T Mobile US : Q3 2023 Transcript

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EDITED TRANSCRIPT

TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

EVENT DATE/TIME: OCTOBER 25, 2023 / 12:00PM GMT

OVERVIEW:

Company Summary

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

C O R P O R A T E P A R T I C I P A N T S

Callie R. Field T-Mobile US, Inc. - President of T-Mobile Business Group

G. Michael Sievert T-Mobile US, Inc. - President, CEO & Director

Jon A. Freier T-Mobile US, Inc. - President of Consumer Group

Jud Henry T-Mobile US, Inc. - SVP of IR

Michael J. Katz T-Mobile US, Inc. - President of Marketing, Strategy & Products

Peter Osvaldik T-Mobile US, Inc. - Executive VP & CFO

Ulf Ewaldsson T-Mobile US, Inc. - President of Technology

C O N F E R E N C E C A L L P A R T I C I P A N T S

Brett Joseph Feldman Goldman Sachs Group, Inc., Research Division - MD

Craig Eder Moffett MoffettNathanson LLC - Co-Founder, Founding Partner & Senior Research Analyst

David William Barden BofA Securities, Research Division - MD & Global Research US Telecom Services & Communications Infrastructure Senior Analyst Gregory Bradford Williams TD Cowen, Research Division - Director

JohnChristopherHodulikUBS Investment Bank, Research Division - MD, Sector Head of the United States Communications Group and Telco & Pay TV Analyst Jonathan Chaplin New Street Research LLP - US Team Head of Communications Services

Kannan Venkateshwar Barclays Bank PLC, Research Division - Director & Senior Research Analyst

Michael Ian Rollins Citigroup Inc., Research Division - MD & U.S. Telecoms Analyst

Philip A. Cusick JPMorgan Chase & Co, Research Division - MD and Senior Analyst

Simon William Flannery Morgan Stanley, Research Division - MD

P R E S E N T A T I O N

Operator

Good morning. (Operator Instructions) I would now like to turn the conference over to Mr. Jud Henry, Senior Vice President and Head of Investor Relations for TSU Mobile (sic) [T-Mobile US]. Please go ahead.

Jud Henry - T-Mobile US, Inc. - SVP of IR

All right. Welcome to T-Mobile's Third Quarter 2023 Earnings Call. Joining me on the call today are Mike Sievert, our President and CEO; Peter Osvaldik, our CFO; as well as other members of the senior leadership team.

During this call, we'll make forward-looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review.

Our earnings release, investor back 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 in the Quarterly Results section of the Investor Relations website.

With that said, let me kick it over to Mike.

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Okay. Thanks, Jud. Good morning, everybody. If you're watching on our webcast, you can see we're coming to you from New York City and I'm here with several members of my senior leadership team, where we're looking forward to discussing another quarter of great results.

Our strategy to deliver the best network, coupled with the best value and the best customer experience, has remained remarkably consistent. And our Q3 results again show how well that strategy is working with another quarter of industry-leading customer and financial growth.

I want to thank our amazing team nationwide. We have tackled a lot of change together recently to position our company for success in the future, and it hasn't all been easy. But this team showed once again what loving customers looks like and how that simple philosophy translates into success.

I'm sure you've seen the numbers already. So I'm going to spare you the greatest hits album of all the quarterly results and just [pick up a few things] with a few comments so that we can [get to your questions]. First, as we announced yesterday, I am so proud of our network team for reaching our audacious goal of 300 million people covered with dedicated mid-band 5G over 2 months ahead of our year-end target. We announced this goal nearly 3 years ago and then we got to work and got it done. And to this day, no one else in our industry has stated any plans to match it at any time in the future.

I know it may get confusing with others celebrating their C-band deployments, which might have the casual observer believe our network lead could be narrowing. But the opposite is true. In fact, even after their C-band deployments, according to Ookla, T-Mobile's nationwide median speeds were double the next competitor's speeds in September. Double in September. And our mid-band 5G square mile coverage is also double the next closest competitor, meaning others still have a lot of wood to chop beyond just population-dense pockets to ever reach the expansive geography where T-Mobile is today.

And we have more spectrum dedicated to 5G than anyone else before we've even begun to deploy our C-band, our 3.45-gigahertz spectrum or Auction 108 2.5 gigahertz licenses, let alone refarming our AWS. Listen, we started the 5G era 2 years ahead of the competition, and today, we remain 2 or more years ahead. And I predict that 2 years from now, we still will be.

What this all translates to is a superior customer experience. We're rapidly putting our spectrum resources to work for the benefit of consumers and businesses and we're doing it with the best capital efficiency in the industry. The most exciting part, many prospective customers are only just beginning to take notice that T-Mobile is the overall network leader, leaving lots of growth runway ahead.

And we're also expanding on our long-held fame for delivering the best value. Our latest Un-carrier move is freeing customers locked into 3-year contracts, and our new Go5G rate plans are delivering the most feature-rich options in wireless. Phone Freedom has turned out to be one of our most exciting Un-carrier moves ever, and it continues to bring high-quality switchers to T-Mobile, as you could see in our industry-leading postpaid account growth.

We're also executing on our ARPA revenue growth strategy, posting another strong quarter, well over plus 1% versus a year ago, and revenue per account on the strength of Go5G Plus and multiple products.

Some have asked, if our new higher-value rate plans are our most popular with consumers, then why isn't ARPU growing faster, too? And I'll point out that consumer ARPU does continue to grow even after offsets from growing segments like 55+ and Military. And consumer overall is being partially offset by profitable growth in the enterprise space at somewhat lower ARPUs but attractive CLVs, a development that's contributing well to our financial growth.

And we're doing all of this within a backdrop of a wireless industry that continues to grow service revenues and cash flows, while simultaneously seeing customers win from healthy competition that delivers more value and better networks. In fact, this industry produces cash flow and EBITDA much higher than 5 years ago while, at the same time, customers are enjoying 3x more data at 4x higher speeds while paying just a fraction of the price per unit consumed versus before. And that's before factoring in the expanded device promotions now routinely offered.

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

A vibrant, profitable business delivering rapidly improving network service and value. That's the win-win 5G dividend nobody's talking about. And it helps to showcase why T-Mobile's 5G leadership is so important. This is certainly true in T-Mobile for Business where we had the highest ever account net adds overall and our highest-ever postpaid nets in enterprise based on the strength of our 5G-enabled solutions.

Consumers are also choosing T-Mobile above all others. Prime network seekers in the top 100 markets increasingly recognize that T-Mobile offers the best combination of network coverage and capacity to meet their needs. And for the first time ever, T-Mobile also won the highest share of switchers in smaller markets and rural areas in Q3.

Broadband also had another strong quarter. We now serve over 4.2 million customers who are enjoying a great experience with Net Promoter Scores that remain more than 30 points higher than cable with churn improving year-over-year as well. We remain very much on pace for our longer-term goals with 5G broadband.

Overall, our customer growth strategy remains differentiated and durable resulting in industry-leading service revenue growth, both at the total company level and at the postpaid service revenue level where most of the value is created, which grew more than 6% or more than 1.5x the growth rate of peers.

That top line leadership, coupled with our synergy realization and focus on cost efficiencies, drove double-digit growth in core adjusted EBITDA with the highest free cash flow conversion in the industry. This allows us to not only raise our guidance for this year again, it also gives us excitement and confidence in the future.

With our significant growth opportunities continuing to scale with lots of room to run, it sets us up for sustained leadership in both customer and service revenue growth as we look ahead.

And we see opportunities amid the rapidly changing technology landscape as well all across our business to drive further revenue growth, margin expansion and free cash flow growth that will allow us to fund our growth investments in our customers and network as well as provide the potential for substantial ongoing shareholder returns.

This amazing customer-loving team continues to perform beautifully with so much exciting potential ahead, showing why it's not just a tagline when we say that for customers, employees and investors alike it's better over here at T-Mobile.

Okay, Peter, over to you to talk about our key financial highlights and an update on our guidance.

Peter Osvaldik - T-Mobile US, Inc. - Executive VP & CFO

All right. Thanks, Mike. Our ongoing delivery of best-in-class customer and financial growth quarter after quarter enables us to increase our guidance once again. So let's jump into the details.

We now expect total postpaid net customer additions to be between 5.7 million and 5.9 million, up 50,000 at the midpoint. This reflects continued progress across all our core growth initiatives, partially offset by the deactivation of lower ARPU postpaid other data devices in the education sector, the largest of which arose during Q3.

As you know, our ability to uniquely solve customer pain points led to significant connection growth in the educational sector during the pandemic, supporting the rapid need for remote learning solutions. As things are increasingly returning to normal, we had anticipated many of these connections to roll off in 2023 and do not expect the deactivation of these educational connections to have any material impact to service revenue looking forward.

Included in the 5.7 million to 5.9 million is our expectation of approximately 3 million postpaid phone net additions for the full year.

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

Our focus on profitable growth allows us to fund those higher postpaid phone net adds and still increase our core adjusted EBITDA expectation, which we now expect to be between $29 billion and $29.2 billion. This is up over 10% year-over-year at the midpoint, fueled by higher service revenues and synergies and excludes leasing revenues of approximately $300 million as we transition substantially all remaining customers off device leasing by year-end.

Our merger synergies are expected to be approximately $7.5 billion in 2023, achieving the full run rate synergy target provided at our Analyst Day a year ahead of schedule as we build towards the full run rate synergies of $8 billion in 2024. Now with the merger integration now substantially behind us, we will discontinue reporting synergies separately from overall business results going forward.

We continue to expect merger-related costs, which are not included in adjusted or core adjusted EBITDA to be approximately $1 billion before taxes. And we now expect cash merger-related costs of $1.7 billion to $1.9 billion for 2023 as they have underrun the P&L recognition to date.

Net cash provided by operating activities, which include payments for merger-related costs, are now expected to be in the range of $18.3 billion to $18.5 billion.

We now expect cash CapEx to be between $9.6 billion and $9.8 billion, delivering our network milestones ahead of schedule at a capital efficiency unmatched in our industry.

The higher operating cash flows not only fund the increased CapEx, but also allow for a slight increase to free cash flow now expected to be between $13.4 billion to $13.6 billion, which includes payments for merger-related costs. Not only is this up approximately 75% over last year, thanks to our margin expansion and capital efficiency, but also represents a free cash flow-to-service revenue margin, which is multiple percentage points higher than peers with further expansion expected next year.

Consistent with the entire year -- related free cash flow guidance does not assume any material net cash inflows from securitization.

Turning to income taxes. We continue to expect our full year effective tax rate to be between 24% and 26%.

And finally, we continue to expect full year postpaid ARPA to increase slightly more than 1% as we continue to expand our account relationships as part of our land-and-expand account strategy to grow service revenue.

In closing, our differentiated and profitable growth strategy continues to deliver industry-leading growth in service revenue, core adjusted EBITDA and free cash flow along with the highest free cash flow conversion in the industry to unlock shareholder value.

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

Q U E S T I O N S A N D A N S W E R S

Jud Henry - T-Mobile US, Inc. - SVP of IR

All right, let's get to your questions. (Operator Instructions) We'll start with a question on the phone. Operator, first question, please.

Operator

Our first question is from the line of John Hodulik with UBS.

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

John Christopher Hodulik - UBS Investment Bank, Research Division - MD, Sector Head of the United States Communications Group and Telco & Pay TV Analyst

Two questions, if I can. First of all, the comments on the rapid share gains in the rural markets were sort of new this quarter. Mike, anything you could tell us about sort of where you are and sort of how much room you have to grow to penetrate these markets?

And then secondly, maybe for Peter, there was a comment in the 10-Q about the workforce reduction and the fact that it would drive OpEx down on a year-over-year basis in '24. I guess two parts there. One, are there any way you could sort of quantify the OpEx reduction? And are there other factors involved that are potentially allowing you to see that OpEx reduction on a year-over-year basis?

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Okay, John. Let's start with Jon Freier, who maybe can give a little color on what we're seeing in smaller markets and rural areas.

As you heard in my prepared remarks, this is a huge milestone because T-Mobile achieved leadership in share of switchers for the first time ever across the entirety of what we call smaller markets and rural areas, which is about 40% of the country.

Jon A. Freier - T-Mobile US, Inc. - President of Consumer Group

Yes, you bet, Mike. So yes, just picking up on that. 40% of the country, everything else out of the top 100 markets, is how we define smaller markets and rural areas. It's about 140 million people, 50 million households, and again, 40% of the market. And we just could not be more delighted. I've been talking to you about this for a couple of years now relative to our ambitions in smaller markets and rural areas and bringing real 5G.

When you think about a lot of the places that we're playing, we're bringing the only 5G network into town, and given the announcement that we just made a couple of days ago around 5G Ultra Capacity, now bringing that to 300 million people across the entire country. So it's a huge opportunity. When we bring the network, we're bringing the distribution, we're bringing our marketing and our special sauce relative to our value proposition and more choice to smaller markets and rural areas. And it's been fantastic.

It's a huge milestone for us to be across all these markets now the leader of share of port-ins. We're not playing in all the markets, just as a reminder. It's about 70% of the markets that we're playing in. We're not even playing across all the markets. And even with that, now we're the share leader in terms of -- share taker, I should say, not necessarily a share leader, but share taker.

And I've mentioned this a few times, we've had a dedicated team, was a big part of our success and smaller markets, rural areas and really getting active this with our dedicated team that's focused on driving the kind of commercial success that we're looking for. And our overall ambition is unchanged, and we're right on track to hit 20% share of household by the end of 2025.

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

You take these last couple of quarters and drag them, right? We'll be the share leader soon enough for smaller markets and rural areas.

Peter, any comments on OpEx for 2024? Why don't you just go ahead and roll out the guidance for 2024?

Peter Osvaldik - T-Mobile US, Inc. - Executive VP & CFO

Yes. Exactly.

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

You got up early. I think you got up early, Peter.

Peter Osvaldik - T-Mobile US, Inc. - Executive VP & CFO

Yes. I got up too early to roll out '24 guidance, that's for sure. But in your question of workforce transformation, look, I think Mike touched upon it at the beginning and you saw us comment around this before. This is really about a tough set of actions. But as we got through the balance of the integration, we had to make some changes.

That's what this team does: it looks around corners and it says we need to make sure we create clarity in operating of this organization, bring that entrepreneurial spirit back and make sure that we're looking at what are the headwinds and what are the tailwinds.

As we think about what we laid out at Analyst Day, which seems like so long ago, with respect to 2024 and what we're going to do there, a lot in the world has changed. But it's a set of all of these tailwinds and actions that we've created that still gives us confidence that we think certainly from a core EBITDA perspective, again, I'm not going to roll out all the '24 guidance, that we're going to come right in there in the middle of the range. And these are the kind of actions that are necessary to create that opportunity and keep bringing the ability to invest in customers and the network and the business as we are.

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

I was kind of kidding, but you did roll out the guidance. That's pretty good. It is remarkable that we did this Analyst Day years ago, I think early in '21, and laid out several years of expectations. And as we sit here today, knocking on 2024, we're able to outlook a year next year that looks just like we had anticipated right down the middle.

And that's something that I'm particularly proud of, given that it's not all like we thought. I mean, it's really different than we thought. And yet we make course corrections as we go to keep the promises that we made to you front and center: a vibrant, growing business, developing EBITDA and cash flow and doing breakthrough things for customers and businesses. And that's what's happening. So we couldn't be more excited about next year.

Operator

Our next question is from the line of Simon Flannery with Morgan Stanley.

Simon William Flannery - Morgan Stanley, Research Division - MD

Mike, you talked about some of the additional growth opportunities and perhaps if you just revisit the fiber pilot and how that's going, how you're thinking about that. There's been a lot of speculation about different assets. I think you've talked about in the past about asset light.

And then related to that, fixed wireless expansion and analyzing millimeter wave, overlay solutions and other ways to add capacity, any updates on that? It sounds like you still got C-band and 3.45 to bring to bear on that. But any color there would be great.

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Yes. Thanks, Simon. Well, nothing's changed in terms of our philosophy and approach as it relates to broadband. And just to take you back, what we had said still holds, which is we are conducting all kinds of experiments in the space, including observing our national performance in 5G home

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

broadband which, if anything, that performance and the resonance of our brand and our team's ability to execute in the space, along with the trials that we're doing in fiber only bolster our confidence that our brand and our team belong in this market.

But nothing has changed in terms of our philosophy. We like this business model. And to the extent we make investments or partnerships in the area, our view is it should be capital-light, generally off-balance sheet, et cetera.

Speculation, I know, is out there. I can clarify, we're not the partner to [Jana] in the transaction that was rumored a couple of weeks ago, although we remain interested in partnerships like the kinds we have rolled out pilots around and other constructs that are generally capital-light, generally off-balance sheet.

And that's for a reason. We're performing really well and demonstrating through our test as well as our broad scale performance in 5G home broadband that our brand and our team belong in this space, and we can create value.

As it relates to new ways to do wireless broadband, you said at the very end there, and I mentioned in my remarks, Ulf and team now that they've reached 300 million people with mid-band Ultra Capacity 5G are now setting about the task of deploying all of our spectrum resources to that base. And we're only just beginning. We have the bulk of our 2.5 gigahertz now rolling out, but our target is to be at 200 megahertz around the end of this year deployed against the 300 million people. And then more room to run next year because, as I said, we have Auction 108 proceeds still pending, we have C-band that we haven't deployed, 3.45 as well as refarming potential from spectrum being used for LTE right now like AWS.

And so lots of room to run as it relates to pouring new capacity into this network. And that means we, right now, at a broad scale, are not looking at alternatives to that from a wireless standpoint. We use millimeter wave pretty strategically in very dense places, and so far, that's a great use for it.

I will say, as we said last time, so no change, that we remain open-minded to whether there are techniques that would allow us to deploy capital specifically for 5G broadband and make a great return for you. But so far, we haven't drawn any conclusions that, that's a scalable opportunity for us.

Operator

Our next question is from the line of Phil Cusick with JPMorgan.

Philip A. Cusick - JPMorgan Chase & Co, Research Division - MD and Senior Analyst

Two, if I can. One, Peter, can you talk about potential savings from the layoffs in August? And will those hit the fourth quarter or should we think of that all next year?

And then maybe one for Callie. Can you talk about the contribution of business to subscriber growth numbers? And what's the typical ARPU of your business [formats]?

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Okay. Let's start with Callie on business and then we'll go to another crack at OpEx. So what's going on in business, Callie?

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

Callie R. Field - T-Mobile US, Inc. - President of T-Mobile Business Group

Well, thanks, Phil, for the question. And I'll tell you, as a result of our network leadership and the solutions that are built for today's unique challenges of a CIO, we continue to deliver highly profitable growth. One of our highest postpaid phone net adds and lowest phone churn quarters in history, and delivered results once again that outperformed our benchmark competitor.

This quarter also, we delivered our highest enterprise postpaid net adds ever. So we're seeing growth in all segments in small business and in enterprise.

As for the macro environment, while there's probably a portion that are pricing sensitive, we know from years of experience that price alone doesn't determine a win with enterprise and government who are uncompromising when it comes to network performance and complete solutions. Solutions like we recently deployed at Boston Children's Hospital, which is the health care industry's first-ever hybrid 5G network solution for over 18 buildings, which is supporting critical applications, not only reliable connectivity, but also with security and MDM solutions for doctors to provide telehealth services to their patients.

So let me pause there, and Mike, see if there's anything.

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Yes. And specifically on ARPU, we said in our prepared remarks it's somewhat lower than consumer, but highly accretive from a CLV and value-creation standpoint. So these are great customers. We are finding, as Callie said, that enterprises are not picking us because we're the lowest price, although we compete ambitiously on price. They're picking us because of the solutions that Callie's team has brought to the market. And that's very helpful from a value-creation standpoint for us.

So we continually look at the customer lifetime value, net of all the cost, to serve these customers and find that enterprise customers are highly attractive and therefore contributing to our financial results. And that's why Peter always warns you ARPU's a mix-driven metric, and we're not solving for it. We're solving for value creation and return on our effort and investment. And enterprise is a great place to put our effort and investment.

Peter Osvaldik - T-Mobile US, Inc. - Executive VP & CFO

And then, Phil, with regards to the [$1 billion] crack at OpEx, so again, the actions that we took are really ways for us to create tailwind and further fuel the growth for the company. And so I'm not giving specific line item, OpEx guide. All of those actions were then contemplated in the updated guide for 2023 that we gave, and again, kind of the teaser we just gave about 2024 and core EBITDA there.

Operator

Our next question is from the line of Craig Moffett with MoffettNathanson.

Craig Eder Moffett - MoffettNathanson LLC - Co-Founder, Founding Partner & Senior Research Analyst

You guys recently took a price increase for legacy plans. And we've heard a bit about -- it certainly drew some unwelcome press, and we've heard a little bit about pulling back from that a little bit. Can you just talk about the kind of response you've had and how you think about industry pricing going forward and the ability to walk some of your ARPUs higher?

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OCTOBER 25, 2023 / 12:00PM, TMUS.OQ - Q3 2023 T-Mobile US Inc Earnings Call

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Yes, of course, Craig. And by the way, that was sort of not very accurately reported. So let me just kind of clear it up. As you guys know, because you follow us so closely, more so than the press, we tend to do tests and pilots of things quite a bit to try to figure out what's the right answer. In this case, we had a test cell to try to understand customer interest in and acceptance of migrating off old legacy rate plans to something that's higher value for them and for us. And we had planned to test and did some training around that. And then it leaked. And it leaked as if it was a broad national thing, and it kind of wasn't.

Now I don't know that we still have to do that test cell because, to your point, we did get plenty of feedback thanks to the erroneous context of the leak. And I think we've learned that particular test cell isn't something that our customers are going to love.

Now exactly none have rolled out. So even to your question that we recently rolled out, we didn't. We had planned it. We had planned it as a test cell and then we aren't doing it because I think we've got plenty of feedback.

But maybe, Mike, you can talk about our philosophy on pricing, things we're interested in, what we're hearing from customers and also what we're seeing with Go5G Plus and Next.

Michael J. Katz - T-Mobile US, Inc. - President of Marketing, Strategy & Products

Yes. Maybe I can start with that. Go5G Plus and Next have been, like we've talked about the last couple of cycles, incredible successes for us. And it really starts with the fact that these are, hands down, the best value in this industry. If you look at all the features that come with those plans, there's hundreds of dollars of value for customers on a monthly basis with the streaming benefits and the in-flight WiFi and roaming benefits around those plans.

But in a time when the market and customers are so focused on device value, there is not a plan in the industry that gives customers more flexibility and more value on device than the Go5G plans do. And you really saw that in this last iPhone cycle where we really differentiated with the flexibility on upgrade. When the rest of the market is at 3 years, we had offers for customers that allowed them to upgrade as frequently as 1 year.

Those plans really create the platform for our core pricing strategy, which is how can we give customers more and more value and allow them to move up our price card because they feel like they're getting something additional from us. So that is the foundation of our core pricing value.

As Mike said, we conduct tests and pilots all the time, all the time, and we will continue to do so because we still think there's opportunities both to deliver more value for customers in a bunch of different ways, but also look for opportunities to simplify our overall portfolio.

So I would expect to see more of those kinds of tests from us because it's been a consistent practice throughout the entire Un-carrier journey so that we get it right for the experience for our customers.

G. Michael Sievert - T-Mobile US, Inc. - President, CEO & Director

Yes. Although that particular test cell doesn't need to be executed now, we remain very interested in rationalizing our legacy rate plans for IT purposes, simplification purposes, revenue realization purposes, customer satisfaction and retention purposes. So we're going to stay at it. But that particular idea is -- we'll probably do something different. Good. Okay.

Craig Eder Moffett - MoffettNathanson LLC - Co-Founder, Founding Partner & Senior Research Analyst

Can you just comment on just the industry pricing environment overall and what your sense is about the pricing -- the competitive intensity on the rate plan side?

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