Tuesday, February 26, 2019

Sprint's 5G Launch Potentially Gives It the 'Yellow Jersey"

At Mobile World Congress, Sprint announced its intention to launch 5G in May  with initial markets in Chicago, Atlanta, Dallas and Kansas City, along with Houston, LA, NYC. Phoenix and Washington, DC.


In support of the 5G foray, the company has lined up vendors to create and make available complementary halo devices LG (V50 ThingQ 5G), Samsung (Galaxy S10 5G) and HTC (5G Hub).   

The big picture: Sprint is finally realizing the advantage of its 2.5 GHz spectrum. While most of rivals were deploying LTE with FDD spectrum, Sprint's 100+ MHz TDD is a blessing as it can use that same wide bandwidth dynamically (split mode) to serve LTE and 5G. Therefore, it can add more downlink where market conditions require in contrast to a defined chunk of bandwidth as in competitors' FDD modes.

  • On the technology side, Sprint has been very vocal about investing in Massive MIMO radios and antennas, either when upgrading existing sites or building new ones. This technology is foundational as a 5G enabler and is ramping up in the first 5 months of 2019.  
  • Sprint's LTE Advance should be well over 220M POPs covered. But in late 2018, the company claims 225 gigabit LTE cities. This is important as it can provide a similar customer speed experience along side 5G. 

Why it matters:  To take a page out of the Tour de France where the leader wears the 'yellow jersey' as the winner in the stage, the 5G race seems to line up with Sprint.  While larger competitors AT&T and Verizon are deploying fatter mmW spectrum for fixed and quasi mobile service, it's unclear how they will get a national 5G footprint (It can bring in its discontinued 3G spectrum).  T-Mobile is banking on its FDD 600 MHz to provide the national coverage layer that could win the 5G geographic race down the line but it currently is still deploying and waiting for television station clearing. Moreover, it's unclear how much of its limited spectrum that it shares with LTE can provide a meaningful 5G experience. 

To be sure, Sprint's 2.5 5G coverage cannot provide a fully filled-inn national map. Physics makes it just too expensive to do so. However, using the 2.5 GHz in already built out markets and Massive MIMO upgrades along with the trend of vendor modularity (software and 5G 'cards'), Sprint can provide more 5G POP coverage than competitors in 2019.  
Tour de France observers will note that the race is multi-stage and with each stage there could be different leaders wearing the yellow jersey.  For now, in the first stage of the domestic 5G, it's looking like Sprint.

Extra content: John Saw, Sprint CTO at Mobile World Congress 2019 talking about its 5G network plans.

Thursday, February 7, 2019

4Q18 T-Mobile Prepaid Recovers A Bit

T-Mobile took back net additions leadership for the quarter amid a slowdown in 2017 and 2018 from monstrous growth in 2015 and 2016.  With 135K adds, the company beats continued prepaid nemesis AT&T which posted 26K but only 13K phone net additions


Why it Matters: 

T-Mobile needed to slow the AT&T prepaid momentum a bit as it has been moving towards prepaid leadership in terms of additions since 2Q17.  Were it not for AT&T branded prepaid losses, Cricket's 240K net adds would have continued AT&T's domination.  A quarterly win is a nice reversal of 2018 fortune.


It's no secret that postpaid has better revenue upside than prepaid and in the 3Q18 earnings call, President Mike Sievert explained that their focus had been converting competitors' prepaid users to T-Mobile postpaid.   Data point: Prepaid makes up 33% of its branded base and 30% of the revenue.

Despite how the company and others in the industry have been stating that the prepaid/postpaid plan lines have blurred, T-Mobile postpaid hovers at ~$46 while its prepaid ARPU is in the mid $38 range. So Mike's argument holds water. What is unique is that in 4Q, T-Mobile admitted that its gains were from lower churn but also plan and handset promotions.  The promotions are a sharp contrast to not responding to 3Q AT&T promotions.  Will T-Mobile by Metro continue its  promotional run or is the AT&T branded prepaid losses a quarterly anomaly? Though with the 4Q win, AT&T safely won the 2018 leadership. What will '19 look like?