on, maybe cost savings and AI. You framed the $2.7 billion of cumulative savings target by 2027 and with even more opportunity beyond that. As a CFO, how do you separate gross savings from net savings? And I think what I'm trying to really get at over here is how much of the AI and digital productivity benefits should investors expect to actually flow through versus being reinvested in network, retail, care or growth?

Yes. Well, figures that we gave you, the $2.7 billion in 2027, that's the amount that's actually flowing through to the bottom line and incorporated in that pretty ambitious guidance that we put out there. And like you said, there's way more opportunity even beyond 2027. It's not like $2.7 billion is the ultimate one. But we have conservative adoptions, assumptions and things to that effect, but that will grow beyond 2030, and we'll see even more gross benefit. But what's even more exciting than what are going to be great, and we're already seeing some of that, some great cost efficiencies and productivity efficiencies come out of that is, what does this mean for both consumers and the TAM and service revenue opportunity for us beyond cost efficiencies. Certainly, you see us leverage the fact that we're so far ahead on network to put early things out there like live translate, right? That's a great AI use case. It's in beta now, that can really provide meaningful incremental service to both consumers and businesses alike. But the even bigger opportunity that's not in any of our plans from a service revenue, core EBITDA free cash flow perspective, but because we're the network leader from a technology, we're certainly the central ones who can take advantage of this is physical AI. So for the first time, when you think about it, a simple use case is, for example, robotics. And the challenge of robotics manufacturer has is, I really need -- if I have a fleet of robots or drones, I really need space time coherency as Dr. Saw tells it. I need to be able to know where those things are and when they are, so that they're not crashing into each other, they're able to interact, they're able to do the tasks that they need to do. And to accomplish that, I either have to do 1 of 2 things, put a lot of the technology on the device itself, which means not only sensors, compute but battery drain is a real issue. And that makes the devices really expensive. Or my other alternative is, cool, let me do inferencing in the central cloud, but the problem is the time dynamics, the latency just doesn't solve that problem. So now you're going to have robots and drones crashing into themselves. So this is the first time where networks are going to be in the center of this where you can have inferencing at the edge that allows robotic manufacturers, drone manufacturers. We've got a few of these already. We're working on with other companies to be able to take some of that compute and battery drain, make these things cheaper and put some of that inferencing on the edge because that inherent latency and jitter and other aspects that are so important are fast enough to be able to do it. And that solves that problem. If I couldn't do it with the central cloud, there's still be plenty of stuff in the central cloud, but you need the central layer of a distributed edge-based inferencing technology that only a network can provide and ours being 2 years ahead of everybody else is in the center of this. So this, to me, is one of the most exciting opportunities of significant TAM expansion for this company and the industry as a whole later if and when they catch up from a network tech perspective, which they won't. Dr. Saw won't let that happen neither will we. But you've got the ability to connect and being the center of value creation of the next AI revolution, which is physical AI.

And I think -- I'm not going to push you to provide numbers unless you're willing to. But some telecom investors that I think have -- remember 3, 4, 5 years ago, when there have been made -- there have been some promises made of 5G and what different use cases and business cases could be. And that hasn't necessarily evolved in the way that I think some had hoped. But it sounds like these opportunities are a lot more tangible in near term and you're seeing that. Is that a fair characteristic?

Yes. Remember, we've never put those out as we're the company that has to see the opportunity. It has to be real before we promise investors, oh, MEC is going to deliver $1 billion or $10 billion or whatever it was that Verizon said long ago, we put 0 of that in our plan because there really wasn't this connection of, okay, what is the value proposition to whom? Like I'm just going to take a software application that's living in the cloud and move it on-prem. We didn't see how that was really going to create a lot of value for anybody. And so we didn't put MEC into our plan. This is fundamentally different because, again, you either have very expensive robotics, drones, all the things that physical AI is going to bring or you can do it with the cloud or you solve it by making all of this cheaper, having battery drain not be a problem and having it solved at the edge. So it's not just bringing some sort of software closer. It's actually providing a value that would never have been brought under MEC.

Perfect. All right, 3 minutes and 2 last questions. One on capital allocation, which, to me, seems to be perpetually underappreciated part of your story, I guess in my seat. For 2026, your -- you've -- your return authorization stepped up to $18.2 billion. The balance sheet remains a relative advantage. When you think about the next dollar of excess capacity, how do you rank buybacks, dividend, spectrum, fiber JVs and other smaller strategic M&A?

It's -- we really use our very consistent capital allocation framework that I know we've talked about a long time. First being, to your point, what is the right leverage for us. We want to have flexibility. We have the best balance sheet in the industry that creates a lot of strategic optionality in the future as well. But what's the right leverage for us. We continue to believe it's 2.5x core adjusted EBITDA. That's a growing core adjusted EBITDA. So that in and of itself creates a lot of capacity. And then you go down the waterfall and say, one, I need to make sure I'm investing sufficiently in the business to take this best network, best value, best experience proposition and make sure that it continues to be in a leadership position. We have no desire to fall behind in our network leadership. We want to grow. And things like physical AI or something that's tremendously exciting for us, neither so on value or experience. So that's the first place you invest for long run value creation. The second is you look at things like spectrum acquisitions or smart M&A, you see us do it in the JVs very prudently. And then you look at how do I return to shareholders any of the excess. And that's a balanced, dividend and share buyback plan. So we keep running it through the same thought process and philosophy.

Ton of excess. Okay. Last 1 for me. when you talk to investors, where do you think the debate today is still too focused on? Maybe we talked earlier about postpaid phone and whether or not that's a right or wrong metric. Where do you think folks should be spending more of their time on in terms of underwriting the T-Mobile story?

I think it's -- and we've touched on this many times already in the conversation. It's the full left to right of don't focus on just 1 KPI but focus on how we're able to translate growth, the P and the Q plus new opportunities like financial services, T-Mobile for Business, 5G broadband into true tangible value creation in the form of service revenue, core EBITDA and free cash flow margin and how fundamentally differentiated it is to the others in the industry. And again, we have the structural elements to keep that advantage and keep that growth going on way into the future in a very differentiated way. So I think that's the fundamental piece, coupled with particularly this concept of where physical AI could take this company. That's not embedded in any of the guidance that we gave you, that's already exciting and what that means potentially for the future of the company.

Fantastic. All right. Peter, thank you so much for your time today.

Thank you so much for having us.

Yes. Absolutely.

Appreciate it.

Good afternoon, everyone. I'm Sebastiano Petti, and I cover the telecom, cable and satellite space at JPMorgan. I want to welcome T-Mobile's CEO, Srini Gopalan. Srini, thanks for being with us today.

Well, thanks for having me here. And just before we get started, I'd like to draw your attention to our safe harbor statement that I will be making forward-looking statements and using non-GAAP measures. But delighted to be here.

Thank you. Thanks for joining us. And I think it's your first time at the conference. So great. So Srini, since the February capital markets update which reset multiyear guidance to reflect not only recent M&A, but as well as improving underlying trends, T-Mobile followed up with a strong first quarter print. What are the 2 to 3 priorities you're most focused on executing against, I guess, over the guidance horizon?

Yes. Thanks. Look, the heart of what drives our outsized growth, both revenue but also financial and tumbles into industry-leading free cash flow, is differentiation, right? Our NPS is today, 20% higher than that of AT&T and Verizon. And the heart of that is being able to bring together best network, best value and best experience.

So what I'm really focused on is widening that differentiation in networks that's going from 5G to 6G that's driving 5G advanced. In terms of protecting our position on best value, that's providing value not just once in 2 years, but on an everyday basis.

And on best experience, the heart of our best experience has been our people. Now we're augmenting them with digital and AI. And the reason that differentiation is so central to the way I see the world is all of the outsized growth.

And I'll just give you a few examples. We've got 20 million businesses and families who are still using AT&T or Verizon because they think it's the best network. In small markets and rural areas, our market share is 24%. We're in a very, very early innings there. Enterprise, our market share is in the 10% to 15% range, massive opportunity there. Broadband, we talked about at the Capital Markets Day, we have the opportunity to get to close to 20 million customers by 2030.

And then there's all the new businesses we're incubating, things like financial services. Also, the possibilities with edge AI and physical AI. So there's a lot of growth ahead of us. And the heart of that growth is stoking differentiation. So what I'm focused on is making sure that we say streets ahead on best network, best value, best experience.

Yes. The network perception, you called out the 20 million network seekers, right, that aren't on your T-Mobile subs. In first quarter, you saw the highest ever share of switchers citing network quality. So beyond the passage of time and marketing and ad spend, what specifically closes the residual perception gap? And help us about maybe realistic time line to when you could possibly fully neutralize that?

That journey is well on its way. And you say with every passing day, we get more recognition for it. Things like the Ookla Speedtest, which is 0.5 billion data points across the country. This is not kind of a drive test where you have 50 people driving around and trying to figure out who the best network is. This is billions of data points from actual customers. You've seen J.D. Power, where after 22 years, we claimed the best network position. So we're getting more and more recognition from it.

The thing we're learning that we're now scaling is ultimately, changing network perception is about what the network means for you, right? Because nobody really cares about America's best network beyond a point. Network differentiation happens when you experience it, when our network is demonstratively superior where you work, where you live and where you play. And we're getting to the place now we're able to target people at an individual level and demonstrate to them, network superiority. And that's really what creates this acceleration.

I don't look at this as a point of we will arrive at some point, which is the truth. The reality is we will make a lot of share gain along the way. 20 million accounts, families, businesses is a lot of runway. Just think of it this year with our guidance, you're talking 1 million and change accounts. That's a lot of years of growth left for us.

And any update in terms of maybe what you're observing in May or since the earnings call in terms of just promotional intensity across the ecosystem? You are still confident in customer lifetime values being maintained at appropriate levels. But I guess, what's underpinning the confidence that led you to raise your postpaid net add guidance after the first quarter?

I think we spend a lot of time obsessing about promotions and competitive intensity at the margin. Sure, it's important. But if you think of it, right, there is a flow of where the water is going, and then there's kind of perturbations on top. The flow of where the water is going is based on differentiation. When you have 20% higher NPS, when you have best network, best value, best experience, there's a natural demand pull that's heading in our direction. That, at its core, is what gets us comfortable with raising postpaid guide.

You said something really important there, though, because our true north on how many nets we do in terms of accounts in any quarter gets driven by our view of CLV. And you saw first quarter, 6% higher accounts than last year. We didn't talk about this at great length, but also better value. So our port-in ARPA was 20% higher than our port-out ARPA.

And so when you look at competitive intensity, yes, sure, December-Jan was more intense. But as we work through the first quarter, we saw value in going after more accounts because the CLVs were strong. We were looking at our port-in ARPA versus our port-out ARPA. All of that filled us with confidence that we were booking stuff that had really strong CLVs. And quarter 2 is going really well.

Great. And then you touched on SMRA, share hit 24% in the first quarter. So this is, I think, your 12th consecutive quarter of win share leadership, if I'm not mistaken. So just beyond word of mouth, I mean, what's resonating in these markets? Is it distribution efforts, brand? And I guess, I mean, what's the long-term ceiling if you'd have to frame it for investors?

Can I start with the second piece?

Yes sir.

Because this theory of a long-term ceiling kind of assumes no differentiation. There's this view of the world that if there are 3 players, everyone sits at 33% share. That assumes all 3 are the same. The reality is when you've got best network, best value, best experience, all 3 are not the same.

So you look at the city of New York, we have about 50% market share there. That's what happens when you bring the 3 things together. Not suggesting that SMRA is going to get a 50% share, but we're at a very, very early innings in SMRA.

In terms of what we do differently in SMRA, what we're seeing is an underappreciated thing in wireless is the network effect. And that's just a bad pun. But what I mean by that is when you get to something like 24%, 25% share, you get more and more word of mouth. And that creates its own upward spiral where you're seeing more and more people talking to each other about the fact that the network is distinctly superior.

And what we've done really well in SMRA is combine the network expansion with the distribution expansion and localized marketing, things like Friday Night 5G Lights, where we go into a small town, there's a $1 million award for fixing the football ground. And last year, we had hundreds of thousands of small towns competing for this. Small town called Dierks in Arkansas with a population of less than 2,000 got 2 million votes, right? And that starts giving you a really local presence and local word of mouth.

Interesting. I was not aware of that program. Pretty cool.

It's actually in Dierks, Arkansas with Gronk. That was quite an experience.

Oh, yeah? Yes, I have to pull that up. So you've always anchored on the best network, which we just have been touching on, at the best value. But should we read that the 2026 guide as -- from an ARPA perspective, I apologize. Should we assume that the 2026 ARPA guide embeds a rate action at some point this year? And I guess more broadly, what's the composition of the 2.5% to 3% ARPA growth? And how much is pricing versus mix in terms of features?

So I'm not going to break up the 2.5% to 3%. Let me give you directionally how we think about this thing. We guard our value leadership zealously. Now we're -- we've strategically architected our portfolio so that we have something that's quite rare in the telecoms business. We have a front book that's higher priced than our back book, which means our existing customers actually pay less than our new customers. That just means where -- even volume growth is ARPA accretive.

And the way we think about the sources of ARPA growth is we've got 3 distinct sources of ARPA growth. Number one, this front book/back book dynamic, which is even as we grow volume, we actually grow ARPA. Number two, expanding the nature of the relationship with our customers, which is kind of why this 20% higher NPS at 45 makes a big difference because people don't buy more things from you unless they're incredibly satisfied with the things that they've already bought. And the last, and traditionally, our smallest has been thoughtful more-for-more rate optimizations. And that's the formula you should expect to play out not just over this year, but over the years of our thinking.

And then shifting gears to the broadband business and FWA. T-Mobile was again the fastest-growing ISP in the first quarter with 50,000 -- 500,000-plus broadband adds and with FWA reaccelerating year-over-year. I guess, what's driving that inflection? And how is the competitive backdrop evolving now that Verizon appears to be deemphasizing FWA a bit and AT&T kind of scaling their efforts?

Ultimately, it's really simple. It's an incredible product. So you look at this business, right? Over the last 2 years, our number of customers has doubled. Usage per customer has gone up 25%, and our median download speeds have gone up 50%. And they're 50% higher than our nearest competitor.

So what you have is an incredibly easy-to-use product. In fact, on some of our newest generation routers on WiFi, right? This is not when you plug in fiber Ethernet into your computer or whatever. On WiFi, we're getting 400 Mbps download, which is why our NPS is actually higher than fiber. So it's just an incredible product powered by an ultra capacity network. That's what's been driving a lot of our volume.

And then I guess a persistent bear case that we continue to hear about less so, but is that FWA can't scale sustainably, just given data usage growth curves. I guess, what leading indicators give you confidence that capacity stays ahead of demand? And I guess, what are the release valves if utilization tightens in specific markets?

So let's talk about -- we talked about 15 million customers by the end of 2030. How did we get to that math? Here's what we do. We divide the country into 36 million hex bins. These are small geographic areas typically covered by a sector or even less than a sector.

For each of these areas, we look at the growth in wireless usage based on historic data and then take a conservative view going forward. And we focus that growth entirely between 7 to 9 at night because that's our busy hour. That's what matters as a binding constraint. We take that and block that capacity off. That is only for wireless. Everything else in the network is what we call fallow capacity. The way we got to 15 million was we took that fallow capacity and then capped market shares. We said, "What's a reasonable market share?" Because purely because I can supply, it doesn't mean there will be demand. So we capped that market share.

And that gets us to 15 million, assuming no incremental capacity -- no incremental spectrum purchases, assuming no incremental spectral efficiency, right? That's how we get to 15 million, which is why I'm super confident of our ability to deliver on that 15 million because we will end up seeing more spectrum, and we will use the fallow part of that spectrum. We will see spectral efficiency gains. We're already seeing massive spectral efficiency gains with 5G advanced.

Right. That's before we even think about [ fixed income ] with 6G?

Yes.

Got it. So shifting to the fiber JVs. You announced 2 new ones ahead of the 1Q call, adding, call it, roughly 1.8 million passings, I think, with Oak Hill and Wren House. I guess, what made these the right partners? And what's the decision framework going forward as you think about JVs, wholesale relationships and maybe even deploying your own balance sheet for fiber M&A?

So firstly, the way we think about fiber and broadband as a whole is not kind of some defensive rush to scale because we think this myth of convergence is going to suddenly become relevant. It hasn't in the last 10 years. It's built into our run rate. People can talk about hypotheses on how convergence changes customer behavior. You look at the last 10 years, it simply hasn't happened.

And so our approach to fiber and fiber JVs has been to look at places where we can make double-digit IRRs, where we can scale fiber, those tend to be first-to-fiber areas. And we do them as JVs because our partners bring incredibly valuable local experience in things like zoning, permitting, digging, et cetera. And that will continue to be our approach to rolling this out.

And when you look back -- when you look at our overall plans of 18 million, 19 million, that number will change with these new JVs up until 2030. It's important to remember that FWA is 3/4 of that, right? And that's the -- fiber plays an important role in our portfolio, but it's a role where we see -- where we look for places where fiber can genuinely create equity value and then double down on those with partnerships.

And how have your wholesale partnerships scaled or your partners scaled relative to initial expectations? And is there a preference emerging for JVs over wholesale opportunities?

So look, if I talk about fiber as a whole, it's obviously very early days. But we're tracking well on our penetrations. We're getting 20% first year penetration. Now that's pretty incredible given that the vast majority of this is a greenfield fiber rollout. I'm not converting existing copper customers into fiber, right? That penetration is really strong. And of course, that means I get incremental value rather than ARPU substitution because I'm not shutting down a copper plant to roll out fiber.

In terms of preference, we like the JVs, and we will look at places where we get accretive JVs. Wholesale, depending on the structure of the deal, is a good fallback to that. And we tend to be on fiber, very focused on value creation rather than kind of this is the scale we need to get to because the homes passed number is a little irrelevant.

Well, it's a great segue to my next question. You've been clear that cable isn't a priority and that the focus is on taking share from incumbents. Is there a scenario though, whether it be valuation, asset quality, market structure, that would change that calculus? Or is cable structurally off the table?

Look, I think of this stuff strategically first rather than valuation backwards. Cable is off the table from our perspective, right? The reason for that is kind of threefold. Number one, we're a growth company. Our DNA is the Un-carrier. Our DNA is changing the industry for the good of the customer. We don't play defensive. We don't like being in a place where we're the incumbent. We like being in a place where we're attacking the incumbent.

Second piece is just front book, back book ARPUs, where cable's back book is so overpriced that you're spending your entire time chasing your own tail, right? Because then, you compete on the front book and you suddenly see spin down. Even if you get to positive net adds, you're in a place where value leakage happens.

And third, you look at the speed at which wireless technology is developing, especially as you look at FWA rolling out in countries like India. Suddenly, the ecosystem becomes really exciting because you're getting CPEs cheaper. You're getting the ability to optimize your technology a lot more. And that combination -- and you'll compare that with where DOCSIS is going. That combination is what takes us to a place of no to cable.

And just a quick follow-up on some of the fiber. You talked about getting to 20% year 1 penetration, which is great. But from a build perspective, I mean, how is that -- is that ramping on schedule? Any early learnings in the markets?

So we're seeing good performance on using our distribution. We're seeing good performance on using the T brand, and it's very early doors on fiber.

Got it. Okay. And then shifting gears. At the CMD in February, you framed a $2.7 billion cumulative cost savings target by year-end '27. And I think Peter touched on the call, weighted maybe a little bit towards later stages of 2026 and beyond. Maybe help us think about from an initiative perspective, what's already in flight versus still to come? And maybe what are the largest buckets of savings opportunities?

Yes. Just one clarification. That was $2.7 billion by '27. That doesn't mean that's going to be the run rate going forward. This is obviously an accelerating run rate, so you should expect even more going forward.

In terms of places where we're seeing joy on this broader bucket of digital and AI, I think firstly, it comes from a philosophy of we don't use digital and AI as shaving cost at the margin. We start by saying, what can it do to fundamentally change our experience? What can it do? Because very few customers actually walk into stores or call because they just want to chat to us. They walk into a store or call because they have a problem.

What digital and AI, especially with 24 million monthly actives on T-Life, enables us to do is proactively address that problem before they call. Or when they call, be able to deal with it quickly, efficiently, often through our voice bot. And we made a promise at the last CMD of a 75% reduction in our call volume. We're well on track to that. We're getting something like 60% containment with our InstantCX (sic) [ IntentCX ] chatbot.

So one big source of savings, and more importantly, the next step in the customer experience is everything we're doing in care and retail. The second is the power of this taken to our software development, whether that's in network or IT, where we're seeing just incredible power in having some of our brightest engineers work with 20 agents, agentic interfaces versus actually having them outsource a bunch of stuff. So we're seeing some real movement there.

And thirdly, on the network itself. I mean, when we had Winter Storm Fern, that was the first scale use of AI to actually begin to do our antenna tilt remotely, right, instead of having someone out there in the middle of a winter storm changing your antenna tilt. You're also beginning to see real innovation with things like live translate. So I'd say we're well on track on our -- not just our savings, but using this technology and being at the forefront of this technology to change the experience.

Well, talking about great -- changing the experience, you recently announced an agreement in principle to form a joint venture with AT&T and Verizon aimed at eliminating wireless dead zones by pooling your spectrum and making it available to LEO satellite providers. So I think the stated goals are enabling competition, standardization, helping amongst a fragmented market.

But given that a definitive agreement is yet to be reached, maybe help walk us through the strategic rationale? I mean, why does the JV -- what does it accomplish that T-Mobile couldn't achieve on its own through your existing partnership? And does it -- how do you think about the playing field or level of differentiation going forward?

So there's -- this is very much in keeping with the Un-carrier ethos, right? What we've historically done is done two things very well. One, got out there and innovated to solve a genuine customer problem. Second, once we've had experience with that innovation, sat back and looked at it and said, "If we future cast this and look around corners, where does this go? And therefore, how do we want to play?" So that's the same story that's playing out with T-Satellite.

We worked really closely with SpaceX Starlink. We have a great partnership. We've now extended some of that to broadband to build a new category, which is direct to sell. And we've had lots of experience of how that category is playing out. Long story short, it's clear that this is going to be a fundamentally complementary category. And just to give you an example, we looked at our data in May, and satellite usage is 0.0002% of our total network usage. That's 3 zeroes, right? So it's clearly a complementary use case. And we are seeing it largely focused on the national parks, that sort of territory.

So then you look back and say, clear, we've built this product. It provides value. It does help in dead zones, and it's going to be a complementary product. How do we see this industry playing out? You're seeing more and more that there's going to be probably 3 players in space that -- when I future cast this industry, I look at it and go, most consumer wireless, especially the premium offers, are going to land up having satellite connectivity linked to it, right? We've also seen very, very little take-up of a la carte connectivity, right? Pretty much, no one buys satellite stand-alone. They buy it as part of the premium package which gives you a bunch of other benefits, global roaming, ad-free Netflix, et cetera, et cetera.

And I look at it and go, this is going to become a standard part of most premium offerings from all players, and there'll be enough supply of it. And this is no longer going to be a source of differentiation. However, there are real problems to be solved. Problems like device ecosystem. Right? Some devices support it, some don't. There isn't a uniform device ecosystem. Problems like IP, right, and standardized interfaces and standardized ways in which consumers can get access to the service.

Problems like standardized spectrum. Now you may ask the question of if it's 0.0002%, why do you need spectrum, right? The reality is in hotspots like in the national parks, you do need spectrum. And because of the distribution of spectrum, I might own the right spectrum outside Zion National and Verizon might have it over Yellowstone, right, which doesn't help the customer. And bringing it together creates a uniform spectrum world where we can pool in that spectrum.

So all of that standardization plus aggregation of demand, which for the smaller satellite players is critical or for the recent entrants is critical, creates a satellite ecosystem that allows the American customer to get wireless plus satellite as part of a standardized package. Now we will compete, obviously, as providers in terms of how we innovate around that. But as we look around corners, the differentiation doesn't exist, and this is about creating an efficient wholesale infrastructure.

And how do you think about the risk that a D2D provider eventually goes direct-to-consumer, whether it's through a build-out or an MVNO? And I think you've made your views on how an MVNO with a D2D provider may or may not play out.

Let's start with the MVNO first. I think I've been really clear. That's not something we're interested in. We have criteria around how we pick an MVNO. It needs to be an incremental TAM, and we don't see how this gives us an incremental TAM.

We deal with the D2D, D2C. I think there's a real danger here that is we get lost talking technology. The real question is, what is the meaningful gap from a customer perspective in this market? Is there a significant large meaningful gap that's not being addressed, right? I think as we bring satellite and wireless together to address dead zones, I think that's something that does address a customer need.

But if you think about in the non-dead zone areas, I'd almost frame the question to you, what do you think is the gap that D2D or D2C would address that's not being addressed by terrestrial? And then we can have an informed conversation on technology. But starting technology first, could there be a D2C product? Yes. But look at the take-up of a la carte satellite, right? So I'm more intrigued in what's the problem to solve.

Right. That's fair. And so now shifting to the network. On the Figure AI partnership, what differentiated capabilities does T-Mobile's network or platform bring to physical AI versus peers? And I guess, where do you see the earliest commercial scale use cases playing out?

Yes. Look, I think the commercial scale, I think 6G, we will start the journey somewhere -- at least T-Mobile will because we're well ahead on 5G. We will start the journey, I'd say, '28. And for it to be at scale, you're looking at about '30, 2030.

Why we're excited by Figure AI is what our technology does in the wireless world -- and we're already seeing some of this with 5G advanced -- is for physical AI to work, you need kind of 3 things: low latency. Because otherwise, it's really hard. The robots will be banging into each other on the factory floor, which is not a pleasant thought, right?

The second piece it does bring is voice built in. So as physical AI scales, the need to interact with robots, humanoids, drone delivery, et cetera, et cetera, will need voice built into the core network. And thirdly, you'd need the drones or the humanoids to communicate with each other, which is only possible with a low latency network. And you'd need this thing we refer to as space time coherence, which is you need to be able to know where any device is at an exact point in time. You need to know both the space and the time that you're communicating with it, right?

So you think of physical AI more broadly, it's only going to be possible with a low-latency wireless network. And today, there's only one player across America who has 5G advanced across the country, and that's us. That sets us up in a beautiful place to get to 6G and all of the benefits of physical AI.

So with C-band not yet fully deployed, and I think you still have some mid-band refarming ongoing, how is T-Mobile positioning for the upper C-band auction that's expected in 2027? And I guess, how do you plan on -- just thinking about the further pipeline of 800 megahertz coming to market longer term?

I think the pipeline is really exciting. And I think Chairman Carr and the FCC have done a phenomenal job in releasing trapped spectrum across the board and also bringing more spectrum to the market. And that will enable true American leadership in wireless technology.

On the specific question of spectrum and auctions, I think there's kind of 3 principles that guide us. Number one, we will maintain spectrum leadership. Number two, we will be 6G leaders. And number three, we'll be extremely thoughtful on how we value spectrum.

The way we've always valued spectrum, given that coverage is no longer that relevant, is really look at a build versus buy, the cost of densification versus the cost of buying that spectrum. That's how we will continue valuing spectrum. And when we value spectrum like that, sometimes we look at some spectrum and say we're going to walk away from that, like the EchoStar spectrum. But you should expect us to absolutely be present. And those 3 principles will guide what we buy and how much.

So -- well, that makes a lot of sense, I guess. And we'll see once we have, I guess, visibility into how much upper C-band is coming to market, but it seems like plenty of opportunities and great balance sheet relative to peers to kind of take advantage of some of that. So we'll -- definitely something to watch.

So on the 1Q call or just ahead of that, you took -- the Board announced that you took 2026 total stockholder returns authorization up by $3.6 billion now to "as much as $18.2 billion." So as you think about the pullback in shares and the management team's view of intrinsic value, which you touched on, how are you weighing buyback versus -- the buyback pace versus other use cases? And what would shift that priority?

We've had a very consistent and successful algorithm to capital allocation. We start with leverage. We assess what the right leverage is. We're still of the view that 2.5 is the right leverage. Then you look at everything that you need to do from an organic business perspective.

And you look at things like M&A and spectrum. And our focus areas on M&A and spectrum have been really clear. M&A is focused on double-digit IRR opportunities in fiber. Spectrum, we've talked about what's coming. We've talked about also kind of specific spectrum deals that we've done. And then that tumbles through to shareholder return. And that's exactly the way we're consistently going to look at it. And that formula hasn't changed, and we don't see why it should change.

So now I would be remiss not to ask about some headlines. So I guess, in regards to the potential -- so there was the Bloomberg article or whomever that cited Deutsche Telekom's interest in pursuing a potential combination. Your comments from the call aside, but I mean, any feedback or maybe what you're hearing from your largest shareholders and what they're telling you about a potential combination? And I guess, more broadly, we've talked about fiber M&A, but I guess, what's the appetite for "transformational M&A" more broadly?

When most people -- I'll answer the second part and then come to the first. When most people ask me about transformation M&A, that's normally code for are you buying cable. And I think I've been really clear on that. So I won't go back over that ground, right?

On your question on the Bloomberg article, I'll say what Peter, myself, Tim have said over the last few days, right, which is we won't comment on speculation. And nor is there anything to comment about, really. On the back of the article, we did get a bunch of inbounds on governance. And just to clarify, our governance in -- consistent with Delaware law, any such hypothetical transaction would need the majority of minorities or the majority of what's called the disinterested shareholders. And both DT and our Board of Directors have confirmed this. So that's really all that there is to say.

Got it. Understood. And I guess maybe going back, so talking about maintaining -- being a leader in 6G. Is that -- help us think about the development time line there. Does it require a big new CapEx cycle? Is it more software virtualization-driven just layered on top of the 5G advanced infrastructure?

Look, there's puts and takes. But the answer -- the best answer we have so far is there's no fundamental change in capital intensity. And the puts and takes are fairly simple. You'll need an new air interface. No indication that, that's going to be step function different. You'll end up having some AI compute because this will be the first wireless network that not only processes bits and bytes, but also processes tokens.

But the idea would be to look at fallow compute or to build a 6G network which has the same cost structure or an AI-enabled network that has the same cost structure as a 5G network. And I think there's a lot of indication that a lot more innovation will happen on the core, which will balance out some of it. So on balance, I don't see any change in the direction of capital intensity.

Great. Well, Srini, thank you for the time, and thanks for joining us.

Pleasure. Thank you. Thank you so much.

Thanks, everybody.

Thanks.

All right. Good afternoon, everybody, and thank you for joining us for this afternoon's session with T-Mobile. Thank you to those of you who are joining us on the web as well from MoffettNathanson's 13th Annual Media and Communications Conference. And I'm delighted to welcome Peter back to our conference. This is T-Mobile's 12th appearance in 13 years at our conference.

And if I think back on those years, it's really been an impressive journey, I think, from upstart challenger in those days, to, in many ways, the industry's leader. So we've got a lot to talk about today, convergence, FWA, satellite. We're going to get to all of those. But just because it is so topical and with Deutsche Telekom having reported earnings and spoken this morning. I want to start with the reports in the news that over the last weeks about the possibility of corporate activity between you and T-Mobile. And -- between you and Deutsche Telekom. And make sure I understand the corporate governance aspects of that, that protect the shareholders here in the U.S.

Awesome. By the way, thanks for having us again. It's always a pleasure. I know we had our safe harbor statement up there, so I always point you to that. I'll be making forward-looking statements and, of course, non-GAAP measures.

So yes, let me start there. And really I just don't have a lot to add to what's speculation and the hypothetical transaction out there. But -- there have been a lot of inbounds around, okay, if a hypothetical transaction happened, what's the governance around it. And as a result of those inbounds, our interpretation of Delaware law is that any such hypothetical transaction would require a -- what's termed the majority of the minorities or the majority of disinterested shareholders. And because of the volume of inbounds on that, we have confirmed that, and DT has confirmed that to us as well as the independent directors on our Board have confirmed that to us. So that's really the governance structure, and that's obviously important for people. But as I said, it's a hypothetical speculative transaction. And honestly, we're spending all our time focused on the business and driving the differentiation and the growth there. So happy to get that out of the way, but there's just not much more for me to say on the speculation.

Understood. Okay. So now let's dig into the business. We upgraded your stock to buy again back in April after a couple of years actually on the sideline, in part because we had updated an analysis on geographic cohorts. And while we actually talked about that in the context of the rural cohorts. I think the most impressive part was that you're back to, at least by our numbers, seeing accelerating share gains in the urban top 100 markets where you were already the market share leader. Talk about that, if you would. Geography is only one way to slice it. There are all kinds of demographics or psychographics or that sort of thing. What are the market segments that are driving that reacceleration in the top 100? And what kind of legs does it have in your mind?

Yes. And you're right. And really, we're seeing growth across the board, whether that's in smaller markets or rural areas or the top 100. We tend to segment even within the top 100 we've long talked about. There's really three main cohorts that we look at just from geographies. And that is the ones where we are a market share leader, including sitting here in New York where we're over 50% market share and continuing to grow and then more cohorts that behave actually similarly to our smaller markets and rural areas.

But -- it's really -- whether you look at subsegments, demographics, geography, I mean, in reality, and we tend to distill this down to three simple things, but it's what people care about, and that is can I get what I deem is the best network or a very reliable network? Can I get the best value and I want really great experiences. And as you know, you talked about the arc of -- we've been here for 12 years and the growth of T-Mobile. And it really started with focusing, of course, on the value side of the equation and the experience side of the equation. And with the merger with Sprint and our ability to then unlock the 2.5 gig spectrum, it's now taken us to a place where really any real objective third-party measure out there that's based on real customer use, real device use, I mean, puts us as the best network.

And that's a cohort of customers that in the past, we simply couldn't attract, right? So it was really growth based on value and experience. And what we saw, in fact, in Q1, we just had the highest ever share in terms of new accounts that came to T-Mobile. It was our highest ever share of those accounts that came in saying that they're choosing us for network. So the word of mouth and the ability for consumer perception to catch up with where the network actually is, is starting to happen, and that's certainly helping to drive a whole new set of opportunity for us. We've talked about it as at a minimum 20 million families and businesses that we call network seekers. And while all elements of that equation are important to them, the most important to them is the network quality. And that's one that is certainly starting to drive more and more significant growth in the top 100. And that's how even in markets like New York, we can continue to grow. It's fabulous.

So are there others that come to mind -- so that's a psychographic segmentation, if you will, of the network seekers as you described it. But as I think about all -- whether it's demographics, whether it's income levels, whether it's ethnicity, whether it's -- are there other segments that you say, here's somewhere where we see a significant growth opportunity that we're just leaning into?

Well, a lot of them are intertwined, right? So to your point, network seekers tend to be higher prime customers. And so as we see flow, in fact, we have more in terms of additions of new accounts coming in to T-Mobile that were more prime than we had on an absolute basis than we did last year. And that comes part and parcel with network seekers, but it's growth across all the segments. And you see that in smaller markets and rural areas as well. There's plenty of customers who place value first. And many of them, by the way, when you go through analysis and our customer surveys, we in the industry use jargon like, well, is it coverage? Is it reliability? Is it value? A lot of times customers put those all together and say, well, value is what I pay for what I get. And so it's really hard to discern every single demographic and saying, what is specifically motivating them. But we're seeing growth across all of it, whether it's social segments, whether it's age demographics. And by the way, you don't need any more fiber. I think you might [indiscernible] more fiber today, you don't need any more fiber. You looking great -- or across geographies. So -- and that is because, again, it does distill down, it's way more complex, of course, in how we approach it, but it distills down to you even jokingly said in the past, well, if you have the best product at the best price with the best experience, shouldn't your market share be 100. And I don't think we're quite that ambitious, but we certainly have a lot of ambition and there's a lot of room to run when that's the formula.

Well, in those -- so in the nonurban cohorts, I think I wrote my first piece about the rural opportunity for you guys 10 years ago now. What inning are we in? That's been a story that I think people understand pretty well, but it's not over yet.

Yes. It's -- to me, I feel it's still early innings. And while we're at 24% market share, that includes the acquisition of UScellular, I mean, we see continued growth and runway there. And it is because we're finally bringing this equation there. And there wasn't a lot of investment in many of those smaller markets and rural areas in terms of network, and there certainly wasn't that much investment in terms of customer value because that was a place where maybe only one of the two were playing. And so there wouldn't be a great balance for consumers of what you get for what you pay and our ability to unlock that. And remember, we're doing it in a very, very smart way. We had about 4,000 greenfield site builds last year, a lot of them were in smaller markets and rural areas, but all driven by what we call our proprietary customer-driven coverage model, which is really looking at where do consumers really use and need the network.

And that's not a POPs coverage-driven model. It is really where consumer is going, points of interest, critical roads. And that becomes even more important in a smaller market in rural area, where it's something that maybe a lot of people don't live there, but it's an interconnecting road that's tremendously important. And you cover that and our really efficient capital approach finds those areas covers them, does the build and the word of mouth is just growing. So I think there's a lot of opportunity because of the formula there.

Yes. And it's interesting to see you really leaning into that now. If I think about your Billy Bob Thornton advertising, for example, which is sort of aimed at those low-density markets. Is that -- sort of same question I asked about urban. Is there something different that those customers are looking for versus urban customers? Is it more coverage rather than price value? Is it price value more than coverage? What are the attributes that drive success in those markets?

It's not dramatically different than the top 100 markets. You have a group of network seekers, you have value seekers. I think what consumers are really looking for that they were hungry for, for a long time. And it's -- again, if you go to an average consumer and do a survey, whether you ask about, well, is it reliability or coverage or speeds, they see their network experience as a network experience. And they may consider, well, if it works where I need it to work at the speeds I need it to, that's what I define as reliable. So we kind of take all of them with a grain of salt and focus on all of the network related consumer sentiments and driving those up. And so I think it absolutely is. I want this network to work for me where I need it. And I want to pay a fair price for it and great value and get great experience. So that's -- it's just -- I know it sounds really simple, but when you have competitors who don't focus on the equation.

Is that why you leaned into T-satellite and the satellite opportunity earlier than and more forcefully, I guess, than your competitors? It was part and parcel of that coverage value proposition for rural customers? Or was it more urban customers just as likely to go traveling in [indiscernible] and just going to want it? Or did -- did that part of that rural urban skew in your mind?

No. What it really was is -- and this is part of the DNA of who we are, which is let's work together to co-develop something new for consumers and their benefit. And we co-developed this with SpaceX. We're very proud to put it out there. We always -- much like with a lot of other of the innovations that we bring to market. I always expect that ultimately those go to the broader consumer marketplace. We expect that our exclusivity will end. We always anticipated that. And I think we spoke about in the Q1 earnings that really what we've seen as a part of T-satellite is that it's a great complementary service for consumers. But it is relatively low usage and concentrated around areas like national parks, as you might suspect. And for that's probably a testament to just the strength of the terrestrial network that we have. And again, this customer-driven coverage model, which covers a lot of those places where it's important for consumers. So -- that wasn't really the thought process of we're targeting smaller markets and rural areas or top 100. It was let's drive another consumer innovation into the marketplace and others will ultimately follow. And now you're seeing Amazon and Globalstar and that announced transaction. And this is a perfect time to have more competition in this complementary important but very low usage and kind of geographically contained.

I was going to say, have there been any surprises in that? There was -- early on, I think there was a big debate about is this going to be a meaningful driver of brand choice? Is it instead going to be a separate subscription service? Is it instead going to be a way to uplift people into premium plans? It seems like it's coalescing into that last -- the last of those three primarily, is that right?

There's a tremendous amount of things that are embedded in our higher-tier plans that have consumers self-select up there. So this is just one of the elements of value. I think what we've ultimately found because, again, because of the usage characteristics, it's complementary, good and limited to primarily areas like national parks. And as a result, it really hasn't driven a lot of a la carte purchasing of the service themselves. I think of it as well, just another part of the value equation that consumers can see and maybe it helps on the margins with self-selection of the rate plans, but there's just so much other incredible value that drives consumers up those rate plans. So again, I think it's a great complementary product. And we, as T-Mobile is, is on to the next thing.

So I want to close the book on this topic, but I imagine this is probably very top of mind for a lot of people in the room. And that is -- are the LEO satellite services competitors or are they complements?

Yes. They are absolutely complements. And that's why we're excited that Amazon and Globalstar partnership is getting in there. You have AST getting in there. So I think it will be -- they'll have a great competitive set there for the complementary service. But when you step back and think about -- for example, what makes our network now the best network relative to a Verizon or AT&T and you think about, well, how does that compare to what a LEO satellite can do. And I know there's been a lot of talk about, well, in building characteristics and the inability of satellite to cover that. But just if you step back and think about, we have 400 megahertz of mid- and low-band spectrum deployed across 85,000 sites and like 57,000 at last count small cells, coupled with the Dr. Saw magic of continuing technology advancement, that's -- I mean that's a massive build and a massive terrestrial network. And I just -- we don't see this as really a competitor, but more as a complement.

So I'll put you on the spot. I got a very clear and decisive answer from your competitor this morning. Is there a scenario where you would give an MVNO agreement to a LEO satellite operator?

Yes. I think we -- I mean, we've answered that before, and Srini has where -- we're just not seeing the pattern match between what makes us think about what could be a good MVNO partner, and that's usually attracting certain specific demographics or segments or some subsegment of the consumer base or business base that we don't have an advantaged ability to go get after. And you just don't see a pattern match between the satellite constellations and that. So generally, it doesn't seem to fit.

So if I was Jim Carrey, I would say, so you're saying there's a chance.

That's not what I'm saying at all. I'd say the opposite.

The business opportunity has always gone hand in hand with the rural opportunity. So let me ask the same question about the business opportunity. What inning are we in, in the business opportunity?

We're in early innings of the business opportunity. Remember, we laid out at our Capital Markets Day update, we're expecting double-digit revenue growth from the business opportunity. I think we're well on our way. And it's really driven off the fact you mentioned innings, so I'll have to quote our automated ball strike system. But it's when you think about...

That's right, that's [indiscernible]

That's worth. Yes, T-Mobile for business.

Yes. That's right. A lot of baseball fans. Thank you for that.

A lot of baseball fans.

I'm one of them, by the way. Thanks so much.

Hopefully, you don't hit the automated system.

It's so much better. It's really good.

It's pretty cool. But what really drives the business opportunity more so than because it's not just let's go duke it out over phones and tell CIOs that we have a better network and you should replace all of the phones in your business base. It starts with and where we're heavily advantaged on this is, what is the problem we're trying to solve for you? And what's a real business problem that we can help you solve? And then other stuff comes, the phone business comes. So when you think about automated ball strike or what we just did with the PGA, they have to go out to a tournament that string miles and miles of lines everywhere and then you have static locations based on those. Now you have 5G-enabled broadcast that can run around like it just enables a different solution for them, much more simple, but also enhances the experience. And then the other business come. We talked about underwing operations at airlines that we've been able to replace WiFi.

So it's really the innovation where we're uniquely -- because of the technology advancement on a network uniquely qualified to solve, that is also driving then the other aspects of the business. And that's the larger enterprises and government, but also in like the midsized space where we just introduced super broadband. So taking away the complexity, especially at a midsized business that doesn't have massive IT departments to go manage ISPs and all that. But here it is a combined solution. It's a T-Mobile innovation, plug and play with two connections. You don't have to manage it. It's solving a real problem that they have. And then the phone business comes, too.

I want to turn my attention to convergence. Your new financial reporting structure emphasizes convergence really clearly. It focuses exclusively -- almost exclusively on postpaid accounts, which include both fiber and FWA as well as wireless, rather than subscribers. Talk about that. Is the new intent of the reporting structure to emphasize convergence? Or is it some dissatisfaction with the way the industry is reporting sub numbers to the point where sub numbers are just not viewed as meaningful anymore?

Well, it's not emphasis on convergence. And by the way, we've long been reporting accounts and ARPA. It is really trying to align. And what we saw out there in the industry and what we saw even in Q1, which was so funny to me is you really see a misalignment, particularly when you have a hyperfocus on lines. You even noted this with one of our competitors on how do you gain so many lines and lose a bunch of accounts? Well, consumers don't think about their relationship with a T-Mobile or our competitive set as I have 7 different lines, for example. They think about the relationship on an account basis. That's how they choose to switch their entire relationship. That's where they choose to add. And it's not just fiber and broadband, it's all sorts of other connected devices, of course, multiple phone lines where we've been so successful in family bundles in the U.S. and us, in particular.

And so it really is not only the way consumers, buy but then it's most directly translating to. Am I actually creating value instead of losing accounts growing lines. I mean, if you look -- I kind of had fun with this at our earnings call, but -- you saw what we delivered from a Q1 year-over-year perspective on service revenue, EBITDA, free cash flow margin. Those are the value-creating things that everybody should be looking at. And when you focus on -- hyperfocus on just lines and you're losing accounts, Well, suddenly, you had like a Verizon when you adjust Frontier out that was down service revenue year-over-year, or you have AT&T, where you take out that massive contract asset increase, you have EBITDA down year-over-year. You have the highest churn increase. So to us, it's -- let's focus on accounts ARPA directly translates the best into postpaid service revenue creation and value creation, and mirrors how customers buy, but it's not some sort of convergence thing. If anything, it's a bundling thing because that's how consumers think.

Okay. So I'll take your argument that it's not about convergence and that your focus is not by putting wireless and wireline and FWA together. It's not a convergence signal, if you will. But you've called convergence a myth and yet you've also talked about the opportunity to pick up additional fiber assets if the opportunity arises. So how do I reconcile those 2 things? If there's really a benefit to be had by using the T-Mobile brand and attaching it to fiber, either because T-Mobile wireless helps sell fiber or vice versa, then isn't that convergence?

Yes. Well, I think we've long been clear on our position on convergence, which, by the way, has been in the run rate of the industry for like over 5 years now, and you can see our results is that it is, for us, not about while we need some sort of bundle because that's all it is, bundle of wireline and wireless to be able to effectively compete because -- and as we step back, you say, well, you as a consumer don't get any benefit, no functional benefit from merging wireline and wireless, used to be maybe long ago, you wouldn't have to write 2 checks, but the vast majority of consumers are on auto pay. They're not thinking about writing paper checks. You don't get a functional benefit from it. So what is it then? Well, it's a bundle and an ability, in many cases, to get a discount. And so for us, it isn't about, well, we have to have that to play effectively in the competitive dynamics because that's how consumers want to buy. Consumers aren't wanting to buy that way. They have considered purchases around both. Mobile is the much more considered purchase because of the mobility aspects of it and how it needs to work for consumers. And by the way, you saw us lead in broadband growth as well as mobile growth once again in Q1.

But that doesn't mean that there isn't a great ability to make money and bring value to TMUS by hand selecting whether it's 5G broadband or certain fiber pure play. Remember, we don't have legacy assets we need to defend or try to overbuild and then sell a story around. We're looking at where can the brand, consumer relationships, the experience, all that focus and simplicity actually create value by taking on certain specific fiber providers. And 5G broadband is a big cornerstone for our broadband strategy as well, but it isn't some sort of mythical, well, we need convergence. And by the way, if you believe in scale, if you believe, well, you need scale in this place, but we're going to have 18 million to 19 million customers between 5G broadband and fiber-to-the-home, excluding the two deals we just recently announced, that's a lot of scale.

Yes. I'm going to come back to the 5G broadband in a second, but I'm going to just hit this topic one last time because I know it's a question that I get more than any other question probably about you. I suspect you do too. And that is, as emphatic as Srini was on the conference call about we are not interested in cable. I get the question constantly. And I suspect it comes from a place of saying, okay, but cable is the only scaled alternative to having a wireline footprint. And there are clearly investors out there who believe that there is a need for a wireline or at least there's a scenario where there's a need for a wireline footprint. Is FWA a fully sufficient alternative to that and indefinitely permanently a solution?

Well, we certainly see it that way. In fact, obviously, we have the confidence to just increase our guide with respect to 5G broadband up to 15 million subscribers. But what's most impressive -- remember, this is a technology set that's rapidly evolving. And when we just do an arc of 2 years, we've increased our customers dramatically. They've increased usage according to what we expected. And yet our speeds on fixed wireless have increased by 50%. By the way, they're also 50% faster than the next fixed wireless competitor that we have. And what's really cool is when you look at our latest generation routers, our latest gen CPE, which are obviously the best tech at the moment from a CPE perspective that rapidly evolves. They're able to harness the best tech that we have in the network. You have actual lived over WiFi download speeds of near 400 megabits a second, that's over Wi-Fi. So take away the marketing spin of fiber, which is, okay, if I plug my Ethernet core directly. And when you look at what fiber lived experience over WiFi is, it's right there. And this is something that's increased by 50% in 2 years on a rapidly evolving technology. So to us, 5G broadband is a durable long-term technology, especially the way we approach it with fallow capacity and it's a smart way to monetize all that excess capacity that you have. It's rapidly improving. And by the way, has the highest NPS scores of any category, even above fiber.

Why is -- AT&T is still reasonably new to that category, so I'll leave them out for a second. But Verizon is seeing, I think it's at least 10 straight quarters of decelerating growth, you haven't. You've actually started to reaccelerate a bit. What's driving the -- is it directly versus Verizon and that you're competing better against Verizon? Or is there something different that's making the reacceleration for you look so different than what Verizon has experienced?

In terms of where we're getting our share on 5G broadband, the majority is still cable. And when you step back and say, well, why is it different than Verizon? Maybe my answer would be, well, it's the same as why is it different on mobile, where we're hyper focused on we're driving the best product. And I can't speak as to how obviously they do their selections. But we have the best and most advanced network with the best spectrum. The densest grid, and we have Dr. Saw and team who are massively pushing technology forward and will lead into 6G as well. And you have a fallow capacity model that is very, very, very focused, mid-30 million hexbins, we call it, where we're modeling out at that hexbin level, what is capacity, what is utilization going to look like? And when we have excess capacity there, far into the future, that's where we approve somebody for 5G broadband. And that's why you can monetize the capacity while your network speeds are increasing, your 5G broadband speeds are increasing. I think it's the focus on how we approach the tech. Of course, how we approach value with respect to 5G broadband is similar to mobile and experiences, and it's simple. It's a plug-and-play, a great VAT life, onboarding experience, and the proof is in MPS. Everything we do all distills down to, well, what do customers think? Well, customers think this is a category and our product specifically that they appreciate more than fiber as a category.

Verizon said this morning, my math was wrong. I'll stick up from my math. But the...

I would, too.

But I'll ask you the same question, which prompted that response, which was average usage of fixed customers and average usage of mobile customers would suggest that as much as 2/3 of all the traffic on your network today is coming from your FWA customers. That -- and maybe 6% of your revenues, and that was as of almost a year ago at this point. That doesn't give you pause to say, wait a second, is there a mismatch of network resources here relative to the revenue we're getting for it?

No, not at all. Quite the opposite. So it's not near 70%, but it's up there. And I don't think your math is that far off on any of us. What this represents is -- because, again, because of how we approach it, which is, well, this is capacity because of where we are from a spectrum position and macro position and technology position, it's basically unutilized capacity. And so it would have been there, you would have been paying for all of it, vis-a-vis the spectrum, the site leases, all of that, the backhaul and not monetizing it at all.

So what it actually represents is a brilliant way to monetize that capacity. And one other thing to, of course, note is 70% of traffic is a far cry from 70% of network capacity. Obviously, as a percentage of total network capacity, it's massively lower. So to me, it should be, hey, why couldn't we do this earlier? There was reasons we couldn't do this earlier and why we invented this category of this is a smart way to create a multi multi-billion-dollar business with postpaid phone like ARPUs and CLVs, ARPA accretion, customer satisfaction, all by using more smartly the things that you had sitting there unutilized before.

So it's a related topic, but it sort of segues to AI, which I think is a really interesting topic for wireless. Part of the reason you have excess capacity, at least relative to what we would have predicted a couple of years ago is because the growth rate of mobile traffic consumption on traditional devices decelerated somewhat. There's an argument that it will radically reaccelerate, whether it's from delivery drones or driverless vehicles or robotics or meta glasses or all kinds of different applications. I know John Saw would say that's coming. Do you see that coming? Is that the sort of the house view that there is about to be this explosion in network demand?

We're not sure. The reality is we haven't seen it yet. And a lot of the workloads from AI at the moment aren't all the way through to an end user device. And where search has gone, it's kind of just replaced traditional search. So it's been a substitute there. But the beauty of it is this is a network where we're factoring in increased utilization. We have a lot more capacity. We have a lot more capacity with advancement coming, and so we're best positioned. If that really does materialize, then that's a great position to be in from a monetization perspective. But we're certainly and the network team is very cognizant of we're protecting and creating a lot more capacity in the network that this would have to be something like, well, we've never seen ever, ever, ever before to really be problematic. And then there's ways to deal with it. And it, of course, brings up a lot of monetization. Absolutely. Yes, yes.

Yes. Yes. And mobile edge compute and that sort of thing being one of the...

Mobile edge compute.

The AI version of mobile edge compute, which is using some of those facilities for inference and that sort of thing?

Well, it's so different -- I mean, we were never -- we never put in our plan, mobile edge compute way back in the day, and we didn't have to take it out. And we were kind of like, oh, we don't think this is going to potentially pan out because mobile edge compute, as it was originally thought of many, many years ago, kind of like a millimeter wave strategy that was also misplaced.

By the same company.

Perhaps. Was really about, okay, well, I'm going to take 20, 30 milliseconds of latency away from some application that, well, I'll go faster than it can get to the cloud and back. But there was really no -- well, okay, what tangible benefit is that going to bring? There wasn't. What physical AI brings is something totally different. It's not MEC and the advent of MEC. It's a completely different architecture, integrated with the network and doing things that actually can bring and solve real problems.

So for example, if you really believe there's going to be a large physical AI workforce for drones, all the more critical that they have the ability to know where they are and when they are and when they are relative to other things, space time, coherency, as Dr. Saw calls it, I too have a physics degree, but I'm nobody compared to Dr. Saw. But it's -- like, listen, if you wanted a fleet of -- let's just take a robotics use case. If you wanted to have a fleet of robots out there, that would have all the on robot processing capability, sensoring capability to know where they are in relation to everything they need and everybody else. It's just -- it's not feasible. Well, you can do all that processing on the network that inherently, particularly where we are in 5G has a lot of space time coherency in a way that clouds can't provide.

So now you can take compute off the robots, batteries off the robots, sensoring off the robots and enable it with -- at the edge physical AI. I think it's going to be very interesting. None of this is in our plan from a service revenue assumption or anything like that, but it's -- let's be the technology leaders. And let's build the network to be AI capable. We're not incrementally investing as a result of this. It's going to be a byproduct, fallow compute. So I think we're excited about it. Nothing is in the plan about it. We're going to be best positioned for it, but it's different than MEC.

Okay. Back to the gritty nuts and bolts of the reality and where we are today. All three of you and both of your competitors have talked about getting away from the promotional handset model. Talk about that. It looks like what do you think is coming with the next iPhone cycle with foldables and that sort of thing. Is there any way to actually not just get sucked into this kind of perpetual treadmill of handset subsidies?

Yes. You've seen us make moves around this already in Q1 and Q2 optimizing. And by the way, this doesn't mean we're going away from device subsidies. We're just really optimizing it for what consumers really want instead of this broad-based rush to well, who's got the freest phone? I think you had the term of iPhones dropping from helicopters still couldn't get the accounts they needed as a result of that. But -- so be it -- and it really is, let's focus in on what makes T-Mobile special for consumers. And it's not the once every few years device upgrade cycle and how free it is. For some subset of customers, that's important. It's always going to be important. We don't want to subsidize anymore. We have no appetite for that. We have an appetite to focus and hone in on what are all those incremental value elements and experience elements and network elements that you get with T-Mobile, that is how you live with our service and our product every single day versus once every 3 years. And that's what resonates. That's what allowed us to have delivered 217,000 postpaid account net additions in Q1, do that, and this was important. Do that with inflow ARPUs actually 20% higher than outflow ARPUs in Q1. So you're attracting really great consumers. And you can't do that just with here's a free phone. You have to demonstrate to them the product and the value that you're bringing. And so that's really going to be more of the focus point. We've trimmed an optimized already in Q2 on device offers, I can't read the future. I don't know what a foldable device is going to look like or cost or anything like that. But the focus from us, you'll see a lot more of, while we don't want to subsidize more what we want to do is demonstrate to you why this is the best choice on a day-to-day basis and how you live with T-Mobile.

And how do you, as CFO, prioritize? On the one hand, your value proposition and best value positioning is absolutely central to who you are as a company. But on the other hand, you have commitments to your investors and you have guidance and that sort of thing. How do you prioritize I think especially in terms of back book versus front book of your customers because your front book is actually now not radically different than your peers, but your back book is still cheaper. How do you think about the -- that -- hitting that right balance?

Well, I think it's something that's inherent. That's how we've been focused all along. We're not interested in short-term cuts on, I don't know, CapEx to make free cash flow work. That doesn't create value for the company or shareholders in the long term. That's not what we're interested in. And I don't think there's a choice point to be made there. I think it's about how do you actually continue to deliver what customers want -- and of course, that's going to include up-tiering on the rate plans, more value there'll be. And we've said there might be continued rate plan optimizations on the margin. But what's really worked and what's differentiated us from a service revenue and profitability and free cash flow delivery is that our approach to the P&Q and value and experience I think optimizes value creation. And so to me, there isn't some sort of trade-off we're making every quarter on, well, if I just cut this, I can make guidance. It is about the ethos of how we operate as a company. We're going to make the right smart investments in customers, the network and the service revenue comes, the volume comes, the free cash flow comes, I think we've been able to demonstrate that. But so there isn't -- to me, there isn't a trade-off. It's how you approach the business the right way, which is honed in on value creation.

Very quickly, I just want to touch on fiber. It's not -- I know it's not the foundation of what you do, but you introduced new T-Fiber pricing a couple of weeks ago, April 30, I think it was. Dropped your 5-year price guarantee, but also you dropped the requirement that it come with wireless to get the lower price. So you've got prices as low as $45 and that sort of thing. Can you make money at those kinds of price points? And where do you get the customers? Is that a -- you bring them in and then price them up later? Or is that -- are you setting a new price point in the market?

No, I think what you're seeing from us there, and by the way, it's obviously -- we're new to this space. We're making a little bit of a splash. I'm not going to talk all the competitive nuances of how we plan to price in the future. But we introduced tiered structures, which were so successful bringing customers in and then having to self-select up the rate plan. So I think we're very excited about what we're seeing traction-wise there. But call it, like there's promotionality. There's like, hey, we're here, new to the neighborhood, let's make a little bit of a splash while letting customers self-select up that plan, which is so fabulously successful for us in mobile and 5G broadband.

So we've got time for one last question, probably everyone's favorite. You've got a $22 billion discretionary and flexible envelope. How do you weigh that versus further M&A for expanding your wired footprint, for acquiring spectrum, for deleveraging? Talk about your priorities. And for you, I think it's sort of mortgage board buffet of, right? There's a lot of attractive opportunities.

Well, there's a lot of opportunities. But for us, it's all about very consistent capital allocation framework, again, focused on value creation for the company. And so we always start with leverage. We do believe 2.5 is the right place for us. We just recently had an S&P upgrade, by the way. So it's a fabulous journey of where we're at from the debt capital markets perspective. And then we think about investing in the business because that drives tremendous returns. That includes areas like spectrum. We can make smart M&A decisions provided that they have the right IRRs and value creation. So you saw us do that with things like smaller scale and T ads as we scale the advertising platform and grow there. Could be things like fiber, but it has to fit within the ethos of exactly what we're looking for, for fiber or shareholder returns, which we just increased. And we've now repurchased, I think, a little over 240 million shares since the program inception. So we're just over 1 billion shares out there, total outstanding, which is a fabulous place. We've been able to enhance the dividend every single year. And so we think about it from all those perspectives and focus on value.

Well, I appreciate the time you spent with us this morning and -- or this afternoon, and I look forward to having you back for the 13th visit next year.

Thank you so much for having us, Craig.

Thank you.

[Audio Gap] [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] you may also submit a question via x by sending a post to @T-Mobile.ir or at Srinigopalan using #TGTM-US. I would now like to turn the conference over to Cathy Yao, Senior Vice President of Investor Relations for T-Mobile US. Please go ahead.

Good afternoon, and welcome to T-Mobile's First Quarter 2026 Earnings Call. Joining me on our call today are Srinivasan Gopalan, our President and CEO; Peter Osvaldik, our CFO; as well as other members of the leadership team.

During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We encourage you to review the risk factors set forth in our SEC filings. Our earnings release, investor fact book and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found on our Investor Relations website. With that, let me now turn it over to Srini.

Thanks, Cathy, and good afternoon, everyone. We here in Bellevue today, ready to discuss another extraordinary quarter for T-Mobile. This quarter is a powerful demonstration that the strategy we outlined for you in February is working.

Our strategy is driven by widening differentiation. -- providing customers with the best network, best value and best experience all of the same place so that they don't need to make trade-offs anymore. We made strong progress on this strategy this quarter and nothing demonstrates this more succinctly than our NPS score, an industry-leading 45, over 20% higher than that of our next closest competitor.

This widening differentiation gives us access to unprecedented growth opportunities, and our industry-leading growth this quarter is a testament to this. One of the largest of these growth opportunities is the 20 million-plus families and businesses who are network seekers not currently with T-Mobile.

This is an opportunity with a lot of runway and 1 where we're making great progress. In fact, this quarter, amongst recent switchers who chose to come to T-Mobile from another carrier, the highest percentage ever said they chose us for 1 reason, network quality. Similarly, across multiple third-party surveys like HarrisX and from the analyst community, -- we've seen a strong improvement in the perception of our network. That what's led us once again to grow our share of postpaid households in each of our cohorts in the top 100 cities. In smaller markets and rural areas, where we have only 24% share of households, we continue to accelerate and capture more switching share with word-of-mouth driving strong momentum.

In addition to our tremendous momentum in consumer across network seekers and other underpenetrated cohorts, our low share in T-Mobile for Business also continues to give us substantial growth runway. This quarter, we continued to capture share with our network superiority led value proposition in T-Mobile for Business.

Our industry-leading nationwide 5G advanced network continues to allow us to drive TAM creation with advanced network solutions and leveraging that as a thoughtful cross-sell opportunity into traditional voice and broadband offerings. One example of our innovation and action is Major League Baseball's recent rollout of our automated ball strike system, which uses the T-Mobile network to allow challenges to Empire's calls.

Let's now turn to broadband. For yet another quarter, we were the fastest-growing ISP in America, adding over 0.5 million total broadband net additions with 5G broadband net adds accelerating year-over-year. 5G broadband continues to lead the industry in terms of customer experience, topping J.D. Power, Forbes, CNET consumer reports and OpenSignal, just to name a few.

Our 5G broadband speeds also continue to lead the peer group at over 50% faster than the next closest competitor. Fiber is tracking great, leveraging the T-Mobile brand to draw strong interest. And I'm excited about our announcement earlier today that we're entering into 2 additional JVs with leading infrastructure partners to acquire Gonet Speed, Greenlight networks and i3 broadband as part of our returns-focused capital-efficient approach.

Every piece of the business I've talked about so far helped drive our tremendous postpaid net account additions of 217,000 in Q1, which was up 6% year-over-year. But in addition to volume growth, as I said in February, we also have a double-digit advantage in back book pricing over our leading competitors.

In Q1, that translated to a really strong postpaid ARPA growth of 3.9%, a powerful proof point that our unique and durable value prop is resonating as we deepen relationships with customers. T ads and financial services, smart and thoughtful adjacencies that piggyback of the success and scale of our brand and ecosystem are also delivering strong incremental growth.

Now even as we capitalize on our differentiation to drive growth, we consciously double down on the sources of this differentiation across best network, best value and best customer experiences. Let's start with the network. We're continuing to push the envelope of what's possible. We're excited to be rolling out live translation on data soon, our first network native AI application that we demoed for you at our February event.

Live translation uses language learning models embedded into our core and translate your voice into 1 of 80 different languages anywhere in the world. All you need is just 1 connected T-Mobile phone. Importantly, this is just the initial step in us building AI capabilities directly into our network core. Longer term, we see a world where our network becomes the connective tissue for physical AI and accommodate inferencing at the edge.

As a step towards this, we're delighted to share today that we're connecting our 5G advanced network to figure AI's F3 humanoid robots enabling seamless and reliable connectivity from the moment they power on. This partnership, amongst others, will allow us to explore how the T-Mobile 5G advanced network and its capabilities, including assets like the network edge can support the broader evolution of physical AI.

This is an important stepping stone towards building and even more capable network of the future with 6G. On value leadership, which we guard zealously, we further strengthened our credentials with the rollout of our better value plan earlier this year, which offers access to our premium wireless experience to even more customers at a great value. Our other key differentiator is our customer experience.

T-Life is continuing to drive digital interactions with about 25 million monthly active users engaging with the app multiple times a month. T-Life will also serve as the unified platform to support growth into considered adjacencies like financial services and advertising. In retail, we're well underway in our journey towards more experienced stores with several hundred already up and running. Our experience stores see higher premium mix, higher NPS scores than our traditional outlets.

And over time, our mix shift will lead to fewer doors, but also more meaningful customer experiences. So even as our differentiation drives industry-leading growth, we continue to feed and stock it, so that the gap to competition only widens further. Pulling all this together, this is what drives the industry-leading financial growth we've delivered yet again across all key metrics in Q1.

Our postpaid service revenue grew 15% year-over-year. Total service revenue, 11%, a rate that's more than 4x that of our next closest competitor. Our core adjusted EBITDA also grew an industry-leading 12% year-over-year. All of this while continuing to deliver industry-leading free cash flow margins of 24%. Alongside this, incredible financial growth, we returned $6 billion to shareholders in the form of dividends and share buybacks. I'll end with saying our results speak for themselves. The unique differentiation we have as the carrier continues to lead to best-in-class results. Just look at our NPS store. The best part of all of this is this team's hunger and the incredible passion our people have to truly delight customers means we're only at the beginning.

Okay, Peter, over to you, provide an exciting update on our guidance.

All right. Thanks, Srini. As you can see, our growing differentiation not only drove a strong start to the year, but also gives us the confidence to increase our guidance across multiple fronts. Starting with accounts. we are raising our expectation for total postpaid net account additions to be between $950,000 and $1,050 million on the strength of the underlying momentum in the business. .

Turning to service revenues. We continue to expect to deliver full year service revenue of approximately $77 billion, representing 8% growth with Q2 expectations of approximately $19 billion or up 9% year-over-year. As part of that service revenue growth, we continue to expect strong postpaid ARPA growth of between 2.5% and 3% for the full year. We are also raising our full year core adjusted EBITDA guide, which is now expected to be between $37.1 million and $37.5 billion, an increase of $100 million at the lower end of the range. As part of that, we expect Q2 core adjusted EBITDA of approximately $9.4 billion, up 10% year-over-year.

Our expectation for full year 2026 cash CapEx remains unchanged at approximately $10 billion as we continue to invest to further differentiate the network. And we now expect adjusted free cash flow to be between $18.1 billion and $18.7 billion for the full year, also an increase of $100 million at the lower end of the range.

And finally, last week, we announced we are increasing our 2026 stockholder return authorization by up to $3.6 billion to a total authorization of up to $18.2 billion -- and as always, we will continue to follow our disciplined capital allocation philosophy. To sum it all up, we continue to see strong momentum in the business and cannot be more excited for the future.

So with that, I'll now turn the call back to Cathy to begin the Q&A.

Thanks, Peter. All right, let's get to your questions. [Operator Instructions] We will start with a question on the phone. Operator, first question, please.

The first question today comes from Craig Moffett with MoffettNathanson.

Let me start with the reports that you're considering a merger with Deutsche Telekom. Can you talk about the logic behind that and as well as the logistics, would that require a vote of the majority of the minority among Board members as independents and exactly how would that work? And would there be any premium for U.S. shareholders? .

Thanks, Craig. Let me pick that up. As a matter of policy, we don't comment on market rumors or speculation nor is there anything specific to comment on anyway. However, the article has raised a lot of questions inbound on governance. We've looked into the governance and what I've been told is, hypothetically, if someone were to ever consider such a transaction reported in the article, that would specifically require a separate approval process by disinterested shareholders, what many of you refer to as majority of the minority.

The next question comes from Sam McHugh with BNP. .

On the fiber JV you announced today, I just wonder if you've seen much movement in kind of the bid-ask spread on 5 assets as we started to see maybe fiber ARPUs come under pressure. I don't know if some of the commentary around broadband growth and pricing impact your appetite for more fiber JV going forward.

Thanks, Sam. And as you well know and as I've read in all of your stamp surveys. The reason we're doing fiber is much more because we see an equity value creation opportunity rather than the myth of convergence. And that sort of drives the way we think about these assets.

So when you think about things like beta ask spread or multiples or compression and the rest, each of these assets is a unique case. The way we think about it is, do we believe that this asset has a strong likelihood of giving us our target IRRs? And those are in the double-digit level. And we look at each of these very, very specifically because as all of you guys know, -- each of these assets operates in a specific geography, operates in a specific competitive environment in a specific pricing environment.

So it's really hard to give you an overall sense of our bid-ask spreads changing, are multiples compressing, what's happening with pricing, et cetera, et cetera. What we know so far is our fiber JV is the ones we've launched so far are well on track. They're delivering exactly what we expected.

The lift from the T-Mobile brand and our distribution is completely in line with our expectations. And on the new JVs that we've done, we are very confident of our double-digit IRRs. That's kind of the criteria we'll use going forward as well. There is no magic number we're chasing on homes passed because I could kind of put fiber on the street and claim multiple homes passed. We're looking for places where we can create true equity value. And that will drive -- do we have appetite for cases which create true equity value and which tick the box for us in terms of actually being an opportunity that is monetarily sound, Yes. Are we going to chase a home sparse number? Absolutely not.

The next question comes from Sean Diffley with Morgan Stanley. Sean, your line is open. You may ask your question. .

Let's move on to the next one.

The next question comes from John Hodulik with UBS.

Srini, could you comment on the competition you're seeing in the sort of postpaid market. I think both of your competitors have talked about sort of less handset subsidies going forward and ride when you do what they saw as a sort of less competitive market as they look out.

So just any thoughts on that side. And then on the broadband, the greater than $500,000 was a great number. And sounds like you got some real strength in fixed warehouse. How does the runway look there? Do you expect similar growth this year as we saw last year, and any issues sort of constraining the network in terms of your ability to grow that bid?

Thanks for that question, John. So first on competition and the broader way we think about competing in this market. I think sometimes we tend to over-rotate on promotions and specific subsidies and how all of that is playing out. In the end, the direction of flow gets driven by differentiation. And this is where our unique position of kind of best network, best value, best experience and therefore, no trade-offs for the customer really drives traffic in our direction.

And that's what drove not just the 6% growth in accounts year-on-year, but also the near 4% growth in ARPA. That's the fundamental way we think of competing. Now all of that happened in a quarter where I'd say January was particularly competitive and particularly heavy in 1 dimensional competition based on subsidies. I think Feb and March and going into April, we've seen some cooling down of that environment. But through that quarter, we focused very much on what differentiates us, and that differentiator is a much broader set of things than purely subsidy.

And the way we think of it, and you saw a lot of our advertising, it was about savings you make every day rather than savings, you simply make at the point you get a phone. It was about our network. It was about that more rounded broad proposition. And then we decide how hard and heavy we go based on CLVs, right? That ultimately is the test of how much volume we want in any quarter in the context of our overall guidance. That should give you some sense of the competitive dynamic. But Mike, I don't know if you wanted to add anything specifically on the subsidy section. .

Yes. No, I think you've got exactly right, Srini. I mean the way that we think about this is customers -- we're providing customers the most important technology in their lives that they use every single day. And so how through both best network, best experience and best value, can we prove that to customers every single day. Not once every 1,000 days when they're replacing their phone. And so that's where you've really seen us focus is having a great overall value message for our customers where they can save more with T-Mobile than anywhere else.

In fact, $3,800 T-Mobile customers save relative to competitors over the last 5 years. And they can get a suite of benefits that they only get because they're T-Mobile customers. And these are benefits that really matter. They're not throwaway benefits, free Netflix subscription et cetera. So I think the results that you saw in Q4 as well as in Q1 really demonstrate that, that's important to customers, and that's why they're choosing us at the rate that they are right.

Your question on broadband, let me just touch on the big picture, and be great if you can talk about some of the stats we're seeing in terms of how many more users and usage. We're very confident on the runway on fixed wireless access. Just to give you a sense of this, right? We said we would get to 15 million customers by 2030, a couple of months ago. Now how do we get to that $15 million?

We basically divide the country to almost 36 million expense order of magnitude, -- and we look at a Hexben level, we forecast the level of wireless traffic and what is left is really fallow capacity. And then we subject that fallow capacity to saying, yes, we've got that fallow capacity, but let's put a reasonable market share on how much we can get to in fixed wireless access.

And then we commit to a number. And that calculation we did for 2030, remember, assumes we buy no further spectrum. It doesn't assume 6G. It doesn't assume any further spectral efficiency improvement. That's the basis on which we got to the $15 million. We're tracking strong to that. And this quarter was another demonstration of it. So we feel very good at it, but about it, but Andre.

No. As Srini said, I think, one, we're very confident about the 2030 number. I think 1 of the reasons that makes us very comfortable is what we're seeing today in reality. So not just the outstanding commercial performance we've had for many quarters in a row. But also the fact that all the leading indicators in terms of capacity and customer satisfaction continue to go up.

We continue to increase our NPS, the average speeds our customers have on our product continue to go up quarter-over-quarter. -- the new routers we just launched, as we mentioned in February, have even higher speed than the existing routers. And all of this, we've done while increasing 80% the number of customers we have on the network in 3 years. So -- as Srini said, we plan very carefully. We have a very detailed plan for the next 4 to 5 years in terms of the capacity of the business and beyond that time frame to make sure that this is completely sustainable long, long term, and we're seeing it come through every day, every quarter for our customers. So very, very confident on the runway we have. .

The next question comes from Michael Rollins with Citi. .

Two topics, please. The first one, I was curious if you could unpack the contributors to the ARPU growth of about 4% year-over-year in terms of price actions of curing, lines per account, the broadband update, just some color on what you're seeing there. .

And then second, just curious if you can share what was happening with the postpaid account churn on a year-over-year basis. And given the comments of what you're just describing competitively in the answer to an earlier question, is that something that actually started to get better maybe through the quarter and into the second quarter?

Great. Thanks, Mike. Let me pick up the postpaid account churn piece, and I'll hand off to Peter for the ARPA piece. So postpaid account churn is doing exactly what we expected. The -- when you look at the underlying postpaid phone churn, that was pretty stable. It was up about 3 bps. Now there's 2 things that are worth explaining, given this is the first time we're reporting this metric.

One, why is account churn higher than line churn? And two, why has account churn gone up more than line churn. The simple answer is basically math. Now there's kind of 2 groups of customers who churn more than the average. One is new customers; and the second is broadband-only customers. Now the reality is the weighting of these customers in accounts is higher than the weighting in lines. Now that's obvious when you look at broadband alone customers, but also with newer customers, we just haven't had enough time to grow that relationship.

So the lines per account with newer customers tends to be less. So the 2 groups that churn quicker than the average have a higher weighting in accounts than they do in lines. That's why account churn is higher than line churn. Why is it increased more than line churn? Again, it's pure math. It's simply that our fastest-growing business by a long distance is broadband, which structurally, and we've talked about this before, has higher churn than wireless.

So those -- it's really a math that explains the postpaid account churn. Line churn looks great. We're really happy with where we are. Account churn is doing exactly what we thought it would do. Peter? .

Yes. Probably just to add to that. I think 1 of your questions, Mike, was, did it get better in March? Well, I think you've heard some of our competitors kind of cherry pick the, well, March is better than December. Well, that's every single year. So yes, of course, we saw churn improvement in March -- in the last week -- and 2:34 a.m. on Tuesday, was even better. .

In terms of ARPA growth, it was all the factors, and that's the beauty of this model. Certainly, if you recall back last year, we did a round of rate plan optimizations that impacted particularly Q2 of last year. So you see a little bit of year-over-year impact on the comparatives in Q1 of this year from that. But it's also continually deepening the relationships, so an increase in lines per account, and that's across all product categories, the continued success that we're having with rate plan self-selection up the tiers continues to be at over 60% of new account lines are on our premium tier rate plans. Value-add service attached. So it's really every element of the equation that we've been talking about before that's driving the ARPA increase.

So again, Q2 will be a little bit different because Q1 didn't have the impact of the rate plan optimizations, but continually for the full year, we're seeing strength of 2.5% to 3% growth. Remember, that includes the anticipated dilutive impacts of U.S. Cellular and the acquisitions of Metronet and Lumos. So the underlying organic growth of ARPA is even stronger than that 2.5% to 3%.

Thanks, Mike. All right. We're going to try Sean Diffley again in the queue. Sean, are you on this time?

Was hoping you could further elaborate on the inference at the edge opportunity, which you referenced. I think you said you signed a figure AI deal. But maybe just flesh out, T-Mobile is better positioned than peers to capture this? Is it your network architecture, AI RAN, your spectrum position? And how should we think about the business model? Is this something where you'd have to buy GPUs. And how big could this revenue opportunity be? .

Yes. So let me deal with the second part of the question, and then I'll hand over to Dr. John Saw. We might be here for a while. So just on the -- here's the vision of this, right, for me, do we need to buy GPUs, et cetera. So we're going to be -- we've already started introducing large amounts of AI into our network.

And as we move closer towards Iran, in fact, even doing things like winter storm fan, you saw AI in our network being a big reason why things like antenna tilt being done automatically, things like optimizing our network, a self-healing network in many ways, is not kind of science fiction, it's reality. It's the way our network runs every day. Now as we do more and more AI in our network and as we build for more and more AI in our network, we will be building compute into our network.

And just as in FWA, we have the concept of fallow capacity. As we build more AI into our network, we will generate a bunch of fallow compute, especially at the edge. Now the fallow compute plus low latency creates an incredible opportunity because if you're thinking of scale, automation -- it's impossible to do that without low latency.

Just think of robots running into each other or even we're still somebody trying to do remote heart surgery without low latency, right? Low latency has to be essential to any form of robotics or automation that you do. So the combination of low latency as well as follow compute, is what makes us excited about the opportunity.

It's too early to size TAM. It depends on who you're listening to at any point in time, but all estimates of this market are very large. But John, do you want to talk about architecture and how we're different.

Sure, Sean. And by the way, we are highly optimistic with the prospects of physical AI just because I think when intelligence moves into the rail world, right, you're going to start seeing a shift from generative AI to physical AI. And when objects move that has built an intelligence, we believe that we have a big role to play. So we are more than prepared to take this on and we saw this coming a while back.

So the big advantage we have is our 5G advanced network that we have built. And we are the only ones that have rolled out 5G advantage nationwide. And with that, we have a bunch of innovations that we have developed with 5G advance to increase spectral efficiencies and capacity like especially for the uplink, which is really needed for physical AI, like things like uplink transmit switching, higher transmit power and uplink MIMO, right?

This is why the latest iPhones and the latest Samsung phones actually perform best on our network. Now we didn't build a 5G advanced network just for faster phones. We actually built it for physical AI and with an eye to the future, right? And now that we have a 5G advanced network we can take on the extra capabilities that is needed to support etch inferencing for physical AI better than anybody else. And we believe that we have a multiyear advantage over the competition for this. .

Next question comes from Kannan Venkateshwar with Barclays.

So make in the broadband business, when we think about the model you guys seem to be adopting. It's obviously a capital-efficient model of joint ventures combined with iWireless -- but the trade of, I guess, is there's also some embedded inefficiencies of managing all these JVs, and it's not clear what the economics are, if it's symmetrical, but would be great to get some sense of that as well. But the bigger question is -- is there a path here where maybe you look at more scaled deals instead of trying to scale this in bits and pieces across multiple JVs .

Yes. Let me pick that up and Andre, you can add on to it. -- so I think it's important to understand scale in the context of fiber. Scale in the context of fiber comes from 2 things. a national brand and local scale. Because scale and fiber is about local zoning, local permitting, local expertise in terms of digging trenches -- the fact that you have it in 1 geography means nothing for the next geography you go into because quite often zoning and permitting are completely different things.

The important thing for us is local scale. We are not chasing a random number of x million spread all over. We're very focused on where we are creating that local scale so that we're meaningful in that community so that we can drive the right economics. To your point on scale deals, I think there's kind of 2 or 3 different cuts to it, right?

Are we interested in a scale deal purely for homes passed on fiber? -- no? Are we interested in mixed ILEC and different deals, no, we want to be first to fiber, and there would be exceptions where we'd look at it where some part of the footprint potentially has some has some nonfirst to fiber. But on the whole, we want to focus on first of fiber and driving the economics out of that. And that's really the coherent strategy that we're executing. FWA, of course, is a national product. Andre, do you want to add anything to that in terms of...

Yes. I think to just to underpin a couple of things you said, Srini. One, as we said before, we look at all of these partnerships, all of these JVs from a creation of shareholder value perspective. And that also includes making sure we have partners that are experts in deploying fiber, experts in managing this deployment business but also have strong, as Srini said, local footprint and the ability to build in an efficient manner in each of these geographies.

So we're not looking at master plan on having fiber everywhere. We're looking at geographically with each of the partners, where does it make sense to build, where we can create value out of these builds. And the second thing, as Srini said, which is very important for us is also partners that bring the right technology. So when we look at each of these assets, it's very important for us that these are pure-play fiber assets.

We've done it with the first 2 deals with Lumos and Metronet and we've done it now with these 2 JVs that we set up. On your other question on just addressing it on inefficiencies, the way we've built this is to make sure that we can take the advantages of scale where that scale is meaningful. And that scale is meaningful in distribution. That scale is meaningful 1 brand. That's why T-Mobile has taken over all of the retail consumer operations for these assets.

That scale is also important in terms of, for example, the way we look at internal processes and IT. And the way we've integrated the JVs is we have a common IT platform that runs across all of the JVs that allows us, from the perspective of our customers, our front line and our processes that these JVs all look like 1 single operation from our perspective and from our customers' perspective.

So we take scale where scale matters, where it's more important to have local knowledge and local scale, we will take that. Thank you.

Kannan just struck me that your reference to large deals potentially was you asking the question I get quite asked quite often, which is the cable story. And I think I've said this at least a couple of times before, we're not going to go do scale for scale sake. Specifically, cable is not something we're interested in. We see our strength as attacking incumbents rather than becoming an incumbent. We see a huge opportunity to attack incumbents across fiber and FWA. That will be our key play.

Thank you, Kannan. We're going to go over to X from Walt Paycheck. T-Mobile is packaging Starlink as a backup for businesses using 5G Internet branding at super broadband good sign for T-Mobile SpaceX relationship, MVNO Next?

Thanks, Walt. Let me deal with some of that and then hand over to Andre on some of the pieces on super broadband. So first, I think it's -- I know everyone around this call gets it, but this is something that gets confused quite often, which is SpaceX, Starlink, -- are we talking broadband? Are we talking direct to sell? We see them as 2 completely different businesses. we see the broadband business as actually a substitution to broadband, especially in the rural areas.

We see direct to sell very much as a complementary product -- and I think if you listen carefully to some of the things, SpaceX talked about at MWC as well, they were very clear in positioning it as a complementary product. Let me deal with the MVNO question, and then I can pass on to Andre on super broadband.

So first on direct to sell as a whole. Look, our partnership with SpaceX is very strong. We've worked closely with them to really invent an entire category. And that's been putting an end to dead zones. We're pleased with that. Most of the usage we're seeing is a national box -- and if anything, courtesy of the great network that Dr. Saw has built, we're seeing a lot less usage than we were originally thinking. But it's a great complementary product.

And as you look at the future, -- we're seeing multiple other space providers show up. And the way this will evolve, we think is as a complementary product, it will become more and more of a standard feature of a whole set of offerings. So in some sense, less differentiated. And we're good with that at the Un-carrier, because this is our history. We go out there, innovate, create a breakthrough, solve a customer problem and then the others follow. And while they're following, we're on to our next big thing. So that's how we see DTC as a whole. On MVNOs, we've got a very clear philosophy or approach to MVNOs.

MVNOs make sense for us when it's a TAM expansion. A TAM expansion happens because it's a new customer base that we couldn't target earlier. It's a new channel. I mean an example of this is what we did with cable focused on SMB. It's not obvious to me how an MVNO with SpaceX or any other LEO operator fulfills those conditions. Andre, on Super broadband? .

Thanks, Srini. On super broadband, as Srini said, one, just a grounding element. I know as Srini said that most people -- or all of the people on the call understand this, but just as a grounding element -- this is a broadband product. So it's not a direct to sell product, and it's B2B only. So we see an explain a little bit why we see that this is an opportunity in B2B, but we don't see any translation of this into the consumer space.

First, 2 things. One, this product is only possible because it's anchored on our 5G FWA product and the best network in America. And that's the core, core anchor of the product. Second thing is what we're bringing to the market today and we announced this morning is anchored on an innovation by T-Mobile, which is our ability to within 1 single device.

And within 1 single network policy to be able to aggregate and coordinate between 5G FWA, for businesses and the second connection, which in this case is satellite. And that allows customers to solve 3 problems that businesses feel today.

Number 1 is reliability and redundancy, which this product has incorporated by default. Second thing is coverage. Obviously, the reason why we're using satellite and StarLink is that allows us to provide the service nationwide in every single ZIP code in America, which is a challenge we see some of our customers facing. And third is that it's very simple from a customer perspective, because this means that to cover all your locations with primary and redundancy, you only need 1 contract, 1 provider and 1 management platform.

And so we're very excited about this. If you remember, when we talked in February, I said that business Internet was 1 of the areas where we were looking into where we thought and believe there was opportunity and that we were going to announce something in a couple of months, and we did so today. Thank you.

Thanks, Andre. Operator, let's go back to the queue.

The next question from the phone comes from Michael Ng with Goldman Sachs.

Just 2, if I could. First, just on cost synergies. How are you progressing against the $3 billion target exiting 2027? And -- how much have you kind of realized to date in 2026? And where are the key sources of those cost savings come from? And then just as a housekeeping item on the JVs. Anything you could share as it relates to how much you're contributing to the JVs or how much they should contribute to EBITDA on a run rate basis once it closes?

Peter, do you want to .

Yes, happy to take it. Let me start with the JVs. Much like we did with the last ones. From an investment perspective, we laid out in the press release that it's about $2.7 billion of investment across the JVs when they close.

And at the time that they close, we'll certainly give you a more wholesome update as appropriate then around -- or what does it mean from a subscriber perspective, increase in our target fiber households past figures and all of those things. But it's a little early because they haven't closed -- so please hold on that. In terms of the cost synergies, I'm glad you asked just 2 months after we laid it out for you on, how is the progress going and what are you doing out there? And frankly, it's going really well. And remember what we laid out at Capital Markets Day, is the source of synergies are across a number of fronts, inclusive of customer care, retail, but you also have back-office efficiencies from AI and transfer formation -- and we're seeing great progress.

I would say, the $2.7 billion that we laid out for you exiting 2027, certainly is on track. I would say most of that will come towards the last part of 2026 and then fully into 2027 and beyond. And by the way, there's a lot more runway and opportunity than $2.7 billion. It's just that's what we see our way to phasing through to '27, leaving more runway into 2028.

Probably not a lot of metrics I'll give you in the intervening 2 months that have created a lot of updates. But we are seeing great progress on many of them. And one, for example, is just the use of the Chatbot, an AI-powered Chatbot that is actually capturing a lot of customer questions and addressing them in a great uncarrier fashion that you'd expect and actually containing about 60% of those already. So just another proof point on the way as we're going.

The next question comes from Peter Supino with Wolfe Research.

A question on the cost of getting new customers. Just running some simple math in your income statement, the cost of equipment sales versus equipment revenue produced a greater loss than a year ago by a few hundred million dollars. And if I look at sort of a rolling 4-quarter average, that number for the last couple of years, it's gradually climbing. So wondering what the underlying trend in the businesses that's driving up that equipment loss? And if it's positive or are growth, I wonder if we should expect that to to continue .

Yes. There's a number of things there. If you just focus on that 1 line item, and then I'll step back and kind of give you a view of the business. And that is a few things. One, you just have a larger base. So you'll notice that our upgrade rate was similar -- and of course, our acquisitions were even higher as we see more share switching to T-Mobile. And so in a world where you do have device-centric promotionality that is driving switching as well as upgrades on a smart value-accretive CLV basis one, you have a larger base, kind of doing the same upgrades you're capturing more acquisitions. So naturally, you're just going to have a higher dollar amount there that's associated with that.

To your point, though, there is an element of we are able -- because remember, we very smartly tend to design. Our most premium device promotions to be associated with our most premium device plans. And customers see that as a great trade-off, inclusive of all the other value that is incorporated in those premium rate plans. And so you do see ARPA increases as a result of that. In fact, we mentioned that we continue to see over 60% of lines on new accounts, taking our premium plans.

So you really have to step back and say, okay, not just that 1 line item, which I think this same dynamic will continue to play out on that 1 line item. But what is it doing to totality of the business? And how is that doing? And I know, Peter, you've looked at this more deeply. And I don't think Q1 could have been a better demonstration of the things we've been talking about for a long time now, which is if you invest in what is your product, I've heard others in the industry say you don't need to invest in your network. It's not important.

And I just -- I mean kudos to them if that's what they believe. -- it's our product. It's what we sell to customers. And the differentiation that we're starting to see with consumer sentiment now following what the actual network progress is, the value that we embed in our plans as well as the experiences mean that it's not just devices that make customers come here. You see us be very thoughtful around the promotions around devices that we do, inclusive of linking up to our top-tier rate plans in most instances. But you see the flow of customers coming to us, because it's not the devices. It's these 3 other elements.

And not only did you see that in top line KPIs in terms of service revenue of 11%, 4x the next nearest competitor, core EBITDA of 12% and the all-important free cash flow generation. But if you double-click down like you do so often into the next level of KPIs you see a tremendously stark difference developing in Q1. And it's 1 of those that is as a result of all this investment and differentiation that we've done mean if you take a look at what we delivered, 217,000 postpaid account net additions up year-over-year and ARPA growth of 3.9%.

That's what delivers the top line service revenue that's so differentiated. If you look at Verizon, for example, they lost 127,000 postpaid net accounts and their ARPU was almost down 2% year-over-year. And so if you -- I know they didn't do this for you, but if you somehow back out what you believe the frontier service revenue contribution was from M&A, their business -- the core business ex frontier actually declined in service revenue mean that's fascinatingly start to show you, by the way, why accounts and ARPA such an important metric to focus on in terms of value creation.

Similarly, when you look at AT&T, they just delivered the highest yet again, the highest year-over-year postpaid phone churn increase in the industry, proving that all the convergence talk is just that, it's talk, but also more importantly, they had declines in postpaid phone ARPU sequentially and year-over-year. And if you look at what they just did with contract assets in Q1, where -- that was a $300 million increase in terms of pulling costs off the P&L and putting them on the balance sheet.

If you adjust for that, EBITDA was down year-over-year there. So it just shows you, if you step 1 level down, you see the formula here that's way more than a device promotionality formula is that best network, best value, best experience means customers are choosing to change their whole relationship coming to T-Mobile, deepening that relationship vis-a-vis ARPA and our ability then because of the efficient way that we run, to translate that not only into core EBITDA leadership growth, but also that all-important free cash flow growth.

It just -- I think Q1 started showing you a lot more of what we've promised with this differentiation would come and that is historically different in terms of financial performance as well. So sorry, letting me let me go off that because it was just not equipment revenue and COGS, you really have to step back and see the broad picture of value creation here. So I appreciate you letting me go on, Peter.

Next question comes from Sebastiano Petti with JPMorgan. .

Either Peter or Srini, I guess, for either you, could you see the increase in the capital allocation for the year of $3.6 billion, $18.2 billion. You had the accelerated share repurchase in the first quarter that you announced, I guess, help us think shares have come in here a little bit, how are you thinking about perhaps the appetite for additional share repurchases or an accelerated buyback program here? And then related to the postpaid phone account -- postpaid account metric, -- great to see the upgrade. Maybe help us think about where you are in the process of integration on the U.S. cellular base and whether that perhaps, but to maybe some of that churn increase that you talked about earlier on, the math, Trine, whether or not -- where are you in that migration or integration in that basin, when should we anticipate churn perhaps converges with the legacy based.

Peter, maybe you pick up the first bit and John do an update on your...

Absolutely. So on shareholder returns, you just saw us execute in Q1 an acceleration and delivered $4.9 billion in share buybacks for a significant cumulative amount of share buyback and dividends that have been returned to date under the program. And you saw us more excitingly just recently announced that the Board authorized us to increase up to the $3.6 billion.

And the way we're going to approach it is the way we've always approached this, which is I'm not going to talk about the daily trading dynamics and what we're thinking about and all of that for obvious reasons. But really importantly, it's -- we're focused on where do we see this company and its discount relative to intrinsic value. And of course, we'll follow our capital allocation philosophy, investing in the core business, investing in value-accretive M&A and then its shareholder returns consisting of this very balanced dividend and share buyback approach.

But that's how we're going to approach it. And so I'm not going to be able to say more in terms of what we're thinking about and how and when and trading dynamics there. But I think you saw us execute in Q1 and very smartly and thoughtfully based on where we believe the intrinsic value of the company is and the discount relative to that is going to guide us in a lot of these instances. .

Yes. Then I'll pick up on Sebastino. I'll pick up on the U.S. Cellular integration piece. As you guys know, we closed the U.S. Cellular transaction on August 1 of last year. And we stopped promoting U.S. Cellular to new customers right before the holidays last year. So we unified everything behind the T-Mobile brand, even in U.S. Cellular branded stores. we're acquiring all new accounts under the T-Mobile brand.

And to the premise of your question, we're now just now beginning into the final kind of big throws of the customer migration. We've done a lot of the network-oriented migration that's behind us. now we're handling the customer migration. It's a relatively small base, 4 million customers or so. And we've got recent experience with this, given that we integrated the Sprint base back in 2020 to 2023.

So a lot of learnings that we're applying to this overall customer migration effort in terms of communications and how we're mapping customers over, making sure they're getting all the benefits and understanding the full T-Mobile value proposition. All of that is going extremely well.

I could not be more satisfied with how it's going in the U.S. cellular marketplace. So we're going to be working through that over the spring, the summer and the fall. I think we'll substantially have it wrapped up by this year in terms of the overall integration effort. And then of course, what that's leaving with is a incredibly bolstered network advantage in smaller markets and rural areas where we're continuing to do quite well.

You heard Srini talk about where our share position is now in smaller markets, rural areas of 24%. But -- the other big thing that we're doing in smaller markets in rural areas is continuing to drive that wind share in postpaid switching. We're leading now 12 quarters in a row. So when you think about the majority of 2023, 2024, 2025 and so far in continuing to lead that position, enormous runway ahead of us and really fortified by the overall U.S. cellular assets that we've incorporated into the T-Mobile network. .

Yes. Just 1 thing, Sebastino, just to clarify, -- the math I was laying out about account churn. U.S. Cellular is not a contributor to that. So that behaved exactly like we expected it. This was more kind of weighted average math camp. Appreciate that. .

The next question comes from Brandon Nispel with KeyBanc Capital Markets. .

I think the last couple of quarters, and it was sort of asked, but in the last couple of quarters, you guys gave an organic ARPA growth I was hoping you guys could give that organic ARPU growth this quarter. And then just looking at the guide for service revenue in 2Q, it seems like the trend on ARPA growth needs to come down something with a 1 -- and I was wondering if I got that right. And then it just seems like, again, going -- looking at your guidance to hit $77 billion, we need to reaccelerate that. I want to just confirm that all of that was correct and get your thoughts there. .

Yes. I can go on -- you're absolutely right. On the ARPA piece, but remember, it's a remnant of the fact that we had rate plan optimizations that benefited Q2 of last year, but not Q1 of last year. So you had that being an impact over the year-over-year. So yes, when you think about Q2, I think you're absolutely right in terms of the numbers, probably near 2% on a year-over-year ARPA basis there, simply because of the dynamics of you have the rate plan optimizations and you have remember the dilutive effect that was long anticipated around both U.S. Cellular as well as MetroNet and Lumos, which were taken on and impact Q2 of this year, but not, of course, Q2 of last year.

And then we will see an acceleration for the second half of the year back. So this is all just math dynamics here. In terms of ARPA and giving you organic versus inorganic, we moved away from that primarily because I just don't have a great answer for you. It would all be subject to Art. So for example, as we brought on a U.S. Cellular customer and they expanded their relationship with us post merger, what do I do there? Is that organic or inorganic?

Or when we had fiber-only customers come on board, and then expand their relationship and take on phone and other products, how do I allocate that away -- and so we're not in the business of creating art here. We want to be very transparent with you. And I think at this point, because of how we've accelerated some of the U.S. cellular elements of it, and these nuances, we're really not giving organic or inorganic ARPA for that reason.

Operator, let's do 1 last question, please. .

The last question today comes from Timothy Horan with Oppenheimer. .

With basically the highest quality service out there in almost every metric, you're at a 20% price discount, give or take, versus your peers. I mean, can you get the pricing to parity over time? I mean with the quality service, you might not even impact subscriber growth at all, but how are you thinking about pricing longer term? .

Yes. Pick that up. The way we think about pricing power and pricing as a whole is ARPA growth, right? We don't tend to fix it on 1 number. We love the fact that our back book is actually at a lower price than our front book.

We simply put that our existing customers pay less than you. That's rare in an annuity business, and it creates incredible dynamics. -- right? Because that means as you bring on customers you're growing ARPU as well as volume.

You're growing value as well as volume. And when you have this position of having best network, best experience and best value, that creates a position of no trade-offs. So we are going to protect our position on best value. We're not going to look at it kind of with 1 variable, which is what is our ARPU versus other people's ARPU or what is our ARPU with others. We will, from time to time, do thoughtful moves on our pricing. They are typically more for more moves where what we end up doing is give our customers more because a lot of the plans, for example, would be outdated. So what we will end up doing is bringing them up to date with newer, better plans and that may or may not come with a price change.

But we don't see a world where we look at a 20% discount and go, let's go back that pricing up and create a change because we think getting titrating the volume and value making sure that we stay with this position of best network, best value, best experience is what creates long-term shareholder value, long-term customer loyalty. It's what creates the number I love the most, our NPS, 20% ahead of everyone else.

All right. Thanks, Tim, and thanks, everybody, for joining us today. We're looking forward to connecting with you again soon. In the meantime, if you have other questions, please contact the Investor Relations or media departments. Thank you.

Okay. Hello, everybody. I'm Ben Swinburne, Morgan Stanley's telecom and media analyst. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. Excited to welcome back to the conference, but for the first time up on stage the CEO of T-Mobile, Srini Gopalan. Srini, thank you so much for coming.

Thanks for having me here, Ben. And before we get started, I'm supposed to draw our attention to that safe harbor statement, which I think has disappeared now. Yes.

There it is.

With that in mind, especially the forward-looking statements.

All right, we'll do that. So what I think we're basically, what, just over 4 months into your tenure as CEO. Business is obviously performing well. Maybe talk a little bit about your strategic priorities for the company. What are you and the team really focused on right now at T-Mobile?

So look, where we are today, we're a great business. And the foundation of that has been differentiation. And that's most visible when you look at our NPS, right? Our NPS is 20%, 25% higher than anyone in the industry. And the source of that differentiation and the foundation we're building on is the fact that we have the best network, which hasn't always been true, but is today, the best value and the best experience. And that fundamentally is our differentiation. So when customers come to us, they don't need to make a trade-off, right? They get all 3. So we're sort of breaking the laws of physics in this industry that if you get the best network, you have to pay more for it. If you get the best value, you get a network and experience that sucks. That's no longer true. You can get all 3 in the same place. So that's the foundation we're building from. And so if you talk about kind of what is my focus. It's really widening that gap, widening that differentiation because that by itself creates unparalleled growth, which then tumbles down to financials. If you talk about kind of how do we widen that differentiation and the stuff I spend most of my time thinking about.

On the network side, we're clearly the 5G leaders. But we won't stop there. We're pushing ahead 6G, we will be the leaders. We will stay 3 to 4 years ahead of the rest of the industry in innovation and what we bring to the network.

On value, we will continue to zealously guard our value position, and that's a value position, which is not just about kind of the cheapest freest phone, but that's value every day of your life, right?

And on the experience side, historically, our experience has been driven by incredible people and an incredible culture and a willingness to kind of lean in and actually solve customer pain points. We now have the ability to complement that with the best tech, and we demoed some of that with stuff like live translate, but it's also the progress we've made on our digital transformation.

Now all of that together, best network, best value, best experience and widening that gap creates enormous growth opportunity. Whether that's in wireless, with network seekers with SMRA, whether that's in broadband with the incredible performance we're seeing with fixed wireless and also fiber or whether that's in the enterprise segment of wireless. And we haven't even begun talking about stuff like financial services, physical edge AI and the opportunities that opens out. So it's double down on widening differentiation which in turn gives us unparalleled growth. And remember, we don't have legacy businesses that we need to hide under the carpet, right? This is a pure growth business. And that then tumbles into exceptional financials. That's what I'm spending my time on.

So let's talk about the financials. So I guess it was, what, October of '24. I think you guys laid out sort of a longer-term growth plan. Last month, you gave us a halftime check-in, I think you called it.

Yeah.

Because you're a big football fan. I know as we heard. Congrats. How is the business progressing against those original plans, especially in the context of an industry that people are worried is getting more competitive?

Absolutely, when we did the update, we talked about the fact that our service revenue is kind of growing 4x as much as our competitors. Our EBITDA is growing twice as fast. And the business continues to perform really well. Q1 where it's performing exactly like we thought we would. From a volume perspective, seasonally, you should expect our Q1 performance to be pretty much in line with what you've seen in the last couple of years. And when we talk about the industry, I think sometimes we tend to get overfocused on promotions and what's happening on the latest promotion, the rest of it. But there's a direction of flow of the water, and that's heading towards us. Fundamentally, because if you're a consumer, right, you don't get best network, best value, best experience. I'm going to repeat this a few times today. Hopefully, it's consistency rather than repetition. But you don't get all those 3 in the same place. And so there's a natural choice if you're looking to switch provider, and they come to us.

You guys also for us Excel jockeys out there, made some pretty meaningful changes to your -- or planned changes to your KPIs, taking away a lot of the metrics we've enjoyed modeling for years and years in the business, shifting really to postpaid accounts. Why make that change? What is sort of -- what are you trying to accomplish in terms of refocusing the market on postpaid accounts?

The way I think of it, we've actually raised the bar on disclosure. Because what you want from us as investors and people who care about our company is that we spend time on things that matter to customers and things that matter to investors. If you look at customers, firstly, customers in this market buy accounts rather than lines. 90% of our postpaid customers belong in a multiline account. That's how customers shop. They buy accounts, right? Or these switch accounts.

When you look at investors, look, the really important question is what is your share of the CLV that's coming on to the market? That's ultimately the big question. And the closest proxy to CLV is accounts. The thing that drives CLVs accounts. And that's why we think we're raising the bar because when you -- I mean I know there are more lines to model if you had lines and all those details in it. But the reality is what you should care about is CLV, and that comes from accounts. And you look at Q4, right? We did 261,000 accounts, 962,000 lines. One of our competitors did 616,000 accounts and 26,000 lines. That's a 10:1 ratio on accounts, right? That tells you where the value is being created.

Yes. All right. Well, let's stick with accounts. You also talked about growing ARPA or revenue per account this year, 2.5% to 3%. Can you sort of unpack the drivers of that when a lot of your competitors are not talking about both in ARPU or ARPA?

I think there's 3 fundamental drivers, right? One is really structural, which is part of our best value position, which is really important in an annuity business is the value at which we bring in new customers is higher than our base. So we bring in new customers when we add new accounts right? They're accretive to ARPA, right? That, by itself, just the math of that drives ARPA growth. And that's part of what I mean by zealously guarding this best value position. When you have the lowest front book and the lowest back book, then when you bring in accounts, it becomes accretive, that's math. And the more premium plan loading, and you've seen our premium plan loading, twice what it is in the base on new customers. The more premium plan loading you have, that flows through to the base.

The second thing is when you've got an NPS, which is about 45 today, which is 20% higher than anyone else, then relationships grow as well, whether that's fixed wireless access, whether that's financial services, whether it's adding a laptop and a watch to the relationship. And that's why I obsess so much about NPS. That's the second source of ARPA growth.

And the third and smallest is, from time to time, we will look at some of our legacy rate plans account plans and thoughtfully do optimization around that. But those 3 together is what tumbles into the 2.5% to 3% ARPA growth.

Okay. We'll go into a little more detail on some of the top line drivers. But I wanted to ask you first about digitization is something you've talked about for a while, and tie it back to a $3 billion efficiency target that you guys have laid out, I think run rate by '27, if I have that right. Where are you finding the opportunity within the digitization portfolio and especially when you think about bringing AI into the cost base?

We -- like a lot of things at T-Mobile, we've thought about digitization and AI slightly differently if I'm going to shave off this much cost, right? Because our going-in position is if we fix a customer's problem, they will be happier, higher NPS customers who will then happen to call us less about stuff? Because nobody calls a care center to have a conversation. You get the occasional weirdo who does, but most of our customers call because they have a real problem. There's a problem we've created. And some of the craziness of the way businesses get managed sometimes as you create a problem and then pay agents based on how little time they take to solve the problem.

Now we're different. We start with actually solving the problem. And digital and AI for us, the way we thought about it is reimagine the experience to create a frictionless process, that will automatically flow into costs. And so when you think about -- that's why we've taken our time to say we'll build the capabilities, we'll drive customer adoption. And now we're talking of the benefits because this question, you guys have asked us form '23 onwards, right? And we've kept saying we're building the capability. We're now driving adoption and the cost will tumble down. And we're seeing that happen now, which means in the next 2 years, we will add $10 billion in service revenue, $7 billion of that will flow through to EBITDA.

And there's 4 big places where AI and digital really help us from an experience and cost perspective. The first is T-Life. T-Life, our flagship app. We've got 34 million families and businesses who we have a relationship with. 24 million of them use the app at least 4 times a month, right? That's a really sticky relationship. And T-Life is the center of a lot of our work. Right now, upgrades, which was one of the most frequent transaction in store, 73% of our upgrades are done through T-Life. 39% are done with no person involved. Now as you think about [ Adaline, ] the fact that we launched Easy Switch, which allows new customers to come in using T-Life. All of that is flowing through in terms of efficiency and kind of frictionless process.

The second big place is IntentCX, which is our AI-based model which we use to interact with customers. Everything from when you call a care center, the agent gets a whisper in their ear on what you're likely calling about. Two, when you finish the call, the wrap-up and the documentation is done through AI. Now we said we wanted to take out 75% of our calls at our Capital Markets Day. We've already taken out 50%. So we're making enormous progress there.

The third big bit is customer-driven coverage, which is our AI-based network model, which looks to build the best network, not based on some ego stack of how many POPs you're covering, but based on where customers live, work and play, that's driving enormous efficiency into our network build.

And last but not least, what we're doing with IT, no code, low code what we're doing with kind of factoring legacy code and legacy platforms. All of those 4 are big and all of them helped drive that $3 billion efficiency.

That's helpful. Why don't we talk a little bit more about the industry and the opportunity to continue to grow volumes in particular. You've talked about top 100 and your SMRA markets, how do you -- when you think about the opportunity in those today, Srini, how would you size those up and talk about your strategy to penetrate both those kinds of markets?

So think of them as -- let's talk about 2 different things there, right? One is network seekers, right. Now amongst network seekers, more and more of them are recognizing that T-Mobile is the best network. A stat that blows my mind is 4 years ago, when you looked at switchers, 14% of them part T-Mobile had the best network, something like 38% thought Verizon did. Last quarter, the 14% had grown to 26% and the 38% had come down to 28%, right? So we're in a place where more and more customers are recognizing that we're the best network. There's about 20 million families and businesses who chose AT&T or Verizon, because they thought they were the best network. And that was probably true in the 4G era. And they're today willing to pay a higher price for it. Each of those families and businesses are now getting to the place where they're realizing they can get value and network and experience in the same place. That's what's driving our growth. For example, in the top 100, New York, we're #1 by a long distance, and we're still growing share, right? That's because amongst network seekers, we're still under-indexed in New York.

In enterprises, right, where our share is low. As more and more enterprises are testing their network before they use it because wireless is such a big way of doing business today, we're finding, again, the water flowing in our direction.

SMRA, a fascinating story. We were 13% market share in 2020. Organically, that's gone up to 21%. And when you add U.S. cellular, that's at 24%. Now that's impressive, but it's only 24%, right? And part of this is you've got to start questioning this whole concept of fair share because a lot of the way analysts think about this is almost like in a commoditized industry, there are 3 players, everyone has 1/3. Now that's okay. But what if one player has best network, best value and best experience. I think you've got to challenge what the concept of fair share is. So I see a lot of growth ahead of us in top 100 SMRA and enterprise in the wireless business.

I was going to ask you if the -- if you're narrowing that perception gap as quickly as you'd like, but I think I know the answer, you'd always want to go...

Yeah. I always want to go fast.

How do you do that other than you have those great Billy Bob Thornton join. What else you got up your sleeve to try to accelerate that perception gap getting closed?

So the perception gap is closing, like I was talking about. I'd love to do it faster. I'd love to go even quicker. The reality of the way customers think about a network is the network is a personal experience. Your view of our network is your experience and the experience of your friends and family, right? And now the perception scores help because -- and NPS helps because that means more people recommend us. But ultimately, it's about your experience.

Now there are 2 things that really help with that. One is digital and the app itself. We're able to now tell you what your experience is where you live, work and play, specifically your experience. So give us where you work, we'll tell you what your experience is like. Tell us where you live, and we'll tell you what your experience is like. Tell us your commute route. Where do you go on holiday, right? And we can tell you what our network experience is like and we're happy being open about it. Because in the vast majority of cases, it will be outstanding. We're also bringing that tool kit into our retail stores. So my vision for this is when a customer walks into our retail store, our agent needs to ask them, where do you live, where do you work and where do you play? And I can tell you what our network is there and why it will be an outstanding network.

That's helpful. We were talking about the competitive environment, and we've seen the sort of investor sentiment around your stock and the space shipped a lot in the last 6 months. But it seems like there's maybe a little bit of an appreciation, at least we're hearing it in messaging from all the management teams of more rational behavior, particularly, I've been quoting you a lot. You can't make free phones more free. What's the message that you're trying to communicate to investors around sort of promotional intensity and how the competitive environment is shaping up here early in '26.

Look, I think there's kind of 2 separate questions that if I parse it out, right? One is competitive intensity, promotional intensity and the rest of it. That's something we've lived with for a while, and we like a competitive industry because there's more jump-balls, right? And that just gives us more opportunity to create more switching. This quarter hasn't been that different. It's an intense world out there. But just to give you a sense, December, which is probably the most intensely competitive month, our port-ins had a 15% higher value than our port outs, right, which means not just are we winning on volume. Importantly, we're winning on the CLV of the customers we're bringing in, which ultimately is going to be the big question.

To my comment on, you can't make free phones freer than free. It's less about promotional intensity. It's about a philosophy on value. Our view on value is really simple. It doesn't mean we're going to stop subsidies. It simply means that getting a free phone once in 24 months cannot be the definition of value you get out of the relationship with us. We have so much that we offer on a daily, monthly basis. You know the story of us running out of chicken with Wingstop, when we gave Wingstop free on T-Mobile Tuesdays. But there's Netflix there's Hulu. There's a lot of stuff on us. There's Wi-Fi, right? There's -- so we think of this as making that relationship incredibly valuable and making it a daily relationship, making it a relationship where we thank you every day for being a part of the T-Mobile family. And when we talk about value, we'd love for the conversation to be a more broader rounded conversation rather than I give you a free phone that's really free once in 24 months and then good luck for the rest of the time, and maybe I'll put up your price in the mean well, right? And that's -- so at the center of this for us is the philosophy we want to take the value.

There's certainly a view, I think, from certainly one of your competitors that they have taken too much price, right, and they're backing away. How do you approach protecting your value position with price adjustments, rate adjustments that you guys do from time to time as well.

I mean it's the same piece is growing ARPA for me. Structurally, we really like having the lowest price front work and the lowest price back book. That gives us so much flexibility to act. And the beauty of math is that when you have that, then you get an ARPA increase automatically. You don't have to go out there and kind of do a bunch of contortions and gymnastics to get there. The second piece is we value the relationship and so more product in. And then once in a while, we will look thoughtfully at rate plan optimization.

Yes. Okay. Why don't we shift gears to broadband. So you're targeting 18 million to 19 million broadband customers by 2030 now, a mix of fixed wireless and fiber. Fixed wireless, you've gone from 0 to 8 in 4 years. As you look ahead, Srini, how are you thinking about the opportunity that's still in front of you in fixed wireless?

I love the opportunity that's still in front of us. I think it's worth reminding ourselves how we actually think about this product, right? It is a fallow capacity product. And what does that mean? We have these things called hex bins, they're basically coverage areas. There's 30 million of them across the U.S. We look at each hex bin, and we forecast wireless usage in the peak hour between 7 to 9. Once we have that, we know how much of our capacity is going to be used for wireless. We then look at the rest of the capacity, and we say how many fixed wireless customers could we have here? We capped the market share that fixed wireless will get to. And that's the basis of our planning for fixed wireless. We didn't start with saying we're going to have 50 million customers. We're going to do whatever it takes to get there. We said, what does the bottom-up math give us. And we now find instead of 12 million, we can get to 15 million. Why is that? Because technology in wireless is improving all the time. As kind of the leaders in 5G advanced, we're able to squeeze more out of our spectrum. As the quality of routers improves, we're getting more, right? With our latest Gen 5 routers, we get phenomenal performance. All of that adds up to an outstanding product. I mean we've grown to 8 million customers. But just in the last 2 years, we've doubled the number of customers. We've seen a 30% increase in usage per customer, and our speeds have still gone up by 50%. And in all our assumption on 15 million customers, we're not assuming any spectrum auctions. We're not assuming any spectral efficiency from 6G, right? This is taking our carefully thought out hex bin planning, capping market share, and that gets us to 15 million. So I love the product.

That's great. And I know where you'll probably take this answer, but still to ask it. When you think about the fiber piece of the puzzle. And you guys have done a couple of joint ventures, you're building out fiber. Does any of the stuff you're seeing and you're forecasting in terms of usage and competitive dynamics suggest T-Mobile needs to have a bigger fiber footprint long term than what you've got today?

I like a bigger fiber footprint for value creation, but not defensive reasons. I don't need a bigger fiber footprint. I like a bigger fiber footprint when it fulfills 3 conditions. When the price is right, when the cost per home connected rather than the cost per home passed, is attractive. And where it's a world where we're first to fiber or near first to fiber, and therefore, we can create attractive returns. So I like it as a big opportunity to create equity value. But none of the kind of costs of convergence or number of homes passed or scale for scale's sake because fiber is not a national scale game. It's a regional scale game.

Right. Okay. Why don't we shift gears. I want to ask you about satellite connectivity and direct-to-device. You guys have been discussed a lot by other companies at this conference around T-satellite and the product you've rolled out. Tell us about the partnership with Starlink and how you see satellite connectivity evolving over time for T-Mobile and your customers?

This is -- I love the product. It's -- we created this partnership with Starlink to put an end to dead zones. And just the engineering task blows my mind, right? Who would have thought 4 or 5 years ago, you would have flying towers who could actually communicate with a moving wireless device. And it took both themes, we invented the category with Starlink. And we like the partnership at an engineering level, we love working with them and solving difficult complex problems. And I think that partnership continues to be focused on exactly that, which is how do we put an end to dead zones.

When you think of direct-to-sell as a category -- when you think of satellite more broadly as a category. I think broadband is substitutional and it's a good product and it's substitutional because the physics and the economics of it work to be substitutional. I think you heard Gwen and Mike speak this week at Mobile World Congress, and they have the same view, which is direct-to-sell is far more complementary than it is substitutional just because the physics and the economics of it worked that way, whether you think of kind of the beam that you have in a satellite, whether you think about the ability to connect indoors, it's a clearly complementary category. And we like the partnership and we like what it -- the value it brings in terms of putting an end to dead zone.

What do customers think of it so far? Has the demand been in line with your expectations?

Very much so. It's one of those things that A lot of people buy as insurance as well, right? So usage isn't necessarily the best indicator of value they get. And the way we think of it is it's part of this everyday value we provide, right? It's part of reminding you every day why the relationship with T-Mobile is special.

And do you see Starlink and direct-to-sell still complementary, even if they were to acquire spectrum? Obviously, SpaceX is in the process of closing on a transaction with EchoStar.

Very much so because -- I mean, you just -- again, you look at the physics and the economics of this and the amount of spectrum versus the number of towers and the actual capacity that it will have, even with all the satellites, it's a great complementary category.

In that case, if they were interested in an MVNO with T-Mobile, would you be interested at the right economic structure?

Look, our philosophy on MVNOs is really clear. We get into an MVNO when we think there's an incremental TAM to go after. And that could be because of a specific target population, like an ethnic group. Or it could be because of a specific channel play and distribution, which is why we did the MVNO with the cable players, right? It's not clear to me how a partnership with Starlink from an MVNO perspective would fit into those criteria.

I got it. That makes sense. Okay. All right. Let's shift to something this audience cares a lot about, which is capital allocation. You have, I think, over $50 billion remaining in your capital envelope through 2027. You've got buybacks. We're expecting the pace of buybacks to pick up. How do you prioritize all your different options when you think about share repurchases, M&A, spectrum, obviously got some auctions coming.

So this is one of the things we, as a management team and as a Board, spent a lot of time on as you'd expect is kind of responsible stewards of your capital. We start with leverage. What is the right level of leverage. In the current environment, we still think 2.5x EBITDA is the right level of leverage.

Then we look at the business itself, what are all the investments it needs, right? Specifically, what does CapEx look like? And we've given a guide which is $10 billion while we do the U.S. Cellular and go into that range of 9% to 10%.

What are the investments does the business need? What are the strategic opportunities? Those could range from fiber M&A to spectrum and how does that play into it? And then that tumbles into shareholder remuneration and the split between share buyback and dividend. And that's consistently what we followed.

And how come you decided to lean in, in the first quarter here? I think you talked about up to $5 billion.

So as a Board, what we look at is once we've done that flow through, we look at what do we think is the divergence from intrinsic value, right? And the Board reviews that from time to time and decides on what is the right level of share buyback in the context of the overall envelope.

Okay. I know it's probably a better question for Deutsche Telekom, but they also announced they would not be selling in this year. What does that tell? What signal does that send to the market in your mind?

From my perspective, it tells us they trust this management team, which is good to hear. But you'd have to ask them about the details of that.

Right. Okay. All right. Then lastly, on spectrum, to the extent you can talk about it. Last month, you guys emphasized the sort of build versus buy framework as you evaluate deals, et cetera. How would you describe the kind of spectrum position at T-Mobile today when you look at it versus your competitive set?

We love our position. You just look at mid-band, 2.5 versus the existing C-band, 70% more area covered. Secondly, we will defend our spectrum leadership. We think it's fundamental to the best network. And we'll be thoughtful about doing it, right? I think it's kind of -- we can have those 2 thoughts at the same time. We will defend our leadership, and we'll be economically sensible. So when we looked at stuff like EchoStar, the price was too high. I think the really great news is having Chairman Carr and the FCC have done a fabulous job in terms of the amount of spectrum that's becoming available. And as we go through '27 with the C-band, also the fact that 2.7 is now being looked at by the government as part of an official process. There's also potentials for 7 gig coming in. I think there's a lot of spectrum, which means the value of that spectrum will be good. And so we're interested in looking at all of that as we think about defending our spectrum leadership and extending that because this is not purely about just keeping what we have, it's also extending it as part of our broader best network and continuing to stay 3 to 4 years ahead of everyone else.

Well, maybe for my last question, then let's look out 3 to 5 years and tell us a little bit about what you think 6G could bring to T-Mobile and to the industry as we start to think more seriously about that technology.

I'm really excited by what 6G could bring. I mean I think it will bring the normal things a new G brings in terms of better air interface, better spectral efficiency, et cetera, et cetera. But the standout thing is, for the first time, you will have a network that not just processes bits and bites but also tokens. And that will be because we'll have AI-RAN. And just to give you a sense of the kind of thing AI-RAN is already doing for us. When we had Winter Storm Fern, all of our antenna tilts during that -- during the storm was actually done through AI and a self-optimizing network. You didn't have people climbing up towers to tilt an antenna, right? It's one of the reasons why we had such little disruption in our network.

Now we will need AI within our own network. Now that will create enormous opportunities because in a physical AI world, as Jensen calls it, right? What you will have is for robotics to work for factory automation to work. Connectivity will be the connective tissue because without low latency connectivity and without influence at the edge, it's going to be hard to scale this stuff. Now when you think about the idea that I'm already going to put AI into the network, low latency will be a feature of 6G and you want to offer influence at the edge. I think there's a really exciting possibility of not just having fallow capacity for FWA, but having fallow compute to drive inference at the edge. So I think 6G and what it could do, not just in terms of network efficiency and everything you're normally used to seeing in wireless networks, but also the role it can allow us to play in the physical AI and inference ecosystem could be incredibly exciting. And will be here before we realize it.

Bits, bytes and tokens.

Yes. Bits, bytes and tokens.

All right. Anything you want to wrap up with?

Yes. Look, I think the story of T-Mobile that you should expect to see over the next 3, 5 years is kind of 3 parts: widening differentiation, which goes back to best network, best value, best experience, continuing to push ahead, continuing to open up an even bigger gap from our perspective in terms of the quality of relationship which, in turn, opens up unparalleled growth opportunities from consumer wireless to enterprise wireless and SMB wireless to broadband to physical and edge AI and also into leveraging that relationship into new areas like financial services. And all of that combined with the financial discipline to convert that into revenues, EBITDA and most importantly, industry-leading free cash flow conversion.

Okay. Well, thank you very much, Srini, for coming.

Thank you. Thank you for having me.

Thank you everybody.

Please welcome Cathy Yao.

Hello. Welcome, everyone, and thank you for joining us live right here in New York City for our year-end earnings call and Capital Markets Day update event. Before we get started, I'll draw your attention to our safe harbor statement. This presentation includes forward-looking statements that may differ materially from actual results as well as certain non-GAAP measures. Please see our SEC filings for a review of risk factors. Please also see our Investor Relations website for all related materials, including a GAAP and non-GAAP reconciliation.

Let me walk you quickly through our agenda today. Srini is going to begin with a halftime check-in since our September 2024 Capital Markets Day. Before turning to our widening differentiation across Best Network best value and best customer experiences. He's then going to talk about growth. He's going to talk about how our growth opportunities across our core wireless business across our broadband business. And in new growth areas are going to continue to drive sustained outperformance for the Un-carrier. And then Peter will wrap it all together with a financial update. We'll then have the broader leadership team join us right here on stage to answer your questions. Okay, let's get the show started.

[Presentation]

Please welcome Srini Gopalan.

Good morning. How are you doing? Well, thank you all for being here. It's a unique occasion. A few of you have asked me why are we doing this event, well, it's Q4 earnings. It's halfway through our Capital Markets Day cycle, so we felt it was good to do a half-time check-in. And there's the small thing that Mike and I did back in November, the CEO transition. And I'm excited to talk to you guys about the future about my vision for this phenomenal company and talk to you in detail about some of the unparalleled growth we have staring at us. So I'm excited to be here and excited to spend the next couple of hours talking about a business I've grown to love over the last 10 years.

Let's get started. I'm going to kick off with a quick kind of half-time check-in. So how are we doing halfway through our Capital Markets Day cycle? And the short answer is incredibly well. You've all seen these numbers. But the -- every time I look at them, I'm awed with what we've achieved already. We're growing 4x faster in service revenue than any of our competitors. Twice as quickly on EBITDA. We've returned over $20 billion to our shareholders. Our free cash flow generation and our conversion of service revenue into free cash flow is an industry benchmark and continues to stay really strong. And that's where the rubber hits the road, right? You could report multiple things differently. Ultimately, what matters is free cash flow conversion. So incredible results and we've either met or beaten pretty much everything we've guided to from a Capital Markets Day guidance perspective as of this point, halfway through the cycle. And what lies underneath that is the incredible ability we've built to not just bring in new relationships, new families, new businesses into the T-Mobile fold, but also grow and deepen those relationships.

So if you look at our performance over -- it's a bit stable on the clicker. But if you look at our performance over the last 5 years, we've bought in over 1 million new prepaid relationships every year. right? That's new businesses, that's new families, right? One, 1.2 million new relationships every year. There's only one other competitor who reports that, and you can see those have been negative. And it's not just bringing in these relationships that matters. It's what we do with them. It's the extent to which we nurture existing relationships. Our RPA has grown by 13% since 2020. And in an industry where people worry about deflation where people worry about pricing power, our ability to drive these relationships. T-Mobile stands out as the one carrier who's not just grown volume but also grown the nature of that relationship driven more CLV into these relationships. So all that's great. Those are the headline numbers. right? Great financial performance, great revenue, solid work on volume and value.

But I want to talk about something different. What underlies this, right? What's the secret sauce that drives a lot of this. And the thing that's driven all of this performance is our widening differentiation. Now there was a law of physics in this industry, which is there has to be a trade-off. You can either have the best network, in which case, customers have to pay a premium for it or you can deliver best value and best experience but the network kind of sucks, right? That was the law of physics of this industry. And the reason for our outstanding results is we've challenged and broken that law of physics because at T-Mobile, our customers have no trade-off to make. They get the best network, the best value and the best experience from one provider. And that widening differentiation underlies all of our results. And what I'll talk to you about is. We don't take that differentiation for granted. We fight every day to widen that differentiation. It's widened over the last 3 years, and you'll see it widen even further. That's what opens out the unparalleled growth opportunities. that we're staring at. I'm going to double-click you through each of these elements, best network, best value, best experience, what we've done and how we're going to widen that differentiation further and then convert that into what does that mean in terms of growth opportunities for us.

Let's start with the Best Network. I mean historically, through the storied history of the Un-carrier, the one thing we didn't have was Best Network. Over the last 5 years, we have quietly built the best network. And that changes our proposition fundamentally. It's what takes us into the no trade-offs territory. Let's talk about the best network, right? Building the best network starts with having the best assets. And what are the best assets spectrum. We have more spectrum than anyone else. Importantly, we have better spectrum than anyone else. Our 2.5, which we often call the Goldilocks spectrum, our 2.5 covers 70% more area than C-band. And that's just one example. It's a very big important example of where we have not just more spectrum, but better spectrum. Our grid, our history with mid-band frequencies meant for a long time, this was a bit of a disadvantage. We needed a denser grid to cover the same area. In a 5G world, the density of that grid is a huge positive for us. It allows us to generate speeds and capacities that others can only dream on.

And pulling all of that together is the brain of the network our core. Now we moved to a 5G stand-alone core back in 2021. Our competitors got there sometime in 25. That's a 3- to 4-year lead on the quality of our 5G network. 5G SA, now 5G advanced, the number of capabilities we're building into our core gives us the ability to take these best assets and put the best brain to it. Now all of that is kind of the asset side of the story, spectrum, towers, core, all great pulls together to give us the best assets. But in the classic Un-carrier manner, what we've done different is we've turned those assets into something that makes the customer experience better. Now we talked at Capital Markets Day about our vision for customer-driven coverage. That vision today is a reality. We use AI and huge amounts of customer data to deploy capital in our network based on what's right for customers rather than chasing a vanity stack like POPS.

I'll give you an example of where this makes a real difference. Let's take Sacramento. Now the traditional way of thinking about improving the network in Sacramento is densify the network, cover more pots. The reality is to improve the customer experience for the people in Sacramento, where you actually need to double down on coverage is not just Sacramento itself but Lake Tahoe, given the amount of time they spend on Lake Tahoe, right? And that understanding of where people work, where they live, where they play, that combination of things is really what drives network experience. and using AI, using scale machine learning, all of our site deployment. We deploy almost 4,000 greenfield sites a year now. All of our site deployment is surgically planned to improve our customer experience. That's been the heart of what's driven the best network, great assets, a fabulous score and the ability to use all of this to meaningfully change the game on customer experience.

And what that's resulted in is a true ultra capacity network. Now the proof of capacity, the best way to think about capacity is speed. So what speeds can your network deliver is the best way of thinking about what is it actually that this network offers in terms of capacity. You look at our median download speeds our median download speeds are -- get this twice as much as our nearest competitors. That gives you a sense of the amount of capacity this ultra capacity network has today. it's phenomenal. And speed, again, for me is not just a vanity stat. It's not an esoteric number. It's a really good indication of capacity. And when you have a new phone like the iPhone 17, it's great to compare what happens on our network versus other networks. We're 85% faster than one competitor and nearly 50% faster than the other competitor. That's true network differentiation. And it's not just us saying it. Many of you in this room, the experts have known for a while that we have the best network. We won Ookla, we won Open signal, multiple speed tests. What gives me real pride today is J.D. Power. After 35 reports over 17 years, the erstwhile trial #1 network has been unseated. T-Mobile today is the #1 in network quality as judged by J.D. Power. That's after 35 reports, 17 years we are #1 as a network.

What's even more important than what the experts say, however, is what customers say. And this is -- we talk about these money slides. This is one of those graphs that I look at very, very often because this is what translates into customer perception. Network switches amongst the most sensitive, amongst the people who do most research, network switches, when we ask them, what is the best network, right? Now back in 2020, 1 in 8 thought T Mobile was the best network, 1 in 2.5 thought Verizon was the best network. Today, we're at a place where in believe that T-Mobile is the best network, slightly more than 1 in 4. And you can see that gap is closing. And you can see there's a long way for us still to go. We have the ability to meaningfully expand this lead. With our ultra capacity network with all of the features that 5G SA gives us with 5G advanced with our continued investment and doubling down on what this network is we're not standing still. We're committed to network leadership, and we're committed to expanding this lead. And the best indication of that is how we think about the next wave of network innovation, 6G. 5G, we own 5G. We still own 5G. 5G has allowed us to build a business called FWA from a standing start to close to 8 million customers in 3 to 4 years, that blows my mind, right?

5G was the core of how we started competing in a segment we didn't exist T-Mobile for Business. Our 5G superiority has driven a lot of the industry-leading growth. And we're not standing still. 6G opens up multiple possibilities for us, whether that's AI, physical AI, edge AI and we're right there defining the standards of 6G. I'll talk a bit more about specific opportunities with 6G later. One thing to remember, though, is our lead in 5G does mean that our rand refresh cycle runs significantly ahead of the rest. And we start with an unfair advantage on 6G. It's an unfair advantage we love. The fact that people like John saw the vision for 5G way before the rest of the industry did, puts us in a fabulous place to drive the next wave of innovation. And that 26% of network switches who see us as the best network is only going in 1 direction. -- it's going this way. And that unlocks the nominal amounts of growth. And I'll come back and talk about where those growth opportunities exist.

So Best network. After 1 year of the carrier to be able to say that, I relish it. And if you notice, I'll say that a few times today. But it's not just Best network. Having no trade-offs is more than best network. It's also Best Value. And we are in a truly unique place on Best Value. We provide best value, not just for new customers, but also for our existing customers. We provide best value, not just in terms of the free iPhone, but in terms of value that you can count on every day savings, value that you get every hour. Let's talk about existing customers. Our existing customers pay between 12% and 15% lower than AT&T and Verizon. That is a massive factor in terms of the flexibility it gives us. It's also something that we zealously guard and protect because it's the heart of enabling us to claim no trade-offs. It is at the heart of flexibility that it gives us in terms of how we price new customers.

And importantly, it's the heart of the relationship. It's making sure that we can reassure people every day that they get not just best network, but also best value. And when we look at new customers, we -- the holistic value we provide is substantially better than AT&T and Verizon. And you can compare the experience beyond plan here where you not only get all of our services, but you also get Netflix on us. You also get Hulu on us. You also get Apple TV, you also get T satellite. The bouquet of things that we offer and the savings we drive every day is there's a 20% to 30% gap in terms of value, we're able to provide new customers. So you've got existing customers who save every day and you've got new customers who save every day, not just on the free phone you get every 3 years. But in terms of meaningful things that drive your life every day. And that best value is something we're going to guard zealously -- that's something we will protect. That is our heritage, and that's something we will not give up purely because we have best network now.

Now you think about value and network and there's a third thing customers care about, experience. How do you treat me? Now our experience story over the last 13 years, has been built on 2 things: incredible people and an incredible culture. Let's start with our care centers and retail. Now typically, when you talk about taking cost out, people go at this from saying, let me take cost out of experience. Let me kind of shave this much headcount off. That's not how the Un-carrier thinks of it. We think of it as costs come because we've created a problem for people. And the question is what can we do with our incredible frontline to enable them to solve those problems better. You can see on the call reduction front, through a real focus on eliminating force on working with our frontline to solve people's problems better, ensuring that they don't need to call twice for the same problem, equipping them with better tools. You're seeing a 50% reduction in calls. We had committed to 75% in the Capital Markets Day at the half time, we're making great progress on this. And this is not simply about technical things. There's a great element of culture to this.

One of the things that happens at T-Mobile is when this team visits an experience center normal big companies, kind of the big shots show up, present for 55 minutes, and then they need to be somewhere else. So they'd love to take questions, but they don't have time for it. That sounds familiar? At T-Mobile, this works very differently. I get on a good day, maybe 8 minutes on stage. Jon Freier fires them up for maybe 2 minutes. And then we have 50 minutes of our front line relentlessly pounding us on what have you done recently for me in terms of solving customer problems. And their expectation is very simple that as far as we can, they'd like us to solve the problem there. This isn't -- let me take this -- that's a really good point. Let me take this back home with me and I'll get my assistant to do something about it. Our frontline is demanding they want an answer now, and they want to know why you can't send an e-mail when you're sitting at that stage to solve my problem. That's a huge part of what's enabled all of the stuff that you're seeing. And the same thing plays out in our retail stores. Our company-owned retail, our experienced stores give us a significantly better NPS than our authorized retailers. That's down to culture, that's down to the incredible empathy our people show. And we're stoking that.

We have cut back on some of our authorized retail and driven even more investment into our experience store. That's a big part of the secret sauce of what's driven our best experience. And it's not just that. A big part of our culture is how we think about rewarding existing customers. Unlike other companies, we don't believe customers need to prove their loyalty to us. We believe we need to prove our loyalty to them which is why all of our plans compact with things that they don't get elsewhere. And then there's my favorite, the money can't buy stuff with Magenta status and T-Mobile Tuesdays is probably a great highlight of that. We do wild stuff on T-Mobile Tuesdays, free Slurpees, actually, we work with Wingstop to give away free chicken and Wingstop actually ran out of chicken which gives you a sense of the -- again, prior and Cat's got lots of e-mails, some angry customers demanding more free chicken. But that gives you some sense of -- when we talk about experience, this is a lot of fun for us. This is about how we work with our frontline. This is about what we put into our product. This is about genuinely committing to giving our customers an experience that special, unique, edgy that surprises them, that brings our relationship to life.

And we're not stopping. We're now taking the best technology digital, AI, putting that in the hands of our incredible frontline to drive an even sharper and even more differentiated experience. And at the center of all that is T-life, Sea Life more than 100 million downloads and there were weeks last year when we were the most downloaded app on the app stores, both the app stores. That's not the most downloaded telco or carrier service app. That's the most downloaded app full stop. Now we've got 4-odd million relationships, businesses, families and typically, the primary account holder is the person who accesses T Life out of those 34 million order of magnitude use T Life every month, and they use it 4 times every month. It's an incredible source of engagement -- it's a huge portal into our experience, it's game-changing for us in terms of the nature of the relationship. And with intense CX which is AI that we've developed, working really closely with OpenAI, where the objective is simple, it is to personalize the experience. We raised the bar on what a carrier experience should look like and using AI and digital, we're taking it to the next level in terms of making that experience feel a lot more personal, feel a lot more tailored to the individual. This gives us lots of opportunities.

But first up, it changes the nature of our core consumer wireless business. You look at the extent of self-service now. We started off this journey with 22% of our upgrades being done through T Life, and they were all assisted, which is an agent would show the customer what to do. That was in Q4 2024 just a little more than a year ago. Today, we're sitting at 73% of our upgrades being done on tea Life and 39% of them unassisted consumers doing it themselves. And this unlocks a huge amount of efficiency as well as satisfaction. Peter will talk in detail about this. But across our AI and digital initiatives, we expect close to $3 billion in savings by the end of '27 in our '27 run rate, which is incredible because this has not been a slash in burn, let's take out X100 people. This has been how do we go after the experience, how do we make that experience a win-win where consumers enjoy it where they naturally move towards this, while at the same time, making us significantly more efficient as a business. And that's the heart of the unlock.

And we'll see the same story play out through Adaline, which is our second biggest transaction in retail as well as with acquisitions. We announced breaking through another big consumer pain point, the ability to switch easily with easy switch back in November. And as easy switch scales, we'll see even more transactions move on to T Life. And TaLife will be the center of our relationship, the portal into T-Mobile. And again, we're not stopping here because like I said, we're about continuing to widen differentiation across network, value and experience. One of the most personal things, as we talk about personalizing experience is language. We have over 6 billion international calls every year on our network. More than 40% of our base travels internationally. And I'm proud today to introduce for the first time across the world on any network using AI, live translate built right into the core of our network. I'll let this video explain it and then come back and talk to you about it.

[Presentation]

Now there's a few things that get me incredibly excited about that. The product itself, life translation. Suddenly, you kind of moving across barriers, you're enabling people to speak to each other, which at the end is the core purpose and mission of our industry. What gets me even more excited is this is the first scale use case of AI being built directly into the core network, which is why the only thing you need to use this product is one person on the T-Mobile network. You don't need an app. You don't need to type something in and pass it to someone else to using translate. You just need 1 person on the T-Mobile network, and you can speak the other language. And it's an incredible capability. But what I like even more than this is underlying this, we've built a platform that allows us to build multiple AI services directly into our core network.

And as we talk about personalizing and experiences, we talk of kind of raising the bar on what you can expect from your carrier. This is a great example of where we're going. So we pause for a minute. Kind of talk about our journey from where we were to the best network. The fact that we're not stopping there. The fact that, that is even going to broaden further as we get into the 6G age. The ultra capacity network that we already have is only going to get better, best value, which for us doesn't mean simply new customers getting great value and getting great value once in 3 years with a phone, it means delivering value every day. It means delivering value to our existing customers and new. We talked about experience and how we're transitioning from A lot of that being driven purely by our people and culture to empowering those people kind of stoking that culture with the best in technology and making that even more personal.

How does all of this come together, right? It's easy to talk about widening differentiation, but do we have any evidence of it. My favorite number is our NPS. It measures what people think about our relationship. Would they recommend us to someone else. And here's what's happened to NPS over the last 3 years. If you look at where we were in '23, it was -- we were kind of in the same place as our competitors give or take a bit. You look at where we are in '25. We've opened up -- this is what widening differentiation looks like. This is what happens when you break out of the pack. This ultimately is the biggest driver to all of the outsized financial performance that you saw. It's the fact that we're able to take these relationships, use our unique combination of best value, best network, best experience to widen that differentiation. And that differentiation, are we happy with where we are today? Absolutely not. We'd love to see those bars, especially the Magenta bar, grow significantly and widen the space between us and our competitors. And that's what moving our network forward, moving our value forward and moving our experience forward is. It's all about taking that and widening that differentiation because our strong belief proven by the results that we've seen is what keeps driving us.

What drives our success is not the promotion that we did last month. What drives the tide of momentum and moves it in our direction is that widening differentiation. And that widening differentiation for us opens out unparalleled growth opportunities. And I want to spend a few minutes talking about the differentiation is great. What does that mean in terms of growth opportunities. We are convinced that we are staring at a set of growth opportunities that no one else in our industry has. Let's talk about them. Let's start with core consumer wireless. Historically, we've over-indexed on the value seeker portion of this. Today, network seekers see T-Mobile as the home of the best network. Over 20 million families and businesses chose AT&T and Verizon, mostly in the 4G era because they were happy paying a premium because they wanted the best network. That is no longer true. And that opens up a massive growth opportunity for us. You take New York City, we are by far leaders here with significant share even in New York City, we're under-indexed on network seekers. And that's why we're continuing to grow share in New York City, even with significant lead over the rest as of today.

The opportunity on network seekers exists across geography, exists across types of customers. Our second big opportunity, small markets and rural areas. Now just to be clear, because we call them small markets and rural areas, it doesn't mean a lot of people don't live there. 40% of America lives here. Our share used to be 13% back in 2020. including M&A, it's now at 24%. But 24% means there's a lot of headroom to grow here. Again, these markets tend to over-index on network seekers. -- and moving to the best network opens up massive opportunity here. And that's not all, even within core consumer wireless. You look at our back book pricing, and we'll talk in more detail about this. that opens up a lot of headroom in terms of value growth, in terms of how we can deepen that relationship. So if I look at core consumer wireless, there are 3 significant drivers of growth. And again, that's not all because we have T-Mobile for Business. Here, our customers rigorously test networks before buying, and we love that. Because we know our odds of winning with a customer who's rigorously tested the network are very, very high.

Again, New York is a great example. The first responders here depend on T priority, and they picked the priority after rigorous testing. Lots of runway here in terms of share growth. Moving on to broadband. Now our broadband business -- for the most, our FWA product is based on this ultra capacity network. And a lot of you have asked us, so where does FWA go? How do you think of capacity in this context. We've said 12 million customers in 2028. Today, I'm delighted to tell you that we believe this business will go to 15 million customers in 2030 and that there's a lot of runway even beyond that. Fiber, we believe, will add 3 million to 4 million customers which will give us a broadband business of 18 million to 19 million customers by 2030. I'd like to pause for a minute. We would have built a business with 18 million to 19 million customers in 7 years. Not sure there's any company of our size and scale that's done that. 18 million to 19 million customers in this industry in broadband, and remember, for us, this is all incremental. None of this is an overbuild of copper and cannibalization. All of this is incremental revenue. as incremental customer relationships that we can nurture and the growth in this business and the upside still left in it is substantial. And I'll double-click on this in a little more detail.

And then there's new growth areas. T-Ads we've talked about, we've just launched our financial services, and we're really excited about where 6G goes -- this last part, only a small proportion of it is captured in our guidance as we build these businesses. But again, I'll double-click through each of these to give you a sense of why I'm so excited by the growth that lies ahead of us and why I'm convinced that the best lies ahead. Let's talk about core consumer wireless first. We've grown -- sorry, like? We've grown really quickly, and we've talked about why NPS being a big driver. The network seeker population, whether it's in TB whether it's an SMRA or in our top 100 is a huge unlock for us. Now let me give you some stats, right? New York City, I talked about, we're continuing to grow share because we're still under-indexed with network seekers. An interesting fact is in areas where our competitors have built fiber. We have gained share.

Now I'm not suggesting that there's any causality there, right? But we have gained share even in areas where our competitors have built fiber because we continue to attract the network seeker population in those areas and our historical under-indexation, gives us share growth opportunities. This collection of opportunities across top 100. And when you look at our top 100, all of you are familiar, we split it into 3 kinds of markets, markets where we're #1, #2 and #3 and we're growing across all 3. We're continuing to win household share. All of this gives us a significant opportunity. And from a unit economics perspective, it's very, very accretive because under-indexing in network seekers, when you're looking at future growth, that's a good thing because in comparison with value seekers, you do see accretion in terms of the relationship and ARPU and ARPA. That's on the volume side.

On the value side, our front book, back book pricing equation is a huge positive. It means that when we think about new customers coming in as a group, they're actually accretive to both ARPU and with time ARPA because of the pricing of our back book. And it allows us a lot more flexibility in terms of pricing of the front book. It also gives us runway in terms of deepening our relationship with existing customers. And from time to time, we will look at some of our legacy plans and optimize our rate plans in the context of more for more. So that combination of things gives us a lot of runway on the RPA side, which is kind of the value, the [ Ptime SKU ]the complement to what I talked about on the volume side. I do want to spend a couple of minutes on 1 thing, though. The one tenant that has been fundamental to the Un-carrier is win-win economics, which is economics that create really strong CLVs, combined with economics that deliver unparalleled value to our customers. And from time to time, the industry loses its way and we kind of get into some bad practices. And that's when as the Un-carrier, we step in and change the course and what typically happens as other people follow.

As I look at the industry today, I believe we're at another such point where we, as an industry, have gotten over focused on how free the newest phone is. And we've lost track of some of the incredible things that we bring to the customers in terms of value. And I'm not going to say a lot more about this right now. but we will change that. The Un-carrier will make another move, which will take us much more towards the direction of where we create value, which will take the emphasis back to win-win economics, things that are good for the customer and things that lead to more sustainable CLVs with time because we believe maintaining win-win economics things that are good for investors as well as customers is critical to driving a healthy environment in this industry. But you'll hear more from us in the next few weeks and months as we drive this journey forward. But that's consumer wireless and the broader wireless opportunities in TFB. So we've got clear line of sight to strong volume growth, especially with network seekers. And we've got the advantage of our back book combined with, as you can see here, strong premium plan loading on our front book and the ability to grow relationships all of which makes our [indiscernible] equation look really strong. Peter will delve into that in a lot more detail, but we believe we will continue growing ARPA in the range of 2.5% to 3% even as we go through this journey, and that will get powered by some of the things we're talking about here.

Let me move next to broadband growth. And how do we create this business with 18 million to 19 million customers by 2030. Our broadband business to date, largely FWA has been phenomenal. We've led the industry in broadband new customers. And that's from a standing start. You can see really we started scaling in 2022. And this business has been running at a real clip, close to 2 million new customers every year. The industry leader in broadband net adds. And what's driven that again is NPS. What's driven that again is the simple reality of when you give customers a great product, you would -- our NPS today is higher than fiber. That's a composite of the product, the value we provide, the experience, the ultra capacity network -- that is the source of the unlock for us on FWA. And that product has only gotten better. And this is kind of -- to me, the best demonstration of what an ultra capacity network is.

When you look at what's happened, we have a 77% growth of customers, a 27% increase in usage per customer and our speeds have gone up by 50% during that period of time. And if you take our newest routers, it's gone up nearly -- it would be nearly doubled speeds at the same point in time that we've seen 80% more customers using 30% more. That is incredible in terms of the amount of capacity our ultra capacity network has. That's what makes us really confident that we can get to 15 million customers in 2030, and our speeds will be higher than this. Let me walk you through kind of how we think about the 50 million customers. We step back for a minute first. As all of you know, we've run this business with a [ fallow ] capacity model. What does that mean? It means at a Hexbin level, and there are 30 million Hexbin, it's a small geographical area. Each of those 30 million hexbins what we do is we look at our wireless usage today. We project that forward for growth. add all of this was done at peak hour because that's the only thing that matters for a wireless network.

So we look at wireless usage and peak projected for growth going forward, reserve that capacity for wireless whatever is left is then used for FWA. When we talk about 15 million customers in 2030 at higher speeds than what we have today, it still assumes fallow capacity. It does not assume any of the spectrum acquisitions that the one big beautiful bill will end up doing. It doesn't assume any spectral efficiency increase because of -- what it does build for is the fact that we are broadening our product range. So as we sell more into businesses, for example, they don't use between 7% to 9%. So that is that is true follow capacity. It does build in the increased spectral efficiency because of better routers. It does build in the increased petrol efficiency as a result of being on 5G advanced features like LS, which allow us to use our existing assets even better. And so when we look at that $15 million number, that's on a very conservative basis.

And when I look at FWA as a category, I think the days of asking the question of is this a temporary category? Is this here to stay? Those are gone, right? The speed of evolution of mobile technology as we look forward, convinces me that this category is going to have a lot more upside. At this point in time, we can see line of sight to the $15 million, and that's what we'll go for by 2030. But that creates itself. Remember, again, all of these are incremental, none of this is overbuild, none of this is compromising legacy revenue. And in addition to that, we have a business we're really excited by fiber. T-Fiber, everything we've done to date has only confirmed our expectations in terms of the power of our brand, the relevance of our distribution our ability to convince customers that this is the next stage in their journey. We've also been super thoughtful about the capital intensity of this and we pick partners who we can trust where they bring expertise that we don't have.

We expect, just based on our current assets to scale the 12 million to 15 million homes passed and 3 million to 4 million customers by 2030, which would leave us with the broadband business of 18 million to 19 million customers largely built over a 7-year period, which is again testament to the value of that NPS chart, what we can do with our relationships, the power of our brand and the power of this team. I'll spend my last few minutes now on new growth opportunities. As I said, the vast majority of these are not built into the numbers that Peter showed you. Let me just back up and tell you how we think about new growth opportunities. For us to do something other than consumer wireless, business wireless and broadband. We start with kind of 3 questions. How large is the TAM or the target market and the business we want to be in? Is it big enough for us to play? Like when we ask the question on broadband, the answer is clearly yes. Second, -- can we use our existing strengths, our network, our customer relationships? Do they make a difference in this industry? Does it help us win?

And third, can we disrupt the industry. Because, again, we believe producing me-too product in a new industry is not what T-Mobile is about. When the answer to those 3 questions is yes, then we double down and focus on that. Three areas that we're excited by. Advertising, T-Ads, we acquired Bliss and Vista, that business is tracking. It's in line with all of the things we talked to you about at the last Capital Markets Day. It's a business that we think has a lot of upside, and we're continuing to drive that. Financial services, we're working with Capital One. We launched our credit card in November. That's gone really well. We're excited about all of the stuff we're seeing in our first results. And we think there's a lot more to do in financial services because it picks those 3 boxes. We believe that we can meaningfully reinvent. It's clearly a large enough TAM. We have a huge amount of credit information and our existing customer base is massive in our ability to leverage that a substantial. So again, that's a business we're excited by. And last but not least, physical and edge AI and everything that a world that becomes increasingly connected brings to us as an opportunity, both in terms of -- I mean, the way I think of this is in an AI ran, we will be using we will be using a lot more compute.

And if you were to think about this, what 6G will be is a network that not just processes bits and bites but also tokens. And effectively, what physical and edge AI will do a bit like FWA, where we landed up using fallow capacity, here, you will end up having fallow compute that we could then put to use both in physical and I. But I'm rapidly getting to kind of out of my depth on physical and I. So we thought we'd invite a close friend of T-Mobile and man who probably knows more about physical and AGI than anyone else, Jensen Huang, to share his thoughts on 6G and physical AI.

Hello, Srini. It's great to join your Capital Markets Day. T-Mobile is the world leader in telecommunications networks. You did it by rethinking innovation and how networks are engineered. A year ago, T-Mobile and NVIDIA announced the opening of the AI RAN innovation center. Together, we quickly moved from idea to making live calls over NVIDIA's aerial AI RAN computer. AI continues to transform every industry and will also revolutionize telecommunications like electricity, the Internet, AI is essential infrastructure. Every consumer will use it, every company will be powered by it, and every country will build it.

Now intelligence is moving into the physical world with robots, autonomous vehicles and cities, 1 billion cars, billions of robots in the future, millions of factories and hundreds of millions of farms will all be connected to intelligence. AI will be distributed at the edge present at the location and understand the logic of the physical world. This is where AI Ran and 6G change everything. The radio network becomes a distributed AI. T-Mobile has recognized this shift. Every base station with NVIDIA aerial becomes an AI computer and 6G is the connective fabric. Computing, sensing and connectivity converge. This creates entirely new opportunities for the telecommunications industry. That's why this moment matters. I'm thrilled to see our vision of AI RAN taking shape in T-Mobile's Seattle Labs. Together, we're demonstrating how telecommunications is an essential platform for AI. And together, T-Mobile and NVIDIA are building this future.

All right. Thank you, Jensen. So let me just pull this all together. The foundation of everything that we've built, the foundation of everything we're building is our NPS. It is our ability to continuously differentiate. You can see that gap widening and we've only just got started. Our fundamental capabilities across network, value and experience is something we're working at every day to make that gap widen even further. And what that gives us is the plethora, the unparalleled set of growth opportunities that you can see above. And we're only scratching at the surface here. One of the big advantages is you get all of those growth opportunities with no drag of legacy.

And that combination of huge differentiation that will only widen with time. unleashing a set of growth opportunities is the heart of our story. That, in combination with this team in front of you, who have constantly set really big goes, gone out, smashed them and strive every day to exceed every number we give you is the heart of the T-Mobile story, and that's what drives outsized financial performance. And talking of outsized financial performance, I'd like to invite Peter Osvaldik on stage to talk to us. Thank you.

Please welcome Peter Osvaldik.

You can tell we're just a little bit excited, and it's not just because the Seahawks won the Super Bowl. Well, I thought that would be a little dangerous or close, but that's good. All right. Well, let's get into it. I thought I'd start a little bit with a look at Q4 and 2025. And as Srini and said, as Srini said, it's a little hard to click this clicker. Anyway, what is that strong differentiation deliver? It delivered industry-leading results yet again. 261,000 postpaid net account additions in Q4. Think about that. That's times what the other competitor who reports this delivered in Q4. And that's important because as Srini said, this is the center of value creation for the industry. And this proves consistently and scale that customers are choosing T-Mobile.

Combined with that growth in postpaid net accounts, we delivered postpaid ARPA growth of 2.7% on a year-over-year basis. And importantly, the organic growth was 3.6%. If you recall, as we had talked about before, our acquisitions of both Metronet and U.S. Cellular came with a base that had lower ARPU allowing us to run our playbook of ARPA expansion that we did so successfully both with Sprint as well as our base over time. That momentum between growth and ARPA expansion led to service revenue that was up 10% year-over-year on a reported basis and 5% year-over-year on an organic basis. That's 10x and 5x the next highest competitor for those keeping score. And I am. So that strength flowed through to adjusted EBITDA, which grew 7% year-over-year or 4% on an organic basis. And of course, the most defining metric for us is our ability to convert service revenue into free cash flow, which we did at 22% in Q4, topping off a year where we delivered it 25%. And that's important because it highlights a lot of the things that Srini was mentioning, the structural advantage of T-Mobile as expressed in terms of the best metric for value creation, provided, of course, you're not cutting CapEx and going backwards. If you're investing in the core business appropriately like we are for expansion and you're delivering 25% of free cash flow margin. That's the best measure are you able to create value for shareholders.

All right. So let's look ahead. What does this all mean? How does this formula this growing differentiation going to result an updated '26 and 2027 figures. So for '26, we now expect approximately $77 billion in service revenue, representing 8% top line growth -- that includes about $3.6 billion of contribution from M&A. So we have 6% organic growth and acceleration from what we just delivered in 2025. In '27, we now expect between $80.5 million and $81.5 billion in reported service revenue, 5% top line growth and includes $4 billion in contribution from M&A, so delivering 5% organic growth significantly ahead where we gave you just in September of 2024, our projections at Capital Markets Day. I think it's important if you step back, think about what we're delivering here at the high end of this guidance from 2025 to 2027, we're going to deliver more than $10 billion of service revenue growth.

Supporting that growth, as we've talked about, is strong postpaid net account growth. And our expectations for 2026, as we enter the year, are to generate between 900,000 and 1 million postpaid net account additions. And for those of you who are curious, and I know you are, implicit in that guide is an expectation of about 2.5 million postpaid phone net additions. Combined with that growth in postpaid net account additions, we anticipate postpaid ARPA growth of between 2.5% to 3%. And that's from all of the elements and ability to expand that Srini mentioned, it's new account inflow, taking our premium plans at 60% plus. It's our base as they interact with T Life and our experience stores taking on premium plans. It's continued expansion of connections per account and introducing new products and services into the account, which you can only do when you have a trust of customers, and that's evidenced from MPS.

And I'm pleased to share that we're now going to raise the bar on ourselves once again. You've heard a lot today about how we believe and we've long discussed and reported that postpaid account net additions and postpaid ARPA are the real correlation to value creation in this industry. Think about that. You have another competitor who delivered 600-some thousand postpaid phone net additions, but only 26,000 postpaid net account additions. The way you correlate how we're growing the service revenue and the translation into profitability is how we're actually able to attract and expand customer relationships. And that's best expressed by accounts and ARPA. As we said, over 90% of our postpaid phone lines are actually on a multiline account and a vast or a substantial portion of our 34-plus million postpaid accounts actually have products beyond just postpaid phone. So when you think about it that way, that's really the unit at which you create value as Srini has long said.

And beginning in Q1, long-standing, we've been focused on postpaid accounts and postpaid ARPA, and that will be our sole focus going forward. So we'll no longer be reporting subscriber level elements. Again, I've given you the underlying assumption, 2.5 million postpaid phones and that very strong $900,000 to $1 million postpaid net account additions, but this is what you should expect from us. This is the bar you should hold us to. This is the bar you should hold the rest of the industry to who can attract customers switch full relationships and who can grow those relationships in ARPA, that's how you get service revenue growth like we're delivering here. What does that mean for adjusted EBITDA? So in 2026, we now expect between $37 million and $37.5 billion, that includes about $1.3 billion from M&A contribution. So 10% reported growth and 7% organic growth, an expansion again from what we delivered in 2025.

In 2027, including $1.7 billion from M&A contribution, we expect 9% reported growth and 8% organic growth at the midpoint, again, further expanding on the growth that we're delivering in 2026, which is further expanding on the growth that we just delivered in 2025. And again, if I step back at the high end of the guidance, this means from 25 to 2027, we'll have delivered more than $7 billion of incremental core adjusted EBITDA getting us to between $40 million and $41 billion. This is, of course, driven by a number of things. One, continued profitable service revenue growth and operating leverage, as you've seen from the ability to attract customers generate postpaid account net additions and continue to expand ARPA. But it also comes from contributions of our unique approach to how we put the customer at the center of everything digitalize, create efficiencies, utilize AI, not for cost cutting as the primary focus, but for customer experience as the primary focus which generates significant efficiencies as a benefit, while at the same time, enhancing their experience, continuing to increase their NPS scores continuing to allow us to deliver customer switching. We now expect between 2026 and '27 -- relative to 2025, these initiatives are going to deliver $1.3 billion of incremental savings in 2026. And and $2.7 billion in 2027. But we're not done there. It's just the beginning of the journey.

There's a lot more expansion beyond 2027. And those come from a lot of the things you've been hearing from us our progress on digitalization and enhancement of the customer experience through as experience through T Life, beginning with upgrades, what we've been able to do with first assisted and then unassisted upgrades, now at a lines and prospects that allows a whole new world of how do you approach retail and approach retail with a focus on creating experienced stores, a rationalized retail structures more in-sourced more focused on customer experience that at the same time, drives efficiencies and value. You heard Srini, our incredible frontline and how they've reduced inbound customer contacts, but there's more to be done powered with intent CX now that frontline will be able to further reduce inbound customer contacts on the way to the goal that Jon Freier shared with you at our Capital Markets Day in 2024.

Customer-driven coverage. We've been talking about this since Capital Markets Day in 2024, a proprietary AI-infused model that allowed us to begin focusing CapEx dollars on where they matter most to customers. And if you put the CapEx dollars where they enhance customer value and experience the most, you get the most efficient deployment of CapEx. We've now been able to apply that model to the existing entirety of the network base. and we'll be able to start generating OpEx savings to allow for reinvestment. And the way we're doing that is we apply the same view to every one of our towers, every one of our small cells and said, which of these are driving the most customer value and concurrently, which are not driving the most customer value and we can streamline and optimize the network to reduce those and reinvest in those that are driving the most value. And of course, as you'd expect, like everybody else, but probably in a leadership fashion, there's a lot of efficiencies in the back office, in IT through utilization of simplicity, efficiency and AI. But if you do it from a customer centricity lens first, you get differentiated results.

Now 2026 is going to have a slightly different phasing to core adjusted EBITDA than 2025 had, which you'd expect because we're both delivering on synergies in the U.S. Cellular, and those will expand as we go through the year, but we're also going to harvest more of these AI and digitalization and simplicity savings as we go through the course of the year. So we expect Q1 core adjusted EBITDA to be between $9 billion to $9.1 billion. There's a few below-the-line items in 2026, I wanted to highlight as well. beginning with we expect approximately $1.2 billion in merger-related costs primarily related to U.S. Cellular. As you recall, we had an exciting announcement around our acceleration of the time line to integrate U.S. Cellular at 2 years. network optimization that I just mentioned, this CDC-based network optimization to generate value is going to result in a network optimization cost of approximately $450 million will be done through that primarily in Q1 and Q2, and we'll harvest those savings and reinvest into the network.

And we'll have workforce restructuring charges of approximately $150 million in Q1 as we go through our simplification initiatives and conclude what we began in Q4. CapEx. No big surprises here. We've mentioned to you before. We expect CapEx of $10 billion in 2026, and that includes all of the overlays around the U.S. cellular retained sites, all of the upgrades to those sites to bring all of the spectrum goodness there and start delivering even more better experiences to customers faster. In 2027, we anticipate CapEx to return to the normalized range of between $9 billion to $10 billion. And again, all of this from a network perspective will be deployed through the customer-driven coverage lens which means that every single dollar we put into the network goes to accrue to the highest customer experience improvements and hence, the best value delivery for us. while simultaneously expanding the network leadership and allowing for long-term growth.

Let's tumble down to adjusted free cash flow. And the short story here is we continue to deliver a cash generation profile and margin that is industry-leading. Free cash flow is expected to be between $18 million to $18.7 billion in 2026, growing to between $19.5 million to $20.5 billion in 2027. Now there's a number of things as you go through an integration that I want to highlight for 2026. We anticipate approximately $1.3 billion of merger-related cash outlays, again, primarily associated with that acceleration of the U.S. cellular integration. We also expect approximately $1.2 billion of cash outlays for the network optimization and workforce restructuring cost. That includes the workforce restructuring charges that we took in Q4 where the cash outflows will happen in 2026. And because we're accelerating that integration so dramatically, we now expect those costs to drop down significantly in 2027 to $1 billion. Cash taxes are expected to be $1.5 billion for 2026 and $3.5 billion in 2027, fully integrating the benefits we anticipate from the one big beautiful bill.

Now one important note is around cash interest. And I know a lot of you in this room like to model rapid deleveraging for us. So I wanted to just highlight that we take a very prudent approach in our guidance assumptions that we're delivering to you. And what we do is we assume leverage at 2.5x, which means we assume utilization of the entire strategic capacity envelope. We don't put any benefits into service revenue or core adjusted EBITDA for that. But for purposes of cash interest modeling as we give a free cash flow guide, we assume full utilization of that. And so that results in an assumption of $4.3 billion in cash interest outlays in 2026, stepping up to $5 billion in 2027. Just for perspective, on an apples to oranges in terms of what you're seeing in consensus because of that desire to deleverage us rapidly. And that means relative to consensus, this is about $500 million higher in 2026. And and $1.1 billion higher in 2027. So if you're trying to get an apples-to-apples comparison and understand what the underlying business expansion is doing that's something to look at, given how we prudently and I think, conservatively guide and assume the full utilization of the envelope.

And again, the most important part here is our ability to convert service revenue into free cash flow at industry-leading pace and that's a key differentiator for T-Mobile. And as I mentioned before, highlights the structural advantage that this business has and the ability to create shareholder value. Well, certainly, that growth in core adjusted EBITDA and a delivery of free cash flow and industry-leading service revenue margin means that there's a lot of capacity. And so how do we think about it? Well, we think about it very consistently with how we've shared it with you before, our capital allocation philosophy hasn't changed. It's disciplined, it's consistent and it's focused on maximizing value creation for shareholders. Begins with always setting a prudent leverage target, which we continually reassess both on our belief of the internal forecast of the business as well as what's happening from a macroeconomic perspective. We then prioritize investment in the core business.

As you see, not only can we deliver in the short term, but our ability to enhance and expand this network leadership by investing in the business prudently, it's what's going to generate continued differentiation for customers even beyond 2027. We focus on high ROI strategic investments, and I'll get into some of the ones that we've done there. And then our focus is to deliver with excess stockholder returns in a very balanced approach between dividends and share repurchases. And all of this is done with an eye on maximizing both midterm, short term, but just as importantly, long-term value creation. So with my last Super Bowl pun, let's do our own halftime show of what have we done? Since our Capital Markets Day in 2024, we funded strategic investments of approximately $12 billion. That included our acquisition of U.S. Cellular, included establishing the JVs with Metronet, Lumos, Bliss, Vistar as well as investing in spectrum for the long-term continued network leadership. We returned over $20 billion to shareholders balanced between dividends as well as share buybacks, which puts our total now since the program inception in Q3 of 2022 to over $45 billion.

Now as we look forward for the balance of 2026 and 2027, we have a remaining envelope of over $52 billion, driven again by that core EBITDA expansion and a free cash flow delivery. Our initial view of this is allocating up to $30 billion towards shareholder returns. That currently includes an assumption of approximately up to $10 billion in share repurchases per year. And I'm excited to announce today that we are accelerating our Q1 share buybacks to $5 billion, up to $5 billion, or double our run rate. And you might have seen Deutsche Telekom's announcement this morning, given the strength of the business and their belief in where we're going, as we've laid out for you today, they are not planning currently to sell any T-Mobile U.S. shares in 2026. And in fact, we're looking at strategic alternatives to further deepen their investment. I think between the acceleration of share buybacks in Q1 that you're seeing from us as well as DT statement that you can see the conviction in the business. And most importantly, we're always guided with respect to share buybacks and as to where our belief of the intrinsic value of this company is and where the trading dynamics are today.

Well, what does that leave? That leaves over $22 billion in a flexible envelope and we'll deploy that much as we've done in the past. It can be deployed for strategic ROI investments. It can be deployed potentially for further stockholder returns. And this all assumes a prudent 2.5x leverage assumption. And we're focused, again, on all of this, the focus remains on ensuring that we have the healthiest and the most strategically flexible balance sheet in the industry allowing us to capture opportunities for shareholder value creation as they come. I know you're very curious to get to Q&A. So let me just summarize quickly. I think as Srini mentioned, we have a tremendously growing differentiation not only has our current differentiation and where we've arrived with best network, best value and best experience is continue to deliver industry-leading results, both from customers selecting T-Mobile and our ability to translate that into outsized financial growth, top line, bottom line free cash flow. But we see the ability to grow this differentiation and continue to deliver outsized results in '26, '27 and beyond. So with that, we're going to get to Q&A. So if you can give us just a second to set up here, we'll get the team up and get to your questions. But thank you.

[Presentation]

Let's get to Q&A. We'll have mic runners across the room. Please raise your hands. If you've got a question, and please also introduce yourselves once you have the mic. I'll start with Peter since he's right there.

I wanted to ask about the change in your disclosure about the elimination of postpaid on subscriber reporting and, I guess, ARPA. If you could just expand on your thoughts behind that and how you think it allows you to run the business better and ultimately benefit shareholders.

Absolutely. Maybe I'll kick off and then hand off to you, Peter. So the change in reporting to me is actually comes from a conviction of what do we want to focus on? What do we want to double down on. accounts, and I think of them as relationships because these are really families and businesses. That's the fundamental way in which consumers buy. 90% of our postpaid lines belong to a multiline account. It's how consumers buy and it's where value gets created. It's the thing that's most correlated with CLB. And from our perspective, this team and everyone on the front line is incentivized on accounts, is incentivized on relationships.

We want that alignment to exist between how consumers buy, what creates value, how this team is incentivized. And that, in our minds, raises the bar in the industry. because it drives this conversation on how many relationships have you actually bought it, right? And that's, to us, the fundamental unlock and the most transparent way of thinking about the P-times-Q equation.

Yes. I mean, as I mentioned, and fundamentally, what underpins that is the fact that the vast majority of our customer accounts have deep relationships. So you need to think about both as you're approaching new accounts coming in, but also as you're thinking about the base and expansion of ARPA, now over 90% of our postpaid phone lines are multiline accounts. A significant portion of our accounts have products beyond phone lines, whether that's tablets, watches, our very successful broadband offering where we're the most bundled player in that space, and we can get into that. I'm sure there'll be questions around that later. So when you think about how do I, one, think about the customer relationships.

Customers don't think about their relationship with T-Mobile is I have 3 different relationships or 3.5 different relationships. They think about it as one. And when you win that trust over as demonstrated by MPS, that allows you to expand and give them new products, whether it's connectivity products or more importantly, as we demonstrated, when you have a platform like T-Life, with 24 million monthly active users, meaning they're using, I think, 4 times a month it allows you a completely differentiated experience. It's not just I interact with my customer base once every couple of years when they come into the store. Now I can interact with them on a multi monthly basis to introduce them one into new products like T-Mobile, Visa but also help them understand how we can expand in a win-win, a more-for-more construct the relationship with them, and that's what gives us the confidence to think about ARPA expansion the way we are. So it's really fundamentally how the customer buys. It's how we're thinking about the relationships.

And honestly, when you think about it, just focusing on postpaid phones and postpaid phone ARPU is one small portion of the postpaid service revenue line and doesn't really correlate as well as accounts in ARPA to what you've been able to do with service revenue growth over time. That's why you see such different -- how can you be 600,000 and 900,000 and suddenly have such different -- wildly different expectations for 2026 service revenue delivery? It's because we're focused on the actual unit of value creation and how customers think.

And even when you restricted to postpaid phone, very few people go out and buy one line, right? Phones shopped as a family, as a business, and that's what drives consumer behavior. And that's what our North Star should be

Okay. Let's go over to Sebastian Tishan.

Can you just help us think about the long-term penetration rate implied within your broadband guidance of 12 million to 15 million passings is how you've at least discussed it in the past. And so it would imply penetration below 30%. And so -- just help us maybe contextualize that what you're seeing in the market today as well with the type 2 fiber launch?

Yes. The fiber is tracking all of the things that we set out to do with it. and we're tracking well on plan. When you think about long-term penetration though, the thing you need to remember is we'll still be building, right? And so what you're looking at is what is cohort level penetration, then it will be higher than that number you're looking at purely because we'll still be building. You want to?

No, I think what we're seeing in terms of how the brand translates, how channel translates, we're seeing everything we expected to see, and we're very happy with the progress. As Srini said, we need to look at this in a prospect of we're still going to be building at a relatively fast pace as we go to '27, '28, '29 30. So for a lot of the cohort we will have, we won't be a terminal penetration, which usually happens more towards year 3, year 4. So that's why you have these numbers that look to be below 30%, but they won't be on a terminal cohort perspective. They will be significantly higher than that.

Great. I'm going to go to John Hodulik and then Walt up there.

First, a follow-up to that. How many homes passed do you guys have now? So what's the build rate going forward? And did you guys talk about the cost per build -- and then just maybe a broader question on the wireless market. Just what are you seeing in terms of competition? Do you still think that the business has pricing power? I know we're trying to get away from ARPU here. But just sort of the drivers are clearly churn and ARPU, how do you see ARPU trending and your ability to price? And then maybe just for Cathy, are we going to get churn account churn going forward be able to sort of assess the health of the business.

Maybe I'll start with the phone competition and the wireless market, then you can talk about account churn and Andre, you can pick up broadband question there in one question. So let's start with the first one. What are we seeing in the wireless market? Look, as always in this market, you kind of go through cycles of promotions. You kind of go through periods in time when there are lots of free phones. We saw that happen in Q4. We're feeling very good about where we are. Now in Q4, specifically, like Peter said, in a very competitive cycle, we outgrew the only other person who reports accounts 10 to 1, right?

So we're feeling really good about the strength of this business. The momentum that it's driving. And I've said this before, look, promotions are things we over-rotate on. There's a direction of travel, and that direction of travel is driven by differentiation. That's why you get this exceptional performance -- this was our highest postpaid phone lines if the we don't talk about much since the merger, right, in the context of record beating accounts, right? And when you're talking about pricing power and kind of our ability to grow the relationship, it's a composite of 3 different things. It's the fact that our POS naturally tend up because of our back book, front book dynamic and the premium plan loading, which is why we're guiding to 2.5% to 3% on ARPA. Our back book also means that there are opportunities for us to look at pricing. Underlying our guide of where -- and Peter unpacked the $2.5 million is also an ARPU of $1 million to $1.5 million. So we do see ARPU growth happening in '26, even though that's not the primary thing that we're focused on.

And the last bit is expanding our relationship, which is through fixed wireless, which is through fiber, which is through everything else we do. So we see a lot of ability to grow both volume and value in this market. I'll leave you with one final piece, which kind of reflects our value-oriented view of the world, when you look at just the month of December, and this is something we track very closely -- and Mike and I were talking yesterday, the value of our port-ins was 15% higher than our port outs. So when you think of what drives value creation in this business, even in an intensely competitive month like December, we saw significantly higher values in than out. Do you want to pick up the account churn?

Yes. I have to give transparency around this metric, we'll absolutely be reporting account-based churn.

And on homes passed, we don't disclose it. These are joint ventures. The only thing we can say is we're tracking to where we want it to be tracking, and we will hit the 12 million to 15 million homes passed by 2030. So that's something we are very confident about.

Just on the 6% service and 5% service and '26, '27, respectively, any -- is that mostly core, right? So can you give us a sense of like the size today of the advertising business? You talked about T Life, $24 million, it seems like monetization there. edge compute, maybe some monetization there. Are any of these things, maybe you can rank order them stuff that could add 50, 100 basis points to service revenue growth. So maybe like size what you got now in advertising and then anything that material, not even can go beyond '27, '28, '29, anything that can give you 50, 100 basis points?

Yes. I would say, as you're absolutely right, Walt, it's -- majority of it is core growth. I think as Srini mentioned earlier on, there's actually nothing in the plan with respect to edge or AI RAN or any of that opportunity. Now we see it and we're in a leadership position. I think it's going to drive fundamental growth whether any of it comes in, in a meaningful manner by '27, I don't know, that's potential upside. I think you've seen us talk about a lot of other new business opportunities, including the very successful early but tremendously successful launch of the first foray into financial services with T-Mobile Visa, that's potential upside to the plan. That's not incorporated into it. And T Ads has very prudent but small growth assumptions in it. It's going tremendously well.

But that's a business that we think could certainly in our belief, not all in the plan, only a little bit of that is in the plan could be a significant growth driver, not in just 2027, but beyond. So we're trying to be very prudent in terms of the new growth opportunities and how much of that is actually in the plan versus how much of that is potential outperformance.

I wanted to ask about the comments around potentially moving away from device subsidies. Is that something that you see happening industry-wide potentially? And what are the implications of that just given where we are in the product upgrade cycle and how you see that impacting the gross adds or drop opportunity for next year?

Thanks, Mike. I'll keep this brief, and I'll hand off to my cats to talk a little more about it. There's not that much we're going to be able to say about this right now. for obvious reasons. But I think there's -- the principle for us is really important. We think when the industry starts moving away from win-win economics for investors and customers. We need to step in and change the direction of it. And our sense is this is a point in time where we're beginning to see some of that drift, right? I'll let Katz talk about that in more detail. Mike, do you want to?

Yes. Sri talked a lot about differentiation and how important differentiation is for us and for customers. And I think that's a great example of it. Like you can't make the iPhones any freer than they are today. And the truth is, is customers phone purchases a point in time. It happens once every couple, 3 years. And between those times, they're living with their wireless service every single day. And we think customers expect and demand more from us than just a free phone deal every 3 years.

And that's why what the value that we've built into the plan is so important because it's a reminder to customers every single day of these incredible benefits that they're getting -- incredible benefits. T-Mobile customers save $1,000 a year relative to competitors, both because of the core rate plan savings, the front book, back book dynamics that Srini talked about, but incredible not niche benefits, incredible benefits that our customers use at scale. In fact, T-Mobile customers of these Magenta status and T-Mobile Tuesdays benefits. On average, most of our customers use multiple of those every single month. So that's where we think we can create the real differentiation. And phones, everybody does great deals on phones. It's what happens in between the phone purchases, I think where T-Mobile really stands out.

And 2 point on subsidies and kind of what that means for jump balls and the rest were. And when we plan the year, when we plan ahead, we look at jump balls, we look at competitive intensity, and our guide incorporates all of that, both the 900,000 to 1 million and underlying that order of magnitude, 2.5 million debt, which is kind of where we're positioned right now. And on subsidies, we will always be competitive with phones. It's really changing the center of gravity of the conversation, to stuff that creates sustained value, which is all the stuff Mike is talking about because also from an economics perspective, that's where we believe real CLVs are.

Great. Let's go over to Kannan, please.

So I guess a couple of questions on the broadband business. The first is when you look at the service revenue mix going forward, I mean, the guidance that you guys have provided -- how much of that growth comes from the broadband business specifically and more in general, the newer businesses? If you can help us understand that. And then from a margin perspective, I mean, there's a lot of things you mentioned today like focus on ARPA, less subsidies potentially more focus on the back book price and so on.

All of this would imply that your core organic wireless margins should step up at a faster pace going forward than it's been so far because there's less focus potentially on volumes. So if you could just help us parse through some of these details to understand what's in the mix of EBITDA and revenues, that would be helpful.

Let me take the first -- thanks, Kannan. So the question really on wireless you're asking is an operating leverage question, right? And you are seeing, as we move from '26 '25 to '26 to '27, really strong improvement in operating leverage at the EBITDA level. So you're going from 5 and change because you shared the x M&A numbers as well to 7 to 7 and change almost on -- and that's a reflection of the fundamental operating leverage improvement, both in terms of our focus on ARPA the ARPA growth as well as some of the cost reductions that Peter talked about. In terms of the broadband piece, Peter, do you want to pick that up?

Yes. It's all -- we don't report segments because we don't run the company that way. We run the company as you heard today, in terms of customer relationships and ARPA expansion. So broadband is an important element of how we get to ARPA expansion. In fact, again, we're the most bundled in terms of successful ability to take customers and either customers and then sell our broadband product into it or have broadband-only customers get introduced to the power of the T-Mobile network and then expand their product set there. So it's all implicit within the ARPA guide in there.

And then when you run the business, inclusive of synergies and integration and all of that, we're really thinking about it as one business and one operating leverage. Even for example, on new businesses, ability to utilize T Life, as I was speaking about earlier, to not only self-serve or help improve the experience with our amazing frontline and customer owned retail stores and our experienced stores but it also then provides a platform for new business growth, cross-sell, all that. So that's why we think about it in totality. And I think when you step back, what I'd look at is you're driving, again, at the high end from $25 million to $27 million, $10 billion of service revenue growth, and you're going to drop $7 billion of EBITDA growth as part of that. That's the all-in number that we're looking at as well as are we actually able to deliver in an industry-defining way free cash flow margins on service revenue?

Let's go over to Greg Williams.

Greg Williams, TD Cowen. Just wanted to get your updated view on your appetite for additional spectrum. There's presumably more spectrum out in the marketplace today as we think about your M&A flexibility envelope?

Great. Well, thanks for that. The way we've thought about Spectrum historically will be consistent with that is every piece of spectrum that comes up, we look at it on a build versus buy basis, right? What would it cost to densify versus buying the spectrum. And that's why we walked away from things like the EchoStar spectrum. We fundamentally believed it was too expensive. Now that said, we're incredibly committed to maintaining spectrum leadership and network leadership. And we're looking forward to how this plays out in the auctions.

Our view on that, again, is we'll do the same there's kind of 3 things, right? One, the build versus buy, two, looking at the spectrum that comes up in terms of consistency with our existing spectrum holding, and three, a commitment to maintaining our spectrum leadership. Those 3 things together will drive what we do with spectrum acquisitions. And you've seen where needed, we've been incredibly disciplined about the valuation of that spectrum and where it makes sense. The good news is there's a lot of new spectrum coming with the one big beautiful bill, which will drive valuations of that spectrum as well, just from a supply perspective.

Yes. And the beauty of it is, of course, we only guided through '27 today. But obviously, we have aspirations of growing beyond '27, both from a core EBITDA perspective and a free cash flow perspective. And so you just see how much capacity this business is creating. And because we're so prudent and strategic with how we allocate capital, that creates capacity for all of the things, so to speak. And when you think about run this out to '28 to '29 '30, when who knows the timing of all the potential spectrum opportunities, but you're creating a lot of meaningful capacity to think about wisely in terms of investment.

Let's go over to Frank and then 2 down from Frank.

So can you walk us through the economics of the financial services business with the credit cards? What is sort of the opportunity there in terms of revenue and EBITDA? And is that something that would get folded into ARPA?

Yes. We're not -- we haven't broken that out separately. It's early days. But just think about -- what -- as we mentioned, the way we look at new businesses, and this is very consistent with how Mike Katz laid it out at the Capital Markets Day in 2024. Where can we bring significant scale and the assets that we have, meaning we have trusted customer relationships. We have our network assets. We have our distribution assets.

We have now an app that has 24 million multiple times a month, monthly active users, which means you can and we have data, particularly on our base, meaning we can do advantaged credit decisioning. -- there's a reason. I mean, we've been really tremendously strong and the capabilities we've delivered some by necessity from where the Un-carrier began in terms of being able to deal with subprime and near-prime populations. Q4 was another quarter we delivered much lower bad debt as a percentage of total revenue than AT&T or Verizon. It's because of the capabilities and the data sets. -- and making sure that we create better customer value, better customer experiences. So think about financial services. There's a lot of great ideas out there. And I think we have them too.

One of the big barriers to great ideas getting in the hands of customers and changing and improving the customer experience in financial services is honestly CAC, right? I mean a lot of these business ideas get killed because of customer acquisition costs. We can change that whole paradigm. We have T Life. You have trusted relationships with 34 million accounts. If you're thinking about postpaid phone, that's 85 million postpaid phone users out there, and they're using T Life. And now you can bring them a better product, perhaps even something that can't even get in the financial service space because of our advantaged credit decisioning and data opportunities. And you can do it at a customer acquisition cost that nobody else can touch. So that's the -- that's one way to think about that opportunity. That's how we're thinking about the financial service opportunity. There's very little in the plan from a financial service perspective.

When the CFO is the biggest proponent of this, I don't have to say much. But listen, fully aligned, I think, as Peter said, we always look at this as a win-win for the customers. And what we're seeing today is the ability to not have some of these industry legacy either revenues in the backlog, like you see it in FWA, right? There's a great advantage of being able to flow through all this growth, greenfield because we don't have a back book to protect. Now in new -- in some of these industries, like financial services, we have no backlog.

The second thing is our clear advantage in terms of access to customers leveraging our NPS scores that are leading -- industry-leading and the fact that we have acquisition capabilities, both on retail and on digital with Life allows us to create these win-win relationships that we were talking about when we were talking about wireless, the same approach to this industry, right? And you think about the credit card industry, financial services or advertisement. These are all industries that have opportunities to create a lot more win-win with customers, and that's what we're focused on. That's what's going to guarantee us growth beyond what we're putting in the targets we have today.

Avi Greengart, Techsponential. So we've been talking mostly about consumer. I was curious how your expectations of business or enterprise growth play into your guidance going forward?

So we see a huge opportunity in business. We've talked about double-digit revenue growth for the next 3 years. It will probably run for the next 5, the reality. The reason we see that huge opportunity comes back to the position we've put ourselves in from a network perspective. A lot of our growth today is coming from differentiated things only our network can offer from the most obvious example of that key priority where our ability to slice and our ability to build that network creates a clear win with TFB customers. But it also goes through things like when people do RFPs based on large-scale testing of networks. We clearly win in those cases. So we see a lot of upside across everything from SMB to enterprise to government.

Okay, let's go over to Dave Barden.

Dave Barden from New Street Research. I guess my first question would be Srini. Could you elaborate a little bit on your understanding with DT about how long they will cease to contribute their shares into the stock buyback program and kind of the framework that we should expect that, that will operate under as we forecast? And I guess the second question would be, with respect to presumably any incremental ambition for fiber expansion is the best way for fiber expansion for T-Mobile to use the existing Lumos and Metronet partnerships to let them do the expansion? Or do you want to create -- or would you be willing to create new partnerships go and take advantage of other opportunities to kind of create a portfolio of fiber companies. So thanks for the question.

I'll pick up the fiber piece and Peter, maybe you can talk about the share buyback stuff. So on fiber, our view on this has been clear. We see fiber as a real opportunity to create customer and equity value. We're not targeting a number. We're certainly not targeting a number of homes passed. So we're not kind of keen on how much fiber lays outside multiple buildings, right? We're keen on building a business that creates equity value and creates value for customers. Today, everything you saw was based on the Lumos Metronet expansion. So all the numbers we presented today is the assets we have currently. Are we open to looking at more assets? Yes, at the right price. Because we're not going to sit here with a gun to our head on, hey, we're going to cover this many streets forget customers and then work back from that while people inflate their prices when they have a discussion with us.

Are we open to more assets? Yes, they need to be at the right price. Just from our -- the way we think of the way this market works are 15 million customers that we've now announced till 2030, if you were to equate that to fiber homes passed -- that's above $40 million already. You take 12 plus 15 of fiber homes passed. We're going to be in 50-plus million from a homes-pass count perspective. It's a count we think is actually precisely irrelevant. But if that's the count you want to do, that's order of magnitude where we are. So my view on fiber is absolutely interested in looking at other assets and other scalable platforms, but they need to be at the right price to create value.

Yes. Look, as our majority investor, I can't really speak to their intentions, right? I mean we're focused on running and creating value creation for T-Mobile U.S. shareholders, and Deutsche Telekom as an investor, obviously, has their own motivation. So I can't speak to their long-run thought process or their decision-making around it. That really is something you have to ask DT. What I'd step back and say is, what they laid out and what they disclosed this morning, I think it's driven by what we laid out here and shared with you is we created a great vision for outsized growth in our September 2024 Capital Markets Day and today increase that vision.

I think give you all the kind of pieces around how we believe this growth can continue way beyond 2027 and deliver industry-leading results beyond. And we're not sharing that guidance here today. We're focused on '26 and '27 and then our own conviction. Again, we are always guided by how the plan that we've put together, including our internal views of it informs us around the intrinsic value range of this company? And where are the shares trading today? And if we believe there's a significant discount to that, that informs our approach to what we recommend to the Board from a share buyback perspective. And I imagine since obviously, Deutsche Telekom has the ability to see all of this in their roles on our Board, they're also convicted with the plan. In fact, they said so to be able to say we're not actually going to sell any of our shares in 2026, whether that's into the share buyback or on the open marketplace.

And in fact, we're going to look at strategic opportunities to potentially enhance our shareholder holdings. So it's our long-run belief in this business, that's what convicted us to actually double the pace of Q1 share buybacks to $5 billion. And I think those statements will have to speak for their own. But I think it's a similar mindset.

For a minute there, I thought Peter was going to guide for '28.

Mike Funk from Bank of America. So I think the last Capital Markets Day, there was a slide where you showed the drivers of switching activity in wireless. And the primary drivers, I believe, were network quality, customer experience and then kind of price and value were lower down. So based on the K-shape economy that we're in, have those drivers changed? And how does that inform your comments about device subsidy?

Everything we see suggests those are still the big drivers. I want to double-click on a couple of them, right? So network quality, we spent a lot of time on. On value, just to be clear, we will zealously guard our value position. And one of our -- one of the reasons Mike and I talked about how value is being interpreted in this market that reflects our focus on continuing to guard that value position. What's important to us though is to guard it where it matters for customers, not to guard it in places which destroy value, right, either for customers or us. Like -- and that's part of the debate on the whole subsidy piece in terms of if phones are lasting longer, if they're becoming more expensive, what you're finding is more freer but then baked into price and there's a gotcha somewhere.

How do we move this industry to a place where we truly deliver value because we think value is always important irrespective of the state of the industry, and we will stay at the forefront of it. It's how we do it that really matters and doing it in a manner that resonates with customers. I still see those as the big drivers, and we will be the best at all 3.

Chad, did you have a question?

A couple of questions around AIRM. How are you thinking about AI going and connect the dots for us going into 60? And can we expect in 2026? And then a question around T satellite, the impact you have seen of satellite in the last 6 months.

Okay. So let me do the T satellite piece and then hand over to John Saw. It depends on how long you have because you get them started talking about AI Ran and 6G, we could be here for a while. Let's talk about T satellite. Look, T satellite, from our perspective has been a huge success. It was a world first when we worked with StarLink to create a functioning direct-to-sell, service. It's hard to do. We're actually making a satellite going at high speed talking to a moving mobile phone is not easy to do. It is fundamentally a complementary product. And the physics and the economics of that business will make it stay that way.

I mean, it's great for the 500,000 square miles of uncovered America to have an alternative, but let's be realistic. Manhattan. I want my wireless network. And that's our understanding, and that's, I think, the emerging understanding across the industry that this is a great complementary service. We love the work we've done. We like our partnership very much with StarLinks. So that's kind of where I am on satellite. And now over to Dr. Saw for 6G and AI Ran.

So Jan, AI RAN, we think, has a tremendous potential to transform the future of mobile networks, especially at our last Capital Markets Day, we announced the creation of the AI and innovation center with some of our key partners I Nokia and Ericsson to develop and test a new architecture. We really wanted to push the industry to think about a new architecture with more powerful compute that allows us to actually not just process telco workloads, but also AI workloads at the same time. And like Srini said up earlier, we see a future network where you were able to not just process bits but also tokens. And why is that important? I think you heard Jensen and Srini talked about the emergence of physical AI right? Today, as big as AI is, it's focused on generative AI. TAM is about $4 billion to $5 billion, which is huge. But it's really a digital space enhancement. It's focused on the IT economy. And wait until you see physical -- basically AI moving into the physical world and start interacting with it. And that's physical AI. And that's why we see the potential there.

If you talk about tokens the basic compute unit for AI is tokens, right? And with information -- with generative AI, tokens are usually just information tokens. They can be processed in a few seconds. It basically gives you good analytics of the world. But with physical AI, tokens are going to be moving. They're going to take action, right? We called it kinetic move, right? When tokens move, when things move with AI, I think it gives telecom operators a license to play in a big opportunity with physical AI. It could be worth if you believe some experts, hundreds of trillions of dollars, that's a total 10, right? And we believe that is the connective tissue for physical AI, right? And it is going to be the intelligent fabric that connects data centers, network edge as well as AI devices itself. So 6G is not just the connecting pipe, but really the nervous system for physical AI. That is why we are focused on AI RAN. We wanted to change the way compute is done in telco for generations now and bringing a more powerful compute model that does tokens and this. So we're making good progress. Since then, we have got both Nokia and Ericsson now being able to make full voice calls through the NVIDIA platforms. And towards the end of 2026, we expect to start some field trials.

Okay. Let's go over to Jonathan Kees and then I think Ben Swiber.

Jonathan Kees from Daiwa Capital Markets. Great presentation. Wanted to ask specifically, I guess, follow up on a question earlier about churn. Q4 churn was pretty elevated for both postpaid and prepaid for 2025, in for 2024. And that's with your NPS scores going up with leveraging your differentiation of the value add that you provide, I guess, how do you see churn going forward? And from what I heard earlier, sounds like you're just going to be giving churn of accounts versus per phone going forward? And then the second thing I wanted to ask is how much are you going to leverage price increases, especially legacy plans in terms of the service revenue growth?

So let me start with churn. So clearly, NPS and churn are hugely correlated. What I think we saw in was also a normalization of churn as an industry as a whole because you went through these years with 36-month contracts and suppression of churn. Now when you look at '25 as a whole, our increase in churn, which is 7 bps on is the lowest amongst the 3 players, right, which is just an indication of the NDS stuff playing through. Even in Q4, when you talked about elevated, I think we went up 10 bps and everyone else went up for 10 to 14 bps. And -- but importantly, if you look at full year '25, I think what you saw was a normalization of overall churn rates. They went back to what they were effectively before the suppression of the 36-month contract. -- right?

And our view on account churn again is that's the big number to look at because again, when you look at the value loss that happens when an entire account leaves you, that's truly -- that truly hurt [indiscernible] versus you take an inactive account which somebody suddenly realizes this line, I'm not using and decides to move away from it, that actually doesn't cause any value loss. That's why we're focused on account churn rather than online share. The other question?

Rate increases.

As yes. So on -- look, our view on this is what will drive ARPA is a composite of 3 things. The biggest 2 will be the fact that we have this front book back book dynamic, which means as your premium plan lowered in the front book, you naturally see a growth in ARPA. The second is expanding our relationships from time to time, we will look at specific cases, and we did one in January, where we think there is a case with the legacy book to look for price changes, and these are really rate plan optimizations.

One other thing I'd say is this really underscores the importance of the strategy that we have about the included services and differentiation in our premium plans because it gives reason that customers a reason to move up in rate plan by choice. And that strategy has been really successful. I mean, there's meaningful differentiation between our experience more plan and our experience beyond plan. And customers that are looking for those benefits by up themselves, both at acquisition, but also during their life cycle. And that is unique to T-Mobile. Nobody else packs these benefits inside the plan.

And just to underscore Mike's point, that natural upgrade cycle is not purely an acquisition play and premium plan loading. It also happens in the life cycle which is why we're guiding to 2.5% to 3% ARPA, 1% to 1.5% underlying that from ARPU.

It's also -- there was a tidbit you dropped that I'm not sure everybody picked up, and that is the delta and the value we saw with switching. So churn isn't always unhealthy. We've been very successful in the pre reduction of churn environment and now back to the normalized churn environment, and you saw in December a 15% delta between the value of accounts coming in and the value of accounts leaving. And there's a lot of [indiscernible] in the industry. We're trying to be very transparent around it. That's how you get the growth. That's -- then when you combine it with ARPA, you get the service revenue that's completely different from a profile perspective. We just promised you service revenue growth versus one competitor who said 0% for wireless service revenue growth. This is where it comes from.

We just promised you that service revenue growth actually going into core EBITDA growth and 10% headline growth and 7% organic growth. And that's with contract assets flat. That's assumed in our guidance, unlike some others who are really loading more and more discount onto the balance sheet, another way to move around core adjusted EBITDA, which is why you need to think and look all the way through to free cash flow generation. Again, provided you're making the right investments in the business, and you think you've seen today from us, we certainly are to expand our network margin of leadership, how much free cash flow you can generate out of service revenue is probably the best predictor.

So we're going to Ben Swinburne and then we'll do San [indiscernible] right behind that.

So I want to ask you about Tea Life digitization. And I think it connects to the I think Peter said $2.7 billion of savings, I believe, is out in '27. I know that's not all to life, but that's a piece of it. What are you doing to make sure that this migration is customer led. I think pretty clear it's good for your business to move to a digital provisioning model, but your retail distribution, your frontline people are obviously core to your NPS, your strong position with the consumer. And I guess I would imagine there might be some risk you sort of push the consumer in places that maybe impacts that NPS core. How are you guys managing all that? Because there are some big savings Peter has outlined.

No, absolutely. We've been incredibly thoughtful about this. we haven't driven digital and AI from a -- we're going to lay off this 20,000 people because we need the cost from it. We started with -- and this is why this has been a 3-year journey. Step 1 was building the capabilities. having our IT in place, having the digital in place. Step 2 was customer adoption, which is actually working with customers and then moving them to assisted digital and step 3 is now scaling. But really the person who should talk about this in the most remarkable transformation that's seen in a frontline and customer-centric way as Jon because he's driven a lot of this jump.

Yes. It's a great question and it's something that we are taking ourselves, which is really what we want to do is we want to meet customers where they are. And we need to be honest about this. that like stores open from 10 a.m. to 8 p.m., and that's the only time you can do business or when you call 611 and you reach one of our [indiscernible] that's not meeting customers where they are. People want more power and capability right on these smart screens to be able to do things, access T-Mobile Tuesdays, all the Magenta status benefits, transacting, changing a plan, adding the feature, remove in the future, all those things, and we want to be able to do that.

At the same time, there's a lot of customers who have some anxiety about like, hey, all these promotions and the complexity, I need someone to help me with that. And what we want to also do is lean into this experienced store format. We've got hundreds of these stores up and running and then in-source more of our selling and service versus outsourcing. Strategy 101, you outsource what you're not core competent on and you in-source what you are core competent on. And what we feel just incredibly proud of is the way that we go to retail, the way that we do customer care, and we want to do more and more of that ourselves. And I said this at the Capital Markets Day back in September 2024, that ultimately, the role of retail is changing. We don't want it to be a center of just transaction. That's 30 years ago. What we wanted to be a center of experience. How do you discover? How do you experience new products and services. Think about everything that John talked about just a few moments ago and what's coming with 6G, and physically and understanding and learning about that in our stores. We want that to happen.

And at the same time, we want to build more and more expertise. We're proud of this 45 Net Promoter Score that we have. You saw what Srini just shared just a little while ago in terms of how that has really separated not only in the top 100 markets, but also in smaller markets and rural areas as well. We're leading in NPS versus our principal competitors versus everybody in those markets. We see an opportunity to further that gap. We're not like reading our press clean we're like, okay, that's good, but we have ambitions to push that past 50. And we are sweating everything that we can do between the digital experiences and the technology that we're building in T Life and then empowering our people and creating T Life as a platform. So no matter if you call customer care or walk into a store, or do it yourself at 11:00 at night after you put the kids to bed, it's the same system, the same platform. And if you need our help and you need our expertise, we're going to be there for you. And if you can do it on your own, we want to meet you where you are as well.

Sorry, 2 quick questions. The first one on guidance and phones. I think we've got pretty that's, yes, we all got pretty comfortable in the last few years kind of having a good feel about what the guidance implies and then the end result on the beats on phone nets. Is there any reason to think that the way you're guiding on postpaid accounts is kind of conceptually different from how you used to guide on postpaid phones? And then the second question was on the better value plan that you launched a few weeks back. I don't know if there's any early signs on kind of upsell in the existing base or if it's having any meaningful impact yet.

So to your question on phone nets versus accounts, Sam. Look, our guidance philosophy remains the same. We go out and put a tough number out there, and then this team works its socks off to beat that. That will remain the same. In terms of historic ratios, they've -- historically, we've had 2.8 phones per account. Now you can see with our guide about 2.5 with to 1 million. We're also assuming a certain amount of growth on fiber. We're assuming a certain amount of growth on fixed wireless, which may not on day 1 come with the bundle. So that's the way you should think about it. Nothing changes from the way we guide. -- right, in terms of our philosophy of setting a number out there, which we think is the right number, given what the industry -- where the industry is at, given the number of jump-ball, given the competitive state of it and then going after and working our socks off to beat it. Better value? Mike, do you want to?

Yes. I mean I think better value is a good example of a lot of things that we've been talking about here today, where we built a plan that was really built around family savings and switching your family over to T-Mobile and how much you can save with that plan, not just not just today and not just this year, but every year relative to competition. And like we said here many, many times already, we think that's important because customers aren't just picking based off of a free phone in a point of time. It's what can we deliver for customers every day, both in value and in network. And that plan was designed to do that. So I know we're not going to get into lot of details this quarter, but so far, the plan is doing exactly what we expected to do and it's been great.

We'll go, Eric, and then there.

Eric Luebchow from Wells Fargo. I wanted to dive into the $15 million fixed wireless target you have [indiscernible] maybe you could talk about kind of the pacing to get here as we look out in 2026. You've been adding close to 2 million new fixed wireless subs a year. And maybe you could talk a little bit as well about the distribution of geography. I think historically, this has been a product that's been more in urban areas, it's been more consumer-led. Are you seeing any broadening of that as you move into more rural markets as you sell more into the enterprise, that would be great.

So I guess a few things. One, phasing of that move, that's -- we are where we are right now, and we've constantly outrun whatever phasing we had on this product because the demand has been so strong on the back of -- so we'll see what that phasing lands up playing out like over the next few years. We'll also see what that 15% looks like with time. That's all we can really see at this point in time. It's our -- it's our most conservative view on where we'd get to based on the assumption of no additional spectrum, based on assuming no spectral efficiency with 6G, all of those, honestly, will have a bigger impact than purely our run rate, right?

On geographies and kind of segments we're in, we're absolutely going to expand that product into business. which is great because that is the definition of fatal capacity. I think increasingly, and Andre, you might want to comment on this. I think the urban versus rural SKUs are less true, especially as we grow into SMRA.

Yes. So both, as Srini said, I think one is the SKU will always exist. It's a matter of density. But you saw Srini and John talk about the progress we're making in SMRA and that obviously translates with time also on our ability to compete in those markets. Again, we go back to we have the highest NPS in these markets. and we have the strongest network position. So that is translating and will continue to translate. And again, another opportunity to -- that gets us comfortable with the $15 million number, which is we're still under index in areas where we have the best network and we have the best NPS -- in B2B, it's something that we've launched and we've been successful at, but we're still in early days of this. I think B2B in wireline is a great opportunity for fixed wireless access. And you will see us over the next couple of months. innovating a lot what broadband and what Internet connection means for B2B. So stay tuned.

But there's a big opportunity. As you know, there's a big -- and you see it in -- so what other players are putting out. There's a big transition of technology happening in B2B from traditional connectivity based on Ethernet and PLS towards much more of an underlay-overlay split where you start seeing more traditional Internet connections being the baseline of connectivity and then them being complemented with SD-WAN and SASE solution. That's a huge opportunity because that allows us to get into that space. without having to carry the legacy and the complexity of having to run complex support systems, for customers. So that is opening up. Technology is moving in a way, both on FWA capacity capabilities, but also on the way customers want to buy that technology that gives us opportunity in B2B connectivity as we go forward.

We have time for one last question that's going to come from Matt [indiscernible]

Great Matt Harrigan StoneX. When you look at the simple math on the switching effects, it's much more powerful than the unit growth in the market. You've got some huge tailwinds, 24% penetration and device innovation helps you look at iPhone 17. You got the still very sticky lag in the network perception but if we did have unthinkably an economic slowdown on the low end of the K at least, probably already having that. Maybe you couldn't hit the 2.5, but do you think you could get near that number because -- and honestly, maybe your other actors would be more price rational in that environment, who knows. But do you think you can get substantial growth even if we do finally get a recession?

This is why -- I mean, thanks for the question. This is why we have zealously protected value over the years, right? We've always believed that we need to be resilient to any economic climate even though we understand that our category in many ways, is the most resilient to economic change, right? We are as a category where never a lot of people ask us, what's happening with bad debt what's happening? Are there any signs of a consumer slowdown. And my response to that typically is we're never the canary in a gold mine, right? We're just -- it is such an essential that we're very, very resilient to economic cycles. That said, what this team is absolutely passionate about is not losing our value heritage. And that's why, over the years, as our competitors at various points in time have use their pricing power, quote on quote , which has put up prices on existing customers without really doing more for more. We've been very thoughtful and choiceful and we will be going forward as well on where we do any rate plan optimization. Because staying best value is absolutely critical to our ethos and that's what, even in a world where economic times get harder. And even in the off chance that the category gets more value seeking, I think we're incredibly well cushioned and protected against that eventuality.

In fact, we're certainly not forecasting that. But if you see a world future where there might be more of a consideration and flight to value because of macroeconomic changes. Well, then T-Mobile is probably best positioned to actually capture a more meaningful share of that given where we're at, particularly as you have more consumers doing consideration of switching and they start asking around the way they do, and now you've come to the place where you have best network and still offer the best value.

All right. Well, that's all the time we have. Thank you all for joining us. There's light refreshments over there if you want something on the way out, and our team will be available to mingle for just a little bit. Thank you.

I'll get started. Again, I'm John Hodulik, telecom and media analyst here at UBS. And I'm very pleased to announce our next speaker is Srini Gopalan, the CEO of T-Mobile. Srini, thanks for being here.

Thanks for having me, John.

So as we always do -- well, first of all, we've got 35 minutes for presentation or Q&A, and I have the iPad here. So if anybody in the crowd has any questions, please log them in and I'll filter them into the conversation. Srini, we always start by giving a little bit of an outlook for 2026. You've been in the seat a relatively short amount of time, but we'd love to get your impressive about the company and what your priorities are as we look out into the new year. .

Thank you, John. Let me start by first drawing everyone's attention to the safe harbor statement. I think that just disappeared a minute ago. But having cleared that bed out. Look, I'm hugely excited to be here. I've been associated to this company now for almost a decade, been on the Board and now part of management and then took over as CEO. I've got to say this -- when you look at the history of everything we've built as the Un-carrier, and to be sitting here today and to be able to say, I'm convinced that the best lies ahead, is a testament to what the team's built and is a testament to the strategic position we've put ourselves in.

When I look at -- I mean, the baseline for everything we talk about was the strategic plan and the financial plan. that we laid out as part of our Capital Markets Day from '23 to '27. And that was not just a set of numbers, it was a set of capabilities that we wanted to build, which we thought was fundamental to changing, again, the way this industry works. And I'm pleased to say we're well on track to not just meet those but exceed some of our goals from that. And from my '26 priorities, there are kind of probably 3 big capabilities that I'm spending my time focused on.

The first is, and you won't be surprised to hear this, our network, right? And that has 2 pieces to it. One, not just maintaining but extending our network lead. We are today America's best network. We brought 5G to the U.S. We're very, very focused on extending that lead now with all of the developments that are happening, but also into 6G, right? And I know we'll talk a little bit more in detail on what 6G and AI-RAN is, but there's a piece of kind of just, we won't stop, we'll continue extending our network lead.

And the second part on network, and this is as important as the reality of the network we built, is making sure that we close the perception gap. We are America's best network. Not everyone sees it as that, right? There's at least 70 million Verizon and AT&T customers who chose Verizon and AT&T because they thought they have the best network. That was true way back in the 4G era. That's changed now. And these customers are paying a premium because they thought they were at the best network. That's no longer true. Huge opportunity there.

Lots of underrepresented segments, whether that's enterprise, whether that's government, whether that's just simply network seekers who have historically not considered T-Mobile, but as we talked in our earnings call, our perception amongst -- our network perception amongst network seekers is now at an all-time high and that's driving some real momentum into the business and our latest move, Easy to Switch or 15 Minutes to Better is part of kind of taking away that inertia amongst network seekers and bringing them to us.

The second big piece, so that's network, both perception and reality. The second big piece I'm focused on is our AI and digital transformation. Again, you've seen some of those -- I mean, this industry in many ways, operates like it's in 2002, right? For most things, whether you're an existing customer or a new customer, you've got to go into a store, you've got to call someone. We fundamentally believe that has to change.

And we are changing that over 90 million downloads of the T Life app, 70% of our upgrades are now done through digital channels. AI is a space we're hugely excited in, more from the perspective of how can we make the experience even better you saw our launch of 15 Minutes to Better, which really uses some of the best tech to start smashing one of the biggest pain points customers have, which is the process of switching.

I'm sure a few of you have been through the process of kind of trying to drag your 17 and 20 year old into a store to try and switch network providers, spending most of Saturday there. That's what we want to change. We want to put an end to that. And on the digital transformation, huge distance covered on our base, and now we're going after prospects and new customers.

And the third big leg of what we're doing is broadband growth. We're now the fast, have been for the last 15 quarters, the fastest-growing broadband service, a combination of FWA, where we've doubled in the last 2 years, and our fiber gives us -- I mean we like broadband because what you've got is an industry T-Mobile loves to attack, where you've got incumbents sitting on poor products with an inflated back book price, it's what the Un-carrier is all about.

So those are really my say, 3 big priorities, network, both reality and perception, digital transformation enabled by AI and driving our broadband business. I mean you put that all together, it's really about taking the Un-carrier to the next level. In this morning, in fact -- and we're beginning to align the organization around that. We've made good progress. This morning, in fact, we had an 8-K where both John Freier and Mike Katz have moved into broader roles, which are aligned to this strategy. They've had some kind of tweaks on their titles. But importantly, it's about aligning the organization behind the strategy.

Got it. Makes sense. All right. That was a great overview. Maybe we'll eventually get to a lot of those topics. Maybe let's start with the sub growth, you sort of increased expectations for sub growth through '25, you've actually done better than -- certainly than we expected to date. What drove that initial outlook? And what's the sustained performance that you've seen thus far?

Sure. So there's 2 pieces to think about sub growth, right? I'll come to the piece on how we think about guidance, how we think about our philosophy to approach that. But first, and this is kind of the 50,000-foot view that I think is really important, which is there's a flow of demand towards us, especially from new customers but also existing customers upgrading. And there's a real driver to that flow, which is our differentiation.

Historically, we were best value, right? Now -- and best service. Now we're best value. We've maintained that as well as best network and the best digital experience. You put that all together and it's the one place customers don't have to make a trade-off. Now there's a rule in telco, and I've worked across the world in telco, right? There's this golden rule that I can get only 1 of the 3.

If I get the best network, I must be paying a premium. If I'm a if I'm getting value, I must be getting a bad network, right? And we're all about smashing through that contradiction. There is 1 place where you can actually get all 3. And because of that position, we're seeing kind of gravity flow towards us, we're seeing huge demand. We're seeing that in terms of our NPS. We're seeing that in terms of perception and purchase intent. That's, if you'll have it, the Uber phenomenon that's happening, which is why we're outgrowing the industry. Now the specifics of '25, the way we think of every year is we tend to think of what will drive switching in the year.

So we tend to look at -- like in '25, for example, they were more 36-month plans that were coming to an end, right? And that's some of what led us to have a higher expectation, right? We tend to look at what are CLVs. So really, is there enough demand? And is the demand robust economically, right? Is there enough demand gets driven by how many switching events there are and how robust is that economically, gets driven by looking at what our CLVs are and what we expect them to be, right?

So in '25, our guide came from a view of, there is going to be these jump balls, were greater jump balls because of the first piece I talked about our competitive position, and we saw very robust CLVs. So we guided and we actually went out and over achieved that. You should expect us to look at the world similarly in '26. What are the jump-ball events? What are CLVs? We tend to guide not based on how many postpaid nets are there in the industry that's kind of, for us, a really hard number to get our head around because what one person calls a postpaid net another person doesn't.

We tend not to look at this from the perspective of what did we do last year versus what should we do this year. We tend to look at it quite purely from how many jump-ball events, how strong are CLVs, therefore, where should we position ourselves so that we grow in a responsible manner, and we grow in a manner where we titrate industry economics, along with our growth.

Got it. I don't want to jump the gun here, but as you look out to '26, how are the jump balls, how do you have them shaping up? I agree with you, the way we look at the industry. You had a big cohort coming off these 36-month payment plans last year. how is the cohort in '26 look versus '25? And also, how have you seen sort of CLVs sort of evolve through the year.

So CLVs and '25 are looking really strong, right? We'll talk more about this at guidance because I don't want to kind of start steering guidance on '26.

Okay. That's right. So I get that [indiscernible].

No, I get that John. No. But look, we'll talk about this more a '26 guidance. What you should expect from us is a responsible guidance. That's based on our view of jump balls and our view of CLVs rather than something that's somehow weighted to an industry net number or our net number from last year.

Got it. I think one of the main concerns among wireless investors is the competitive environment, right? You have a new leadership at Verizon that seems to be more focused on subscriber and, I would say, branded market share gains. What do you think the ramifications are for wireless and for T-Mobile as we look out to '26?

Look, I think on the whole, we are used to a competitive industry. And we've seen -- whatever we've seen on Black Friday as well, is kind of pretty consistent with historic levels of competition. This has been a competitive industry. The shape of competition changes from sometimes being focused on rate plans to sometimes being focused on devices. That's why we tend to look at CLVs and how robust they are.

To your specific question on Verizon. Look, we -- I mean, our strategy has been different from theirs. When you look -- I don't think Verizon has a network share problem, right? If you look at their network share as a whole, it's pretty robust right?

Including the wholesale you're saying.

Exactly. So when you look at network share, which is what Verizon is at the heart of it, right? Our bias has been always to focus on branded nets. And so the way we think of it is that feels more like a brand problem or a brand distribution problem and shares between brands rather than a Verizon network problem. But frankly, you're probably better off dealing with that question with them. What we're very, very focused on is growing responsibly, growing with innovation, which is why things like 15 Minutes to Better were a big part of it. We want to grow because consumers see the value of having no trade-offs and consumers see the value of a simple 5 click process instead of having to wait 4 hours. That's what should drive our growth because when we drive our growth like that, CLVs are robust as well.

Got it. Yes. And we'll come back to the digitalization in the 15 Minutes to Better. You said Black Friday was pretty much in line with what you've seen in the past. I mean, can you just talk a little bit or put some more color around that. What you saw from competitors, what T-Mobile had in the market and how that positions you for the holiday selling season.

Yes. Look, we upped our guide on postpaid nets to $3.3 million. We're having a great quarter. We we're confident of hitting our guide. Black Friday, like all events in this industry, when promotions pulse in and out is obviously something we monitor closely. I think where we are is the level of competitive intensity, which has been pretty consistent with where this industry has been in the past. We're feeling good about CLVs and the way we guided.

I think most importantly, it's really easy, John, to get lost in this promotion versus that promotion. A couple of things that are worth keeping in mind. When you look at Black Friday headlines, for example, and I can tell you why -- how it works for us as the switching leader, we tend to get full account switching, which means it's not just the headline offer, it's the entire account that comes over.

And a reasonable proportion of that account will not take the headline offer because you're getting an entire family in. So when we look at CLVs, we look at the CLV of the account, right? Also, the broader picture is while we can get kind of distracted by specific promotions, there is a direction of flow, which gets driven by the differentiation of having best network, best experience and best value.

Got it. Makes sense. Maybe a couple of sort of more micro questions. If you look back to the third quarter, churn only grew by 3 basis points and upgrades were effectively flat for T-Mobile. And those are very different trends than what we're seeing from your competitors. So how are you achieving this? And sort of how is T-Mobile positioned, I guess, across these metrics as we look out to next year?

So let's take churn, right? Again, it's useful to see these things in a multiyear arc, right? What you've seen over the last 5 years is a big improvement in our churn. Now that's kind of entirely rational when you put that together with what's happened on our network experience. We've maintained our value position while the network offering has improved substantially, right? Now we also don't have the lumpiness of 36-month contracts. So we didn't have the suppression and then the release from the suppression.

So what you've seen is a secular -- when you look at it over a period of time, when you've seen is a secular reduction in churn, driven by the quality of the offering. And on the upgrade side, upgrades are more complex to predict because they're a function of what is the inflow of plans, what kind of subsidies do they have linked to them, what kind of periods do they have? It gets linked to devices and things like that. I think our secular upgrade trend though has been driven by something else, which is as the network has moved to become the best network in America, fewer and fewer of our customers have felt the need to upgrade device to experience the best network, right?

Because the network -- I mean, even when you take the latest devices, right, our network clearly outperforms our competitors. We're 40% faster speeds than one and 90% faster speeds than the other, right? What you're seeing, therefore, is the stickiness to network quality independent of device, which is one of the factors that leads structure -- that leads to structurally lower upgrade rates for us.

Got it. One of the hallmarks that we've seen for T-Mobile over the last several years is just faster service revenue growth than your competitors, but a pretty good gap. Can you unpack some of the drivers of that faster service revenue growth and the sustainability of that premium that you get versus the industry?

Yes, absolutely. I mean if you just look at last quarter, we talked about 12% postpaid growth right, with 6% growth in EBITDA. You look at our multiyear guide, it's kind of a 5% growth in service revenue, 7% growth in EBITDA and probably most impressively, a continued 26% free cash flow generation, right, which is industry leading, which ultimately, given all the accounting shenanigans and every other metric, the true show me the money metric for me is cash. Now all of that is sustained on the one hand with volume, which we've talked a lot about. And the second is our value growth. And if you look at our value side, we again changed our guide this year to 2% ARPU and 4% ARPA growth excluding M&A on the ARPA side because you'll have some dilution there.

Now all of that growth in value per customer or more importantly, value per account, there's kind of 3 drivers to it. The first is on our inflow or the new customers we take in. The fact that we're able to do more for more, which is sell people up the ladder with things like streaming benefits, with things like T-Satellite with everything else we're adding to it. On the back of the fact that our existing customer base is or what you'd call the back book, has historically stood for value.

It means you get a lot of accretion just by people coming in, right? Even when we talk about things like a 2% ARPU growth, if you look at our pure consumer business, it's higher than that because we're also growing in business, which tends to be ARPU-dilutive. So piece 1 of, outside of volume, piece 1 of our formula tends to be more for more, sell up the rate plan ladder at the front end or for new customers.

Piece 2 of it is then more for more on our base especially with things like FWA, which is adding ARPA and creating growth there. And there's a third piece, which is the smallest of the 3, but something that we're acutely conscious of from time to time, which is looking at our legacy rate plans and doing rate plan optimization on those, right? So when people talk to me about pricing power in this industry, I see us having substantial pricing power because you look at 4% ARPA growth, right? That to me is the harder pricing power. And pricing power isn't simply the ability to kind of do the old cable style rack-up pricing, right? It's also what you do in terms of value delivery and more for more, that creates value growth.

So given that, I guess, the cable style as you referred to it, which I'll be using in the future. Price increases are such a small percentage of the ARPU benefit you've seen or the ARPU trends you're seeing, it sort of suggests to me that those ARPU trends are more sustainable than people might think.

Absolutely. I mean this is -- I mean, what we're here to do is create sustainable pricing power in this industry, right? And of course, there will always be a mix. We can debate how small, how large, that will vary depending on what happens with legacy plans. But the heart of pricing power for me is a combination of all 3, right? It's a combination of being able to upsell at the front end, it's a combination of them being able to attach more products to existing customers. And then when you have a rate plan optimization that you need to do bringing that in. But that gives us substantial pricing power, certainly for us as a business. And to your point, sustainable pricing power.

Right. Another sort of hallmark of the third quarter was despite the strong revenue growth in the subscribers, you had some pressure on margins due to some new spending. Can you just talk about that -- those new spending initiatives? And are they expected to continue into '26?

I debate the pressure on margins. In a quarter where we delivered a 6% EBITDA growth it's ironical to talk about pressure on margins. But the -- look, there's -- the investment is undebatable right? We invested in 3 or 4 big places. One is the digital transformation that we just talked about, the digital and the AI transformation. Now let's look at -- let's spend a few minutes on that, right? Because we're investing in the way we've always thought about it is the digital and AI transformation is here for us to dramatically change the experience because we've not gone at this from the perspective of how do we shave off 5% of cost. We've gone at it from how do we dramatically change the experience with the belief that if we dramatically change the experience or when we change the experience, what will fall out is much happier customers and way lower costs, which meant we had to first invest in the capabilities.

So which was a big investment in our digital and AI capabilities, including our deep partnership with Open AI. The second thing you've got to do is then customer adoption, which is -- this isn't kind of here's my app, go try it tomorrow. The first thing we did with upgrades was say, when you walk into a store, right? And now this happens in every T-Mobile store. When you walk into a store, the first thing that will happen is you download the app. And we show you how to do the upgrade, a bit like airlines, right? And now 70% of our upgrades are digital. That's a huge movement. We're going after exactly the same thing with new customers. We're now with Easy Switch, our all new customers can become new customers -- can become customers of T-Mobile by downloading the T Life app.

I mean I often say this T Life, with time, becomes our only IT system. It's the universal interface by which you interact with T-Mobile. Now all of that investment has also meant kind of running things in parallel, because it's not like we dramatically reduced stores purely because we've got the app. The first thing that the stores do is work with customers to drive that adoption. With time will we see fewer stores? Yes, right?

But we're going through that. We've gone through, especially in Q3 and as we go through Q4, that period of investment on the digital side. When we talk about network, again, very similar thing. We've rolled out thousands of new sites. The revenue stream from those sites will follow, right? And that's what you're seeing in some of this investment. I'm looking forward. I'm quite excited to share our '26 and '27 guidance because as I said at our earnings call, we will increase our guidance to reflect both the M&A, but also the underlying strength that we're seeing in the business. And that will also reflect and we'll spend some time talking about the dividend from the investments in digitization and AI.

That's great. So in terms of the spending, the spending is on the systems and just promoting the app, getting people to understand the power and then to get -- to create that usage and...

And also in the deal running okay? Because it's not like -- and when you talk about Q3, there was also outsized customer growth.

Right.

But to your -- but in terms of the investments, it's in customers who will pay off next year with strong CLVs. It's in digital and AI, which is both kind of the systems itself, but also the parallel running because you're driving adoption. And then it's a network where you are building thousands of new sites.

So if we're looking at it over the next 2 years, you said the '26, '27 guidance, we'll get to the point where not only do we see that some of the spending come down, but we'll also start to see the payoff of these digitalization.

We will see the payoff of the digitization. Absolutely.

Got it. Great. Maybe let's turn to broadband and first, starting with fixed wireless. Very strong, very surprisingly strong third quarter numbers in terms of fixed wireless. What drove the acceleration and sort of -- and I know you have a 12 million guide out there, but talk about sort of how much runway you have maybe heading into that and maybe beyond the 12 million guide?

I put that into 2, right? I mean, like with a lot of this stuff, I think it's it's simpler than kind of lots of tactics. It's just an awesome product, right? That's the heart of what's driven the outsized growth. Now you look at you look at this product, right, we've doubled the number of customers in the last 2 years. Each customer uses 30% more, and yet our speeds are close to 50% higher, right? So you've seen now a product which is scaled to 8 million customers, and it's still getting better. It's an incredibly easy product to use. All you need to do is plug it into a wall, right? You don't need drilling. You don't need the complex fixed line process. It's just an addictive easy product to use.

And the quality of performance has been outstanding. So it doesn't surprise me that we've seen those outsized results. We've got a 12 million guide out there, and you know this team. we're working every day to see what we can do, right, to make that even better, right? Do we have any news? No, not right now. But the way -- but what makes us really positive about this product and the amount of capacity that this product has, is the evolution of mobile technology, right? What we're seeing is better routers, which is great. We're also seeing the innovations happening even in 5G, which is things like L4S, which allows us to optimize and shape our traffic much better.

We're excited about where 6G could go in terms of further capacity. We haven't yet built in any impact from additional spectrum that will come in, right? Now all of this, remember, is in the fallow capacity model, right? We're also seeing great uptick -- uptake of this stuff in B2B, which is really good because it's off-peak usage. So we're seeing multiple growth vectors and really strong momentum as we move from the 8 million towards the 12 million.

Great. You mentioned 6G, and I want to sort of move from fixed wireless. But T-Mobile is featured prominently in the NVIDIA, Nokia announcement not too long ago about AI-RAN. Can you talk about the benefits to incorporating AI into your network in the RAN. What does it do for the fixed wireless business? And what could it do for the overall American? And maybe the timing of when we should see that.

Let me start with the timing, right? Look, some of these developments will take time. Some will come in quicker, but there's one thing that's really clear in my mind. We led this industry through 5G, and we will lead through 6G, right? We will drive the ecosystem, and we will be the 6G leaders. On the specifics of 6G or AI-RAN and you can use those interchangeably. 3 big elements that are exciting. First is what Jensen at NVIDIA often calls the physical AI, right?

And what is physical AI, right? Now I think there's a piece of moving away from Chat GPT as the fundamental form of AI to actually automation and robotics. Now to make that happen, you need low latency connection between the robot or the device and the network. Only 6G can give you that. You also then need a network that's not just capable of processing bits and bytes. But that's also capable of processing tokens, which is Edge AI, right? Now this has been talked about for a while, but with 6G, it becomes real. That opens up some fascinating new revenue opportunities.

So to have robots actually functioning, to have factories automated or what Jensen at NVIDIA calls physical AI, and I love that phrase. You need a network that can deliver that can deliver physical AI. A network that's low latency enough and a network that can process not just bits and bytes but also tokens. So that's 1 big exciting opportunity. I think the second big thing is what it does for our network because you'll have more bits per hertz, you will have more efficiency through the standards, you will also just have greater optimization protocols. So today, most apps are quite hungry, right? So we land up not optimizing how much bandwidth we give.

With 6G and AI, and this is where AI helps optimize our own loads, you will see a lot more being squeezed out of the network. And that helps massively with things like fallow capacity models. And the third probably as big piece is going to be cybersecurity, right? And what we can do from a cybersecurity perspective, including things like 6G will have ISAC, which is the -- which effectively is the equivalent of a radar in the network. And the applications from a cybersecurity perspective, especially being quantum safe are huge.

So put all of that together, and that will come in through different points. So some of the efficiency improvements we're already beginning to see as part of 5G advanced. Some of the physical AI stuff, some of the other stuff, will flow through. And it's really important that we work with NVIDIA with NOKIA here to build a U.S. ecosystem and with them a Western world ecosystem that really drives 6G forward.

Got it. Just for -- I mean when you talk about improvement in spectral efficiency from 6G/AI-RAN, can you sort of size that as sort of 2x to 3x what you're seeing? Or are we talking dramatic change in the sort of...

It's early days. It's early days. So it's difficult to size right now. I'd just say it's substantial.

Got it. okay. All right. Maybe moving on to fiber. Srini, you have a lot of experience in fiber with your experience in Europe. What are the main learnings from your fiber experience in Europe that can be applied to the U.S.?

So I've rolled out fiber, and I think 12 countries now. But the the big -- the 2 big learnings from Europe are one, customers will make different trade-offs on the speed, value metrics. So it isn't fiber takes at all, right? You will have -- and that's why we're really bullish about FWA. It never lands up being one technology takes it all because customers will not everyone wants a 2 gigabit connection with kind of -- and paying whatever price they pay for it.

You will find people positioning themselves at different points, and we feel really good about FWA and kind of the progress FWA is making, especially when you compare it with the progress DOCSIS is making. The second thing that I think you learn in multiple countries is the strategy of an incumbent and the strategy of a challenger are very, very different. If you are the incumbent because what you're trying to do is protect a declining cash pile from copper than kind of land grab and homes passed becomes a key metric. Because what you're trying to do is protect the legacy declining business, especially in B2B.

If you are the challenger, which is what we are, then your focus is building scale on paying customers. It's homes connected. It's penetration that lands up being the big deal. And it's the economic return you make on the investment, that's the big deal. If you're an incumbent, you want to make sure you protect the decline in your existing business if you are a challenger, you want to make good ROE on it. That's why we're focused and obsessed by what penetration we drive, what kind of economic return we drive in our JVs.

Right. So you have targets out there for 12 million to 15 million homes passed by 2030. Is there -- can you give us a sense of sort of where you are now, how that builds over time? And what kind of penetration rates you expect to see as the strategy matures?

So our penetration rates that we're assuming for our -- for the returns we've talked about are very consistent with industry standards. We're seeing a lot of benefit from the T-Mobile brand, from the T-Mobile distribution...

You have the highest NPS. There is.

Exactly.

You would imagine great distribution [indiscernible].

And so we're feeling really good as we build towards that. I mean if your underlying question there, John, is about scale. I think this is a misunderstood thing, right? Because when we think about scale, we think about broadband customer scale rather than fiber homes passed scale. I'm not sure why fiber homes passed scale is relevant, right? Fiber ultimately is the local scale business and fiber homes passed on a local level matters because of things like permitting. But when you're looking at national scale.

What matters is broadband scale because you want to be able to market to a large number of customers and that we have with FWA plus fiber, so it's our, if you give us to convert our FWA and fiber into homes passed equivalents, we -- our plan is already like 45 million homes passed, right? Because that's the scale that matters. The scale that matters is ultimately how many customers you have right, which with FWA, plus our fiber rollout, we will be scale at.

Right. Got it. What are the prospects of doing more fiber-to-the-home JVs? And could you just talk about the the sort of economics you're seeing both in terms of those JVs and just in the broadband, the fiber business in general?

So we -- everything we've seen so far from the JVs are really strong and positive. We will do JVs when we get them at the right economic terms. So we're always open to that conversation. But like I said, we don't feel the need to rush into a game of more and more fiber homes passed purely because it leads to some mythical thing called convergence on the back of that, right? What we're focused on is driving scale with FWA and driving scale with our JVs, especially from a homes connected and paying customers' perspective.

Got it. Those comments sort of lead to the question we've been getting a lot. A lot of change happening in the broadband world. We're also seeing a sort of increase in sort of overall deal activity. What's your view and T-Mobile's view on cable? Obviously, the valuations have never been cheaper, their fundamentals are obviously under some pressure. Are cable assets attractive to T-Mobile as a way to sort of -- I mean, I think you might have already answered it, but gained scale and sort of drive a converged product.

No.

Okay. Okay. That was very clear.

Maybe -- we have a little bit of time. Maybe give us an update on the U.S. Cellular acquisition. How is the integration going? And anything you can talk about sort of synergy realization?

Look, U.S. Cellular is going great. We updated our synergy number from $1 billion in 3 to 4 years to $1.2 billion in 2 years. It's a huge contribution to our SMRA strategy. It brings us 47 megahertz, right, for 37 million POP, which is just great in terms of what it does to our network. The integration is well on track. We've got a playbook, the Sprint playbook. And that's really what we're using here. So we're feeling really good about it.

Great. All right. And just quickly to wrap up. You've been spending about $10 billion in annual CapEx. Is that a sustainable level? And how should we think of free cash flow over the next several years given all the inputs on the broadband side and the momentum you're seeing in subscriber growth and just the outlook in terms of the growth of the metric?

Yes. So first on CapEx, we moved $9.5 billion to $10 billion this year to account for U.S. Cellular. I think we've suggested already that '26 will be $10 billion again. But you should see those as onetime and don't drag right on your spreadsheet to make it $10 billion. Our long-term guide continues to be $9 billion to $10 billion, right, with going up because of the U.S. Cellular this year and next year. In terms of the overall business, I'll just answer the cash flow and then kind of try and wrap up the whole thing.

Look, from a cash flow perspective, we have the unique position of generating industry-leading free cash flow conversion. And all the investments that we're making today only further underscore that point, right, and further build on this ability to maintain that industry-leading free cash flow generation. That's a huge metric. It's one we're laser focused on. If I was to kind of put all of it together, look, I feel it's a complete privilege and honor to be able to lead this business at this point in time where we've had 13 years of continuous success as the Un-carrier and I'm able to sit here and say the best is yet to come.

And that conviction of the best is yet to come for me gets driven by the incredible team that we have, the bench strength that we have, our proven ability to execute and our willingness to transform ourselves as you're seeing with the network as you're seeing with digital and AI at the point where, in many ways we're at, are more successful. That hunger that desire to continuously transform ourselves and reach for the next thing and reach for the next source of growth, this whole attitude of "we won't stop" is what makes us special.

Great. It's a great way to leave it. Srini thanks for being here.

Thank you.

Thank you.

All right. Good afternoon, everyone. Thank you for joining us at the Wells Fargo TMT Summit. Really pleased this afternoon to be closing out the day with Jon Freier, the President of the Consumer Group at T-Mobile. Thanks for joining us.

Yes. Thank you, Eric. Appreciate it.

And I know you have a brief safe harbor. I want to get that out of the way.

I do. If we can move to the safe harbor slide here, which is basically, please look at all of this information. And if you have any other questions, please go to our website at investorrelations.t-mobile.com.

Great. So maybe we'll start out high level with the recent CEO transition. The recent change in CEO to Srini Gopalan you've obviously had some very strong charismatic leaders in the past at T-Mobile. So how should we think about the path forward for the Un-carrier under Srini? How that might differ from some of the previous CEOs that we've seen in the public market?

Well, if I can just say, I think Srini is very charismatic as well. So if I could just say that upfront. Yes, this is something that we've been excited about with Srini being appointed as CEO. We've been working with Srini for a very long time, really kind of the last 10 years where he's had a position as a TMUS board member for the majority of the last 10 years and has been with us and working with us kind of every step of the way relative to our strategy. And he's pretty clear eyed about the priorities that he has for the company.

And I would just say, really, when you look at the 3 priorities he has: one is, how do we extend our network leadership position, attract more network seekers and close this perception gap between reality and what prospects think of our network, number one. Number two is how do we drive the customer experience and elevate that through digitalization. And then number three, how do we make broadband incredibly successful. And those are the 3 priorities that he laid out during our Q3 earnings call at the end of October.

And for us, we're very clear eyed about those priorities. We want to continue to drive growth in a very profitable, durable, accretive way. And that's something that we've been known for as driving lots of outsized growth over the last 13 years of the Un-carrier, but also drive an outsized financial performance along the way.

And he's very clear out about that, and it's something that we've been excited about. And it's not one of these moments where you have a crisis. He's stepping in, in a moment of incredible success. And I love the way that Mike Sievert kind of characterize this, when you have incredible success, the future has never been brighter and the right leader is here ready to go, that's the moment when you make these transitions. And he's done incredible the last few weeks as he stepped into the role, but that shouldn't surprise anybody because we've been working with him for the last decade or so.

Yes. Fair enough. Fair enough. Given that we're kind of in the heart of Q4, we're nearing a very promotional time period. We've got Black Friday coming up. We've got holiday promotions. There have been new phone launches in the market a couple of months ago, and you've had some recent offers in the market like 4 for $100 with no trade-in requirements. Maybe you could just kind of characterize how this Q4 is stacking up from a promotional standpoint, from an activity standpoint versus previous fourth quarters, realizing that, of course, there's still a lot of activity to come in the last 1.5 months of the year?

Yes. This is my 32nd Q4 in this business, if you can believe that. I know that's what you're thinking that there's no way this guy can be that old. But true, it is by 32nd quarter in this business. And it's always kind of a competitive time, as you would expect during the holiday time period, a lot of headline offers that are out there much like our offer of -- in terms of a headline offer for 4 for $100. And this is an offer that we've had that we pulled in and out of the market really for the last 10 years or so. There's just always a lot of noise.

For us, what we try to do is we try to have these big headline offers, generate interest, generate traffic and then really showcase to customers everything that we have to offer. And when you think about 4 for $100 when we had these promotions in the market in the past, they've always represented kind of a low single digit of gross account additions in terms of the mix of that offer. And the overwhelming majority of the customers that are coming into the franchise are selecting premium plans.

And so when I look at the overall competitiveness, it's nothing that I'm concerned about. It's vibrant. The competitive environment is always vibrant in this space. But there's nothing that I'm concerned about in terms of what I'm seeing today. And nothing that I would be concerned about in terms of what I'm seeing in the future for the balance of the quarter.

Our momentum is continuing into this business. We had -- we revised our postpaid phone net guide to 3.3 million for the year. You can do the math between where we are, the guide, that kind of implies what you should expect in Q4. And we're feeling really good about that momentum, the overall switching dynamic that's happening in the marketplace and our ability to compete very effectively. And like I said just a few moments ago, thoughtfully, profitably and doing so that's rewarding customers for the value proposition that we offer.

And obviously, there's been a lot of news and chatter in the hallways around the CEO change at one of your large competitors recently. And they've expressed the desire to at least improve their customer growth through some retention efforts to try to keep more of their customers that have churned off. So early days I realize with the CEO change there, but any changes in behavior, marketing, retention offers that you've seen or expect when competing against them?

Yes. Like you said, they've gone through some changes over there. And so far, I haven't seen anything that is manifesting itself in the marketplace. And I know they've had their public commentary, and I'm not here to do their Investor Relations for them, nor do I want to run their company.

And so -- but I'd tell you that if you just kind of step back for a second and just look at kind of net adds on a per network basis versus a per brand basis. If you look at it on a per-brand basis, sure, lots of challenges for the Verizon brand. But if you look at it on a per network basis between the AT&T network, the T-Mobile network and the Verizon network, actually, that's quite healthy for them.

The big challenge and the big opportunity that I think they have is how to get their mix right between the net adds that are hitting their network. Should they have much more of a retail relationship with customers versus a wholesale relationship with customers, that's for them to decide. But if it were me, just kind of looking at it between the net add composition again on a per network basis, it seems like they have some clear opportunities to rightsize what they're seeing coming through the Verizon brand in that space.

Okay. Fair enough. Fair enough. I guess we'll all be waiting to see how that happen in February. So as we think about upgrade rates this year, they've picked up quite a bit. We've seen industry churn pick up a lot of customers that came out of 2- or 3-year device payment plans. So maybe you could talk about from T-Mobile's perspective, do you prefer this kind of higher switching environment, more jump balls to go prosecute against? Or do you prefer an environment in which switching activity is a little lower like we've had in the past few years. What do you think is kind of the best environment for T-Mobile to win share in? Or are both environments in which you can do really well?

Yes. What you're seeing is you are seeing more switching and more upgrade activity that's happening in the marketplace. And I think that's not a new dynamic but more of a normalization of where it was. Remember, there was -- 2 of our competitors had introduced financing constructs over 36 months. And that probably artificially suppressed some of the upgrade activity, some of the switching activity in the marketplace. And what you're seeing is more of a return to a normalization in terms of upgrades, in terms of switching, et cetera. So I think that's a very healthy dynamic.

We've demonstrated that we can play in either environment, that we can play in a lower switching, lower upgrade environment. We can play in that environment and have done that quite successfully or we can play in an environment where there's elevated switching. For me, personally, the more jump balls that we have and the more switching and activity in the marketplace, that's great. I mean we're a share taker in this overall space and when you have more opportunity to take share, that's what we want to be able to do.

Our upgrade rate, as you've seen, has changed a little bit, but our overall postpaid phone churn is now the lowest in the industry. In Q3, we reported the lowest postpaid phone churn in the industry. So how everything is working out relative to switching, upgrades, that whole dynamic. It's really boding well for our ability to continue to resonate in the marketplace and to deliver great results for our shareholders.

And this question, you've probably gotten in many different forms over the last couple of years, but it's really around kind of fiber and mobile convergence, which has obviously been talked about quite a lot at your 2 competitors. And with the construct that a bundled fiber and mobile solution will help lower churn, it will help extend customer lifetime value. Of course, it also comes at the expense of an upfront cost benefit that the customer gets.

But it doesn't appear that you really have the aspiration to be more meaningful fiber provider above and beyond the 12 million to 15 million homes that you laid out. So I know today, you claim you really don't see it as a competitive disadvantage. I think people are trying to project into the future 5 years when another 40 million or 50 million homes of fiber get built. Does it ever become one? What's your best view today? And how do you prepare for the possibility that it could create lower switching in some markets where you compete against fiber?

Yes. We just love where we are in the space. First of all, let me kind of back up for a second and just talk about our broadband position. We're now the fifth largest Internet service provider in the country. We have nearly 9 million overall broadband customers in the market. And when you look at where we are on fixed wireless, and we've said, hey, we'll be at 12 million by the end of 2028. That's our number. We haven't deviated from that since our Capital Markets Day in 2024.

And when you think about that 12 million in the context of households passed at like basically a 40% penetration, kind of like 30 million households, if you think about that as the households passed. Then in addition to what you just said, between the Lumos and the Metronet transactions, ultimately having 12 million to 15 million households passed. We're kind of in this 40 million to 45 million household pass zone in terms of the equivalent. We love that place. It's in a good place. We're not thinking about broadband from a position of defense. We really like our position here. We don't see anything that we need to be doing to [bat at that] back so-called convergence, nothing that we need to do around that.

We see an opportunity to make money. Obviously, our 5G broadband product is off of a fallow capacity model. We've been very consistent in terms of how that works. And we see an opportunity to monetize that fallow capacity in the network.

And then fiber, we see an opportunity to make money and to go build kind of first to fiber or nearly first to fiber markets. And so all that's going incredibly well. We continue to not see and we've been consistent about this since we started talking about this more openly at the Capital Markets Day in September of last year. Not really a whole lot of correlation on fiber footprint, penetration, those kinds of things. We're just not seeing that.

And the reason is, and it's our experience is that mobile is such a considered purchase. And people don't say, hey, as a result of my broadband provider, I need to go exclusively with that same company for my mobile services. People don't really think about that. Gone are the days where like, oh, if you bundled everything together, you only have to write 1 check versus 3 checks, and it's just easier. Everybody is on auto pay. So like that stuff doesn't really matter anymore.

And sure, there's a little bit of a discount for bundling. Yes, sure, that's there. But when people really think back -- step back and think about the overall value proposition and they really critically compare Verizon, T-Mobile, AT&T, we win in those decisions. Regardless of who your home broadband provider is, does bundling is bundling a factor? You bet. Smartphones, tablets, watches, a fixed line product for your home broadband, a wireless product for your home broadband, bundling certainly lowers churn and there's definitely lower churn, the more deeper a relationship is and the more bundled the relationship is.

But it's not causal in that you have a fiber relationship, and therefore, you have outsized mobile performance. We're just not seeing that. And we're not seeing anything that would suggest that that's going to change anytime soon, if ever.

And I think you've talked about in the past, how we've -- the majority of the industry has been converged for quite some time, like north of 80% of it for 3 years?

Yes. Exactly. 85% of American can get for the last 5 years can get their broadband connection and their wireless connection from the same company. And you've seen what you've seen.

And I would add that given that whole dynamic, and we've been consistently talking about that since September of last year, and we are the company with the lowest postpaid phone churn rate. And our competitors are rising in their postpaid phone churn rate. So the rhetoric and the reality are a bit disconnected.

Yes. Yes. Fair enough. Just to flip the fixed wireless, while we're on the broadband topic, you have the -- obviously, you have your aspirations to get to 12 million customers. Maybe you could talk a little bit about where you're winning share? You put up really good numbers year-to-date. Could you talk about the geographic distribution between urban, suburban and rural and maybe how that's changed since you first launched this product a few years ago?

And when you look at who you're competing with, is this price still primarily coming at the expense of cable or are you seeing some success going up against other technologies, whether that's DSL, fiber in some cases, satellite?

Yes. We just absolutely love this product. And this is something that we started talking about in 2021 initially going from 0 customers and we said, hey, by the end of 2025, we think we'll be at 7 million to 8 million. And then, of course, we updated that to 12 million by the end of 2028. This business is performing just beautifully. And what's happened over time is you would think that the performance, as you load more and more customers on the performance would degrade, but just quite the opposite is happening.

We're finding more and more opportunities to give customers a better experience, better speeds, overall reliability and customers are just loving this product. The growth, as you said just a few moments ago, has continued to be outsized. We had another quarter in Q3 of north of 500,000 fixed wireless customers, 560,000 total when you include fiber, but north of 500,000 on just fixed wireless only. Net Promoter Scores continue to rise, what customers are getting for what they're paying continues to be great. It's just a beautiful business for us.

We're not seeing really much change here in terms of the composition of where the business is happening. Roughly 70% is coming from kind of the top 100 markets, kind of urban suburban markets. And the other 30% coming from more rural areas. And we're not really seeing that composition change much. And also to your question, and where that's really kind of coming from has been disproportionately cable. And I'd tell you, our customers, they just -- they love being able to get a great product that's got great utility, great speeds and to be able to free themselves from cable in those higher prices and exploding bundles to be able to get something that's just as great that we have to offer, than people are loving it.

And it's something that I continue to be excited about, particularly when you think about fiber, as fiber comes into markets, where we also have FWA on a hexbin basis, on a per sector basis, the more that we can get fiber kind of going the more it opens up some potential capacity for fixed wireless in those markets as well. So our teams are loving this product. Our customers are loving the product and the results are really off the charts.

And when you look at -- I know you have a smaller fiber T-Fiber platform today. But when you look at the type of customers selecting fiber versus fixed wireless, is there a lot of overlap? Or is it just kind of a different segmentation of the market?

I would say it's a different segmentation. We really see these products as complementary and they don't really substitute one another. The more mainstream customer that's using 400, 500, 600 gigs per month, fixed wireless access, great for them. Customers that are using terabytes, 1, 2, 3 terabytes per month, fiber is probably the right product for them.

And where we can move customers into fiber in those particular areas to free up capacity, not to have a 1-for-1 replacement, but potentially to have 2, 3, 4 to 1 replacement. That's what we want to be able to do.

Yes. Maybe just to switch to like the overall outlook for postpaid phone growth. This has been something that for the last few years, investors seemingly have been bracing for this big slowdown, which hasn't really come or if it's been very moderate. And there have been worries about immigration, government cost cutting, free lines and prepaid to postpaid migrations, inflating numbers and things of that sort. So maybe you could kind of give your view of how -- what the postpaid phone growth environment looks like, not just this year, but out the next couple of years? And obviously, as the big market share taker in the space, can you continue to succeed even if we do see a slowing gross add environment?

Yes, we can absolutely continue to succeed. If you step back for a second, it's really hard for us to like think about net add growth at an industry level. And you were kind of hitting at it just a little bit, which is like different companies report different metrics, and it's just kind of hard to get to because some companies have a first line free construct, which we do not.

And so like it's always just kind of hard to get to. We pay attention to it, but we don't obsess over it, and we don't try to predict it. What we do try to do is say, okay, here's where we think where the market is going. Here's what our plan is and how do we go and execute our plan and deliver for our shareholders relative to what we've said.

And when you look at the overall market, I'm still feeling great about the robustness of the market. Like I said earlier, switching and the momentum continues to be very, very strong. We love where that is. I don't see that changing anytime soon. A lot of questions have been around immigration and some of the changes of this administration's policy around immigration. We haven't seen that in terms of an impact. There might be other impacts with lower transactional prepaid brands. We just have not seen that in our business at all.

And so where we are, even if there is a change, and it's hard to know if there's going to be a change or not. I just don't know. But even if there is, we feel just great about this overall proposition that we have around best value, best network and the very best experience that's creating a great halo for our brand to be able to compete thoughtfully and profitably for high value and accretive customers.

Yes. And just touching on that best network concept. I mean you were very vocal earlier this year that you're now finally getting recognized by third parties for actually having the best network. And I think you've also stated in the past that there's sometimes a lagging kind of customer perception of who has the best network. But maybe you could talk about how you're getting that message out there, how much more room you have to run in terms of convincing the many subscribers who are not on T-Mobile that you truly have the best network.

And then how do you ensure that you remain the best network, especially with Verizon and AT&T, in particular, acquiring some spectrum assets recently to try to bolster their mid-band holdings, how do you think about all of that and kind of maintaining or extending this leadership you have?

Yes. This is why -- this is such an important topic, which is why I think it's one of Srini's top 3 priorities, which is really the first one, which is really making sure that we advance this network leadership position. And get credit for the network realities that we have and to close this perception gap.

And as you guys have probably have seen, we've had a lot more network brand advertised in the marketplace. We've got Billy Bob Thornton running around. And I don't know who the other guy that's the other guy in the other commercial, the -- I can remember the other guy with one of our competitors. I can't remember his name.

Who was it? Oh, yes, yes, it's been so long since I've seen that guy doing. So like it's been a while. So I just couldn't remember who it was for a second. But Billy Bob Thornton, the landman is hot right now. And so we've got him out and kind of talking about this network. I don't know if you guys have seen our latest spot, which is basically, hey, one of my friends said, the T-Mobile network, you suck. And now it doesn't. And what we're trying to do here is to like really kind of acknowledge the reality -- everybody is shouting we got the best this, we get the most reliable that, and the fastest this. Everybody is shouting that. And what we're trying to do is breakthrough.

First, we've been crowned as America's best overall network, which is an incredible achievement. But we're trying to break through all that noise and tell people that years ago, you're right. If you tried T-Mobile years and years ago, not so good. We had challenges. Definitely, you better stay in the left lane of the interstate and not move into the right lane of the interstate, you might lose coverage, that kind of a problem. But if you haven't tried T-Mobile lately, then you just haven't tried T-Mobile because of all of the investment and the 5G 2.5 gigahertz of spectrum that we've deployed, it's just a completely different game.

And I've been a part of this business for, like I said, 32 years, way back T-Mobile VoiceStream Western Wireless. And did I ever think that we would arrive as having the best network like -- and I never thought we would arrive at that place some number of years ago. But after we got the first 100 megahertz spectrum, the 600 megahertz from the incentive auction plus the Sprint transaction with all the 2.5 gigahertz, you started to believe that we can put all this together and create something incredibly special, which is what we've been able to do. And now we're in the early innings or really getting credit for it.

And one of the big opportunities for us to continue to grow is to capture and incent network seekers from leaving AT&T and Verizon and move into T-Mobile. AT&T and Verizon have more than 200 million customers. 70 million of them chose AT&T or Verizon because they had the best network back then. Now we have the best network, and it's a huge opportunity for us to go in and convince those customers that we have the very best network.

And we won't promote our way there. Sure, there's going to be promotions that are always in the marketplace. But this is about speaking to customers, being real truth tellers, resonating with customers locally where it matters and talking to them in very plain spoken ways. Something that we're incredibly excited about, something that we're going to -- you're going to continue to see more and more network-oriented advertisers that continue to get that message out in the marketplace. Yes.

And related to that, I know years ago, you talked about how you were significantly underpenetrated in smaller markets, not necessarily rural, but outside of kind of the top 50 or 100. And you recently closed on the UScellular transaction that gives you a little bit more footprint there. Where are we in terms of your rural expansion, customer penetration and distribution? And is there really any reason why longer term, you shouldn't have kind of a market-leading position in rural America, I mean not putting an exact time line on it, but just based on all the dynamics you've expressed?

That's our belief. Our belief is that we should be the market leader and being the market leader is that's no question in my mind. The question that's in my mind is what is our fair share because being the market leader is the majority share, but the fair share is that's up for interpretation. Is that just taking the 3 bus between AT&T and Verizon and T-Mobile and Comcast and Charter and diving it up, et cetera, a fair share. Not really, because I'm actually inspired by our top 100 markets.

I mean we're sitting here in Los Angeles right now. And here in L.A., we have a share of household position of north of 50%, 5-0, north of 50% and in New York City, we have a share of household north of 50%. In our top 10 markets where we're #1 in share position, we're continuing to grow. Or we're #2 and #3 in share position. We're continuing to grow, as you would expect in #3.

But what people are really surprised about is that we continue to grow across that #1 share of household position. And if you can do 50% plus in 2 of the biggest markets in the country, then our fair share and our ability to attract customers in rural America, I mean that's way beyond what people think.

And then the question is like how long will it take you to get there? We're well on our way. I couldn't be more proud of like what we've done in smaller markets, rural areas. When we started talking about this back in 2021, people thought we might be a little crazy because T-Mobile is a brand that resonates in the big markets, not necessarily in rural America. Now that we're north of 20% share of household beating our declared ambition before we folded in UScellular, now we're just in a great position.

And to your point on UScellular, we have a great -- and we can talk about this more, if you'd like. We have a great opportunity to accelerate this overall position in those markets. So we've got a lot of runway here to go, fair share, the way I think about it is, I think about the top 100 markets inspiring me to go even further in smaller markets from rural areas than you might normally logically think.

And just touching on UScellular briefly. I mean you closed on that August 1. So a few months under your belt. Maybe are there any opportunities within that footprint that we may not be aware of? And maybe just talk about the steps of the integration, making sure you get that right. It sounds like you're accelerating some of the synergy realization, the cost to achieve relative to your original plan. It seems like things are going well so far.

It's going incredibly well. This is something, to your point, we closed on that transaction on August 1 across the entire UScellular footprint, picked up 47 megahertz of spectrum across 37 million POPs in the UScellular footprint. And it's going incredibly well. Everything is right on track.

We just recently stopped promoting the UScellular brand for new customer acquisition and have unified the entire operation behind the T-Mobile brand for new customer acquisition. So any kind of dollars that you spend on promoting UScellular not the most efficient in the world. So now we've stopped that. And we've integrated the network so that UScellular customers not only have their network that they're used to, but they can now touch thousands of T-Mobile sites in that UScellular footprint and beyond.

And then T-Mobile customers in that UScellular footprint can now see the sites that we'll retain. Well, 2,000, maybe a little bit north of 2,000 sites that came from the UScellular network that will ultimately retain and fully integrate into the T-Mobile network. So T-Mobile customers are seeing better coverage. UScellular customers are seeing better coverage in overall performance. And all of that is going incredibly well. We've got some onetime CapEx charges that as you would expect relative to integration in 2025 and 2026. We've said that 2025 is kind of in the $9.5 billion to $10 billion range.

2026, probably more to $10 billion. But I wouldn't necessarily drag that right. So that's kind of a onetime artifacts of this integration. We'll get to more of a normalized kind of $9 billion to $10 billion range in overall CapEx after we get through this integration of '25 and '26. But everything is really on track. The next big thing that I think we'll be talking to our investors about is how the customer migration is going, moving customers from the UScellular environment to the T-Mobile environment, and we'll be starting that in a pretty big way in 2026.

Okay. That's helpful color. We touched on this a little bit earlier in one of the one-on-one meetings, but T-Life has been a big priority for you. Important part of the customer experience. Obviously, helping improve customer experience, reduce customer inbound volumes and obviously, it could help you manage your cost base over time, whether that's through your partner stores or other distribution channels. So maybe you could just talk about where we are in terms of the T-Life evolution and what kind of the next step is to really help that drive customer experience but also financial profitability for the company?

Yes. So if you have any conversation with anyone at T-Mobile about anything T-Mobile, T-Life is definitely going to come up. We are all about T-Life. And this is something that we started talking about in our Capital Markets Day last year and really this vision of being able to concentrate this fragmented app ecosystem into kind of a super app that we call T-Life.

And ultimately driving engagement, transactions, overall interactions as the kind of the source where everything around T-Life will connect into T-Life. And right now, we've got 85 million downloads on T-Life, and we're regularly seeing north of 20 million monthly engaged customers. So 20 million accounts or lines, I should say, actively engaging with T-Life on a monthly basis. It's really beautiful. We've got 2/3 of our overall upgrades that are happening now on the T-Life platform. Basically, digital upgrades a couple of years ago was like almost nothing. And now for that to be 2/3 really, really speaks to the power of the app.

We're now kind of -- when you look at iPhone preorder, back in late September, early October, 3 out of 4 upgrades that happened during that preorder period came through T-Life, hundreds of thousands of transactions, huge scaled events. So that's something that we continue to see a lot of demand for.

What we did with T-Life is we completely not even just reengineered all of our customer journeys. We kind of basically threw them out and rebuilt them from hello. So like in the old app and the old legacy app, it would take you 30-something taps to be able to do something, maybe. And that was a big maybe on that. Within T-Life, now it's down to like 12 taps, super easy, very fast, very efficient. And what we wanted to be able to do is to take these kinds of transactions from them taking hours to them taking minutes. And so all of that's going incredibly well.

Over time, we see operating efficiency improvements here. I was pretty clear at our Capital Markets Day that we'll have less stores over time. We'll have a higher mix of our stores being company-owned retail and operated. We want to really control that experience, perfect that experience, make that experience great for our employees. And then over time, I think we'll have less and less calls into our customer care environment. There's definitely operating efficiencies that will be coming through T-Life. There's no question about that. What we wanted to do is to not think about T-Life through a cost transformation effort, but think about T-life through an experienced transformation effort that is operating efficiencies that will come over time.

All right. That's a very good overview. And maybe before we finish up, I wanted to ask you about satellite and direct-to-cell that's been very topical recently. So you've been a close partner with Starlink in direct-to-cell connectivity. Could you talk about how important that future is to today's customers for edge connectivity and more remote markets? And then not to make you predict on what Elon or SpaceX may or may not do, but they did recently acquire some spectrum and there's been a lot of conversation about whether that opens up additional wholesale opportunities longer term, if they have ever had aspirations to operate their own network through a terrestrial means.

Yes. T-Satellite has been a great complement to our terrestrial network. And it's one of the many benefits that customers can get with Magenta status. And there are so many benefits that between streaming and in-flight WiFi, all kinds of benefits. And then obviously, T-Satellite is one of those benefits as well. And like I said, it's a complement to the terrestrial network, particularly in the 500,000 square miles that are distributed around the country that no terrestrial network can reach.

I wouldn't say it's mainstream and that you would ever seeming to me that you would never have connectivity around that as an always-on evergreen option, but more as a complement to the terrestrial network. And I kind of heard some of those things, too, on the MVNO relationships that might make a lot of sense for them, sounds right to them to go pursue that.

But I think this is a great complement and nice addition to some of those areas where you need coverage, you need to be able to send a text, you might need to be able to send them a place a call, maybe send a picture. It's beautiful for that. But as a mainstream kind of replacement for wireless, I don't see that happening at all. Nice complement though, to our overall business.

All right. Great. Well, we're out of time. So Jon, thank you for joining us today. Appreciate it, and thank you all for coming.

Thank you all. Appreciate it.

Good morning. [Operator Instructions] You may also sending a post at T-Mobile IR at mikesievert I would now like to turn the conference over to Cathy Yao, Senior Vice President of Investor Relations for T-Mobile US. Please go ahead.

Good morning. Welcome to T-Mobile's Third Quarter 2025 Earnings Call. Joining me on our call today are Mike Sievert, our President and CEO; Srini Gopalan, our COO and incoming CEO; Peter Osvaldik, our CFO; as well as other members of the senior leadership team. During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We encourage you to review the risk factors set forth in our SEC filings. Our earnings release, investor fact book and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found on our Investor Relations website. With that, let me now turn it over to Mike.

Thanks, Cathy. Great job. Good morning, everybody. Well, as you can see, Srini and I are here in New York with the senior team, ready to discuss another truly extraordinary quarter for T-Mobile. But first, let me do a couple of welcomes. I want to first start by welcoming Andre Almeida to the team and to the table. Andre is a deep industry expert and a long-time colleague of Srini's, and he has also been a strategic adviser to me on many topics for many years, and I am so happy that he is here leading such a big part of our team.

Thanks, Mike.

And also, You all know Dr. John Saw, now serving as our President of Technology, and resident genius. John, thanks for stepping into this expanded role for us as President of Technology. John and I go way back to 2009 at Clearwire. So together and separately, we've been stewards of this centerpiece of T-Mobile's 5G spectrum strategy for a long time. It's great to have you here as our President.

Thank you, Mike.

All right. Well, let me just start by saying this. This call is an especially meaningful one for me as it actually marks the 50th quarterly earnings report for T-Mobile. And that means it's also my 50th report here. I've been here for every single one to offer my perspective and to help shape our narrative about the future, and I have had a blast. Leading this company over the past 13 years has been the honor of a lifetime. Together we've transformed T-Mobile from a distant #4 player in crisis and decline into the world's most successful and customer-centric telecommunications company. I've seen T-Mobile go from last to first, with the best network, the best value, the best customer experience in the market. And today, that margin of our differentiation is only widening and the growth and financial momentum that flows from this in many ways, only just beginning.

I'm excited to continue to support this team right here, and the strategies that enable the success in my new role as Vice Chairman. Just a few weeks ago, I talked about what it means to get CEO succession right, but you do it when three things are true. First, when the company has never been more successful. Second, when the opportunity ahead has never been more exciting. And third and most importantly, when the leader to take us into the future is fully ready. Q3 is living proof that all three are true for T-Mobile right now. Now Srini is going to cover the results here in a minute with you, but I just want to say, "Wow, what another spectacular quarter." This team once again delivered the thoughtful, profitable and durable growth for which we are known. We smashed not only all-time customer records, like best-ever postpaid account growth, best ever total postpaid net additions while also leading the industry in postpaid phones with over 1 million nets and phone churn. But importantly, we also once again led the industry in financial growth by a wide margin across a wide variety of metrics beating expectations again.

Clearly, it is evident that this team under Srini's leadership executes like no other team. This quarter was a showcase of Srini's and this entire team's ability to rally the organization to deliver exceptional results while at the same time, building on the durable advantages that make it all possible. T-Mobile has never been stronger. Our growth runway is broad-based. Our differentiation is widening, the Un-carrier ethos continues to disrupt the industry and delight customers, the opportunity ahead to generate even more outsized durable and profitable growth across wireless, broadband, smart new adjacencies as well as digital transformation has never been more exciting. So with that, let's dive in. Srini, in more ways than one, over to you, my friend.

Thank you, Mike. Hi, everyone, and thanks for joining in. I can't wait to start talking about Q3, but I'll take a minute. I just want to start by saying it's an incredible privilege to be here with this fantastic team, the best in the industry. And in the last 13 years, Mike, you have truly turned around this business and you've made the Un-carrier into this force for good. This disruptive, innovative, the most admired telco in the world. The network has gone from last to first, like you've talked about and we've delivered an industry-leading customer and financial growth. You and the team have created more value than any other CEO in the history of this industry, not just in the U.S., but globally. Thank you.

Look, I've been involved in this team for some time now. And the one truly amazing thing, the Un-carrier has done, and this is rare in this industry, differentiation. It's the one truly rare commodity in this industry. For a large part of this journey, that differentiation has come from outstanding customer value and experience. And as I look forward now, the foundation for the next big leap has already been laid. We have the opportunity to widen this differentiation even further with network leadership and digital transformation. I can talk about this all day, but I'll come back to it in our continuing strategy. But first off, to Q3 and the phenomenal quarter we've delivered.

Starting with wireless, we had our all-time best postpaid customer account growth. And that's saying something when it comes from the Un-carrier. We achieved our best-ever total postpaid net additions and delivered over 1 million postpaid phone net additions, our best Q3 in over a decade. And that coming from T-Mobile is something.

What I like is how broad-based this growth is. It's in the top 100 markets, it's in smaller markets and rural areas. Even within the top 100, our postpaid share of households is up where we're #1, #2 and #3 in market share. So it's truly broad-based growth. And it's not just gross additions momentum. In Q3, we led the industry in postpaid phone churn. So across the board, tremendous customer momentum. And it's not just volume. It's also in value.

We saw postpaid ARPA grew by 3.8% on an organic basis when you exclude kind of the dilutive impact of UScellular, Metronet and Lumos. We're also delighted to have welcomed UScellular customers. to the T-Mobile family and provided them with immediate benefits from an improved network experience to great thankings like T-Mobile Tuesdays. Integration is off to the races we're using everything from the T-Mobile playbook that we learned and perfected with Sprint, and we're simultaneously deepening our relationships.

Let me turn to broadband, another huge growth opportunity for us. Again, we led the industry with over 500,000 customer additions on 5G broadband and over 50,000 on the newest addition to our family fiber, and that includes the contribution from Metronet following our close on 24th July. This is an amazing business. And here's an often underrated fact. Our 5G broadband ARPUs and customer lifetime values are very similar to our postpaid phone business, and that just drives great value creation.

Now our customer results and industry-leading customer results flow through to industry-leading financial growth. Our postpaid service revenue grew by 12% year-over-year. Now that's obviously industry-leading. Our service revenue as a whole, 9%; core adjusted EBITDA, 6%; and another incredible quarter of service revenue to free cash flow conversion at 26%. So there's great customer momentum. And importantly, that's translating into that one key metric, cash conversion. So overall, an amazing quarter.

Let me come back to what I was saying earlier about my strategic priorities and spend a moment on that. We start by saying I have enormous conviction in what the team outlined during Capital Markets Day. And even more so now that we're a year into that journey. Everything we've seen in the last year makes us double down on our convictions and convinces us that we're heading in the right direction. I expect continued profitable growth in our core wireless and broadband businesses, and this is the big deal, which is that momentum, which we are seeing right now is being driven by widening differentiation, which means it's truly sustainable. And that widening differentiation is driven by kind of two big things. On the one hand, you have our growing network leadership, not just in reality, but in perception as well. And that's complemented by our digital transformation, which just takes pain out of the customer process.

Let me talk about this in a bit more detail. Start with the natural place to start, our network. We're often asked how big is this whole network perception opportunity. Let me give you some sense of it. One out of every three AT&T and Verizon customers chose them at some point because they were the best network. And these customers are paying a premium for something that is simply no longer true. You work the math. That means there are 70 million customers that are paying a premium for something that is simply no longer true, and that we can unlock with our best network. And more and more of these customers are beginning to change their perception. In Q3, we hit an all-time high in our network perception amongst switches, and that's a big driver to the outperformance we're seeing.

Now our network perception is changing because the reality is changing. Let me give you a couple of examples of how powerful our network is. Ookla data shows that our median download speeds on the new iPhone are nearly 90% faster than one of our benchmark competitors and over 40% faster than the other. That's why when you have jump balls with the device change, you see the Un-carriers continued outperformance, driving superiority in the network for a new device like this and such visible superiority is a huge driver to our performance.

Another great example is our 5G broadband business. Now using the fallow capacity model in the last 2 years, we've nearly doubled our number of customers. Each of them use 30% more. So a phenomenal 580 gigabytes a month. At the same time, so doubling customers, 30% more usage per customer, at the same time, our average download speeds have increased by nearly 50%, and our wireless speeds have gone up as well. That's what an Ultra capacity network truly looks like. And we're not standing still. So we're making progress on perception. The reality is only getting better, and we will not stop. We're not standing still. We're building and upgrading thousands of new cell sites, many of which are in smaller markets and rural areas, and we're deploying and leveraging our nationwide 5G advanced network. I want all of you to know that I am committed to not only being the network leader of today, but also investing tirelessly to defend and widen the margin of our network leadership for tomorrow.

Let me talk a bit about digital transformation. The amount of friction and frustration we cause customers today because of our processes and the state of evolution in this industry is phenomenal. We have a huge opportunity to change that with our digital transformation, and we saw great progress in adoption. Now I love this stat. 3 out of 4 of our iPhone upgrades during our preorder window were digital. That is widening differentiation. Together with the stats I shared with you about network quality, that creates a moment where it's clear that we are different. And T-Life continues to be the center of our digital engagement with over 85 million app in stores. Look, I can sit here all day and talk about all of this. But ultimately, what will matter is our results going forward, quarter after quarter. And Q3 is just another proof point that the Un-carrier strategy is working, that our differentiation is widening.

Now Peter will give you an update shortly on our guidance. I just want to say that I'm really excited to discuss our guidance in detail for '26 and '27 on our year-end call. I plan on increasing our guidance for '26 and '27, and that reflects the core strength in the underlying business and M&A. And I'm looking forward to our future. And as I look at it, it's even better than what we said a year ago.

Let me conclude by saying our differentiation is only widening. This team's ability to deliver is totally unmatched. We've come a long way, and our most exciting days are ahead of us. Our future is bright. Our vision is clear. Our results will continue to speak for themselves as we march towards our lofty long-term goals. With that, over to you, Peter.

All right. Thanks, Srini. As you can see, we had a fabulous Q3, which underpins the confidence in our increased guidance. So starting with customers, we are raising our expectation for total postpaid net additions to now be between 7.2 million to 7.4 million, an increase of just over 1 million at the midpoint. As part of that total, we are also increasing our expectation for postpaid phone net additions now expected to be 3.3 million, highlighting the tremendous momentum we're seeing in the business. and on the strength of our T-Fiber rollout, we are also raising our fiber customer net additions guidance to be approximately 130,000 this year, up from approximately 100,000 previously. We now expect postpaid ARPA growth of at least 3.5% for the full year, including the dilutive impacts of UScellular, Metronet and Lumos. Excluding the impacts of UScellular and the Fiber JVs, our underlying ARPA growth is now expected to be up approximately 4% for the full year. We now expect core adjusted EBITDA to be between $33.7 billion and $3.9 billion for the full year, an increase of $300 million at the midpoint, reflecting our ongoing core operating strength and the inclusion of UScellular into our full year guidance. .

And speaking of UScellular in September, we both increased our synergy guidance to $1.2 billion in total OpEx and CapEx run rate synergies and accelerated the time line to realizing those run rate synergies to within 2 years of close. As part of that accelerated synergy realization plan, we expect to incur approximately $300 million in cost to achieve in Q4, primarily driven by merger-related costs related to UScellular which will be excluded from core adjusted EBITDA.

In network, where we remain focused on using our customer-driven coverage model to both defend and expand the margin of our network leadership, the merger also allowed us to accelerate a broader network transformation initiative focused on optimizing customer experience and value through cell site location optimization. As part of this effort in Q4, we expect to incur approximately $160 million in additional expenses related to cell site decommissioning that will be excluded from core adjusted EBITDA. With all M&A and financing incorporated, we anticipate Q4 depreciation and amortization expense of approximately $3.7 billion and interest expense of $1 billion.

All right. Turning to cash CapEx. We now expect cash CapEx to be approximately $10 billion, an increase of $500 million, driven entirely by the inclusion of UScellular. And we now expect adjusted free cash flow, including payments for merger-related costs in the range of $17.8 billion to $18 billion, representing an increase of $200 million at the lower end of the range.

All right. To sum it all up, not only did our results continue to demonstrate our ability to consistently execute and deliver outsized and profitable growth, we could not be more excited to carry our strong momentum far into the future. So with that, I'll now turn the call back to Cathy to begin the Q&A. Cathy?