Monday, July 19, 2021

Impacts: DISH & AT&T's Network Services Agreement

What: DISH and AT&T signed a long term network service agreement making AT&T the primary network for its DISH MVNO brand (Boost Mobile, Ting and Republic Wireless) customers.

Though the terms were not disclosed in the DISH SEC 8-K filing, the media reports point to 10 years and worth at least $5 billion. Moreover, the agreement allows AT&T to use a portion of DISH's spectrum in various markets to help support DISH's customers on the AT&T network. Lastly, AT&T is providing transport services to support DISH's 5G network. 

Why: DISH needed to exit/held hostage to an acrimonious T-Mobile relationship prompted by the announced CDMA network sunset by January 2022.   The sunset would require DISH to convert (read handset subsidy) those legacy CDMA subs to newer compatible devices. 

When: That is an unknown on the rollover of these customers. However, it's likely before the end of 2021.

Impact:

  • DISH
    • Gets out from under the T-Mobile thumb/control despite favorable ostensibly wholesale rates when it took over the Boost branded base 
    • Likely to receive an incentive monetary sum to assist DISH move subscribers onto AT&T network  
    • Gets out of direct device subsidies of those CDMA subscribers; could use that incentive sum to help offset those devices
    • Possibly gets access to AT&T device relationships to drive down DISH's subsidy costs (near term and future) as well helping to pad the device offerings
    • Ostensibly, this AT&T wholesale deal would provide better monetary terms/outcome for DISH in order to exit the T-Mobile relationship 
    • Allows DISH to bundle wireless service with its own satellite television service (double play) allowing for increased ARPU and growth in rural communities it currently serves

  • T-Mobile
    • Loses wholesale revenue from '22 onward though the T-Mobile should have factored in DISH's 5G network buildout projections and worse case planning given the increasing symmetrical war of words    
    • Loses a customer/partner that is increasing hostile (the T-Mobile Grinch commentary). That could be construed as a good thing.
    • With 'renting' some of DISH's 600 MHz spectrum that allows for T-Mobile's vast national 5G claims, DISH could opt to terminate the spectrum leasing and leave T-Mobile with future 600 LTE & 5G coverage holes.  T-Mobile and DISH came away with a 42 month lease arrangement back in late '20.
  • AT&T
    • Gains future wholesale revenue, presumably for 10 years, and takes it away from arch rival T-Mobile
    • Gains access to DISH's spectrum in certain markets
      • Though the primary purpose was to support DISH's customers, what's to stop AT&T to also support AT&T customers?
      • Markets were not identified but likely in dense urban markets where Boost subscribers consumer service
    • Unclear whether this is relegated to just LTE connectivity or future 5G as DISH would logically have its own national 5G owner's economics 
    • Gets near term and future transport revenue for DISH's 5G buildout. This would help with some return on investment (CapEx) on the company's big multi-year fiber push and buildout 
    • Allows DISH to blunt T-Mobile rural growth as a viable competitor (if DISH can execute)   

Tuesday, March 9, 2021

T-Mobile’s WFX Enterprise Growth Opportunity


Macroview: WFX is the first major move since the integration of the Sprint’s and T-Mobile’s Business groups.  Perhaps by design, the business activities from the pre-new T-Mobile centered solely on small business growth. This segment wasn’t a stretch as there are overlapping profiles between consumer and small business. Therefore the retail playbooks looked similar.  

As the merger moved positive, T-Mobile was banking on Sprint’s business expertise in complex services and its enterprise accounts as a jumping off point to tackle competitors AT&T and Verizon.  In an analyst call, T-Mobile’s EVP for Business, Mike Katz stated that those competitors controlled 91% of the enterprise market. 


Opportunity: T-Mobile’s aggressive network buildout with Sprint spectrum assets set the table for enterprise conversations that never could have happen as standalone Sprint or legacy T-Mobile. T-Mobile’s marketing messaging of its aggressive 5G geographic footprint and increase capacity is now the calling cards to those premium enterprise accounts and leads, those who favor geographic breadth and reliability over price. Yet the company's consumer and small business price leadership reputation doesn’t hurt either, as cost is a key factor for procurement managers.


The Next Big 5G-Powered Move: There are three components for this WFX business focused announcement.  WFX (work from anywhere) as opposed to WFH (work from home) is a nod to the change in forced work due to the pandemic. The three components offer an opportunity to bundle a sale to those business or government entities who look to shift from an office workforce to a partial or fully remote one.  While competitors may have the same piece parts, a bully baked and coherent portfolio offering helps the perception of corporate focus and credibility.  There is also the unaddressed minor adoption approach - corporate or individual liable.  Ideally, a corporate liable approach alleviates out of the pocket expenses and control for procurement managers and mostly employees.

  1. Enterprise Unlimited Plans - unlimited 4G and 5G data is no big deal in the consumer and small business world but in corporate and governments accounts, competitors' plans   centered on pooled data plans. The clear benefit is not worrying and managing data thresholds for managers, employees and intangibly reduce overall internal OpEx. 
     
  2. T-Mobile Home Office Internet - While many companies are ok with co-mingling an employee's internet, perhaps with a bolt-on VPN, the pandemic and pandemic era collaboration tools have, in some cases, taxed the up and downlink throughput of a consumer grade internet connection.  T-Mobile claims this offering comes with enterprise grade SLAs where specific work-related data is prioritized. To be clear, this is a fixed wireless access offering with an included router. The big unknown for the subscriber will be T-Mobile's build out, LTE or 5G and what the associated up and downlink expectations may be.               
  3. T-Mobile Collaborate -  To round out the offering, a unfiied communications cloud -based platform play is in order. While UC is tablestakes in any enterprise portfolio, bundling it into WFX  is a necessary holistic solution to address competitors’ similar offerings.  With Dialpad (a TMobile Ventures investment), there should be some owner's economics and control in Dialpad's future refinements.   
The Path Forward: With the consumer side launching Magenta Max and WFX launched in 1Q21, the company is positioning itself to be a more premium carrier as articulated in previous earnings calls. Unlike the more transactional nature of the consumer business, every enterprise lead is a give and take to win the business which may include device subsidies or for free, depending on the deal.  

Similar to starting from scratch in the business (read small business segment), T-Mobile had claimed amazing growth. Somewhat the same can be said in the enterprise space as T-Mobile is getting its legs together in these easier to understand WFX connectivity solutions to complement more complex service (e.g., MDM, security, contact center, etc.) sales. It will still come down to the enterprise sales teams to make the case, rebuff competitors and close the deals.