Thanks, and welcome again to the 2023 BofA Telco Media Conference. I'm Dave Barden . I head up telecommunications and comm infrastructure research for the bank here in New York for the U.S. and Canada. Obviously, we're super pleased to have with us today T-Mobile, and representing T-Mobile today is Chief Financial Officer Peter Osvaldik, and President of the Consumer Group, Jon Freier. So thank you guys for coming. Really appreciate it. Do you guys have to do any safe harbor?
Yeah, let's go ahead and do it. Just for the, just for the record, we may make forward-looking statements, speak about non-GAAP metrics, so please look at our filings for risks and reconciliations.
All right, I'll do that after. So all right, so thank you guys for being here. Before we kind of jump into kind of the core business stuff and an update, I think I want to try to maybe talk about some of the headlines that have been coming out. The one that kind of had people scratching their heads a little bit was the Comcast 600 MHz spectrum announcement. And I think there was a couple things that struck people about it. Number one was the mere fact that telcos and cables are actually talking to one another. And the second was that the deal is structured in a way that goes out to 2028, which does. People don't really understand.
And then, the third piece was that there's some sort of leasing something in there, where Comcast can choose not to sell you the licenses, but there's a lease, and it was unclear what that was all about. If you could kind of elaborate a little bit on the filing and the origin story of this and what it's all about.
Yeah, absolutely. Well, as you know, part of the breadth of the layer cake story of where our network is, is that tremendous low band that we have in place. And so this was a natural place for 600 to really allow us to deploy it for the good of consumers. This is 600 that's not deployed currently. And so when the deal opportunity came up, it really is structured, as you said, in two ways, and it's really focused on operating markets for Comcast and non-operating markets, right? And non-operating markets, those aren't subject to any of the clawback, but the operating markets potentially are. This encompasses all of the 600 MHz, with the exception of Philadelphia. That's not part of the deal.
It is structured in the form of a long-term lease, so we can go and deploy that 600 immediately for the benefit of consumers, with the option, of course, then to purchase it in 2028. So yeah, we're fabulously excited by this. It continues to allow us to deploy, for consumer benefit, what is kind of a bedrock of that low-band strategy for us.
You will be able to deploy the 600 MHz spectrum-
Immediately.
Immediately across all of this?
Across all of it.
There's a noncancelable option to purchase in the non-operating markets.
Right.
There's a cancellable option to purchase in the operating markets, except for Philly.
Exactly.
So that doesn't require any FCC approval for the lease piece of it. That would occur in the 2027 timeframe, with a closing in 2028.
A closing expected in 2028.
Okay, that makes sense. Okay, so this actually is accretive to the business today?
It'll be accretive to the business today and accretive for consumer good, as really that, that spectrum is not out there, being deployed at the moment and will be. You know, we have the radios ready to go.
So this will just deepen your existing 600 MHz layer where you are. Is this being done out of a necessity to address capacity concerns, or is this an abundance of caution and opportunity to exploit future opportunities?
No, it's not out of a capacity concern and an immediate need, but any time you can get access to, again, what is the bedrock of your low-band strategy, and the 600 is fabulous from a, not only just the amount of, you know, coverage that it has in play, but the ability to penetrate buildings. So it's a great spectrum band. I mean, we are the, the obviously, the ones that have it deployed across the board. And so when you have an opportunity like this knocking on your door, that can be value accretive for the business, of course, that cash outlay is, is way in the future, but allows you to lease it at a, at a rational rate in between and put it, put it to good use for consumers. Made a lot of sense to us.
I guess just two quick follow-up questions on that. One would be, as an outside observer, I think one of the conclusions we draw is that this is a clear statement that Comcast has no interest in being, you know, in the kind of mobile business, you know, at a national level. Would you agree with that kind of perspective?
I mean, it's not, it's not for me, really, to speculate what Comcast-
We'll ask them later.
You'll have to ask them later.
I guess the second piece is: with respect to the clawback, what do you imagine they might? Why they might choose to claw back the spectrum at some future time?
I think they wanted the option. So again, I'd you know, ask that you ask them, but it's in their operating markets, and they're retaining Philly, so probably to see, you know, what develops over the long term.
Okay.
Options are smart.
Okay. Second is, with respect to the new capital return announcement, could have waited a week, and I'm just saying. But so I want to talk a little about it. So the $19 billion, there's a lot of interesting things that come out of that. So, you know, we get to $33 billion total. We're left with $27 billion that theoretically would then be part of that Capital Return Program, and Mike said it might spill into 2026, so I'm just going to say it's like a five-quarter type of program. That's a huge number. But then you've got this SoftBank instead of shares, the 48.8 million, which in round numbers is a $7 billion, you know, nut.
If I kind of say: Well, maybe what T-Mobile's doing is looking at that 27 and saying, "Okay, well, let's just set the seven aside, and really, it's a 20." So then we've got $19 billion in the five quarters from 2023 to 2024, another $20 billion kind of core type of capital return in 2025 to first quarter 2026, and then we've got that nut separate. Is that how you're thinking about it? Is that how we should think about it?
No, that's really not how we're thinking about it.
Okay. Well, I tried.
I mean, it's great. Look, there's a number of things to unpack in there. One of those is, yeah, with respect to the SoftBank option, we've said we're open, and if there's a win-win situation here, that we can take it out, of course, we would consider that. But in the pendency of our plan, we had always anticipated that this would come, right? It's, you know, with the threshold price where it is and what this business is going to generate from a core EBITDA perspective and a free cash flow perspective, we always thought this dilution event would come. So yeah, if there's a rational way, that's a win-win, of course, we'll talk about it, but in our planning horizon, it was always that dilution event will come naturally with the share price development as the business performs.
Now, with respect to the remaining 33, we really looked at it as just what's the next five-quarter program that the board is going to authorize that we would present to them? And to be at a place, you know, as you think about the journey of how we've come through the merger integration, we said we would arrive at a place that gives you significant free cash flow and gives you leading, industry-leading conversion of service revenue into free cash flow. And if you look in this year, we're already in the, you know, 13, 13.2-13.6 is our current guidance. Our guidance at DT's Capital Markets Day was for 16-18 next year, and ultimately ramping to $18+ billion of free cash flow.
And so as we looked at the next five quarters, we said we are at a place where this business and the confidence we have in the continued growth profile and the continued ability to generate the profitability allows us to do a number of things. One of those is, as we think about the capital allocation priorities of the business, of course, it's how do you fully fund the growth? The network build, the growth that we want to do. How do you find value accretive opportunities? And in this case, you know, there's a couple things happening next year as part of this plan, and that, that amounts to about $4.5 billion of spectrum-related purchases. One of those is Columbia Capital, the 600 deal that was announced a while back, as well as the last tranche of our C-band payment.
So we've got $4.5 billion of incremental investment in this plan for spectrum. That is the lifeblood of this business and really fuels the network leadership that we have. We have a small, I'd say, placeholder for any other, you know, accretive opportunities that we may find. And despite those things, we can still have a $19 billion return program and delever to about 2.5, which is the target right now, which is prudent, I think, in this environment. And of course, in and of itself, creates optionality should something arise in the future, and it's just a prudent step.
So it really is the expression of the confidence in this business plan, how it's developing and how it's going to develop in 2024 and beyond, that allowed us to do what we did, and at the same time introduce a small dividend, which we thought it was the right thing to do to start looking at how do you diversify the capital returns to shareholders, but yet still have the preponderance of the program going towards share buybacks, given again, where we believe the profile of this business is going.
All right, let me take another stab at this. So getting to that $27 billion, we have an $18 billion guided free cash flow number in 2025. Our model suggests kind of a $2 billion step up in EBITDA from 2024 to 2025. If you've hit your leverage goal in 2024, you can lever that incremental $2 billion, 2.5 times. That's $5 billion. I mean, that gets you most of the way to $27 billion, if not all the way. Is that kind of maybe how to think about this?
I think, yeah, we didn't guide for 25 for Corey, but I think what you have to look at is, will there be overperformance, whether there are opportunities, whether where they're, you know, present itself that may be more accretive to the business. What happens with the 800 MHz spectrum option? That number. Within our plan, we assume zero from a proceeds perspective. So that's another flex point. So we'll see as we get through the pendency of 2024, you know, what the board and management believe is the right thing for 2025. But the thing to remember, and we always put this in the context of, well, through the end of 2025, this business is going to generate a significant amount of free cash flow, affording this opportunity to have this significant return program.
And then we roll into 26, right? Which felt like forever ago when we did Analyst Day, but unfortunately, you know, for me and my aging, it, it happens quick. And 26, you know, this business continues to generate significant amounts of free cash flow, which creates a great set of optionality in the future. So I think the more you think about well, what happens beyond 2025, and whether this is a in 2025 or the first quarter of 2026, you know, we'll see how things develop, but there's a lot of free cash flow generation behind that timeframe as well.
Just a couple more questions on this program. One is, Deutsche Telekom went out of their way to say that they're not going to participate in the buybacks, but that they'll be selling shares into the open market. I think that there's a tax reason for that, but could you elaborate a little bit on how does that kind of work with the buyback, and can you coordinate in any way with Deutsche Telekom selling their shares in the open market?
Yeah. So, no, we're not coordinating with Deutsche Telekom.
Oh, never mind.
Again, they are a separate entity from us, and so that question is more pertinent for them. But what they've said is they would like to be in this level of ownership. That's what they've said publicly, is for now, they're comfortable. They want to retain a majority of this. You know, they see how the business is developing and what their plans are, you know, really, really has to go to them.
Okay. So the last question on this would be with respect to the dividend. You know, there's philosophies like, oh, pay out a small dividend and grow up very fast, pay out a fat dividend and grow it slowly. You kind of have put a kind of a middle dividend, about a, you know, 1.9% yield, growing at 10%. What kind of consultation did you do either with bankers, consultants, or the buy side to kind of land on that policy is the right one?
Yeah. I mean, we did a number of studies. We debated as a management team, as a board, and concluded this was the right way to start. Again, the whole program, we still want to be predominantly focused on share buybacks at this time, given what the profile of this business, in our mind, with the guidance that we put out there, is going to do. Yet we wanted to also, again, create a more diversified capital return structure and start at what is, you know, a fairly, I think, rational yield when you look across the S&P 500, and yet, more importantly, have the visibility to what the growth profile of this could be over time.
Great. So you mentioned, this is the last kind of T-Mobile idiosyncratic topic, but is the DISH 800 MHz option? You know, not too long ago, you know, Mike suggested that there was a win-win possibility. Charlie Ergen, the CEO, founder of DISH, was suggesting that that there were top-level negotiations going on. And then, a couple weeks later, you kind of foreclosed on the option. And now the DOJ's, sorry, the DISH is asking the DOJ to kind of intervene potentially and extend the life of the option. Technically speaking, within the four corners of the document, within five days of the SEC approving the spectrum transfer, which is underway, DISH is theoretically liable for funds to come to T-Mobile or forfeit. How am I supposed to, as an outsider, think about the DOJ's participation here and how are you dealing with that?
Yeah. Well, so first, yes, of course, that any prudent businesses, right, could try to find... If there's a win-win solution to find, you always try to find that. And ultimately, you know, as a result of the filings, you can see we couldn't get to a win-win situation as of yet. And so from that perspective, the license purchase agreement is fairly clear from our perspective as to what DISH's opportunities are. I mean, they could either purchase the spectrum and at 4% price, or the other way to perform, of course, is just to pay the termination fee, should they choose not to do that. So that really, the ball is in their court. With respect to the DOJ, remember, this was all part of the consent decree as well.
So, you know, we're just gonna have to let that play out, how it plays out, but we think it's very clear in terms of the agreement, in terms of the consent decree itself, as to what DISH's options are, and now, really, the ball is in their court with respect to that.
Okay, so let's kind of transition a little bit. With, let's start with the iPhone launch this week, fortuitous timing. So, you know, I said this earlier today, but, you know, the press seems to have a short memory about, you know, what's happening in the world. You know, they kind of splash $1,000 discounts and, you know, make it sound like this is something that's quite novel and it plays into the thematic negativity, I think, of the market around the wireless space. Could you kind of describe how you see now, a couple days after everyone's kind of come out with their promotions, the landscape looks and how T-Mobile is positioned in it?
Yeah, Jon.
Yeah. Yeah, so I'd love to talk about that. So we're in iPhone season. This is always an exciting time for us and in our space. And yeah, when you look at what's happening competitively, there's always things that are happening promotionally in the marketplace, meaning that in some periods of time, it's a little bit more promotional on plans. In other periods of time, it's a little bit more promotional on devices. This is one of those periods of time over the last couple of years where it's been a little bit more promotional on devices, specifically. And when you look at it on fulfillment in terms of what we're doing and what we announced, what AT&T and Verizon has announced, it's generally stable.
When you really look at the offers today, in terms of what's happening with the iPhone, in terms of presale, retail launch availability next Friday, relative to those offers and the offers that, you know, were happening in the summer or the offers that were happening this past year, it's generally stable. It's very competitive. Don't get me wrong, it's a competitive space that's out there. But in terms of the overall competitive environment, we see that being very, very stable. From our perspective, what we've been focused on is, you know, earlier this year, we launched a new Un-carrier move that was called Phone Freedom, and we put out new great plans out into the marketplace, one.
Two, we introduced an Easy Unlock switching offer for those locked devices, stuck in three-year contracts and trapped with our competitors, and an easy way to move to T-Mobile. And then, two, really put a point of differentiation out in the marketplace around two-year device agreements versus three-year contracts. And that's been very, very positive. And you've seen in terms of, you know, our results that we delivered in Q2, it's inspired us to move to other offers that we might be able to talk about later. But this overall competitive environment, we've been very comfortable. We've been playing in this, navigating it beautifully. I would say what is happening in the market today is really not all that different than what we've seen so far this year.
Just think about, like in Q2, we delivered our highest postpaid phone net additions in eight years, since the second quarter of 2015, with our lowest phone churn rate, postpaid phone churn rate, in the history of our company, and for the first time, the lowest in the entire industry. So relative to the entire environment, we feel very, very comfortable and love the stability of it.
I think, people noted that, I think that your richest offer is actually tied to taking your highest plan, your richest plan, the Go5G Next plan.
Right.
Do I get points for that?
I remember very well-
Thank you. Yeah. And that is actually, you know, a much more expensive plan than, you know, in the quantum of dollars on a monthly basis than a year ago, the plans that were tied to the richest offers. So in a way, has T-Mobile maybe gotten less competitive, or you feel... or you feel, like, comfortable that you being in that position in the market, you've got the tools to make everything work?
Yeah, we feel very, very comfortable in this because we have, as the [inaudible], earlier this year, we celebrated the tenth anniversary of our first Un-carrier move, and when you think about all of the innovation and disruption that we've brought into the space on behalf of customers, the hallmark of that is to listen to our customers. And what our customers have told us is they want more choice. And so when you think about entry-level plans, like Essentials, you know, very kind of basic plans, all the way to our premium plans of Go5G Plus and Go5G Next, there's a lot of optionality out there for customers based on what they need. And that's what we've heard time and time again.
What customers have really told us is these three-year device agreements and being told by the carriers when you can upgrade, and maybe in three years, in the second half of this decade, you can upgrade, that's been a big pain point. One pain point, I knew it was gonna be big when we launched in the marketplace, but it's actually been bigger than I would have expected. When you think about when we launched Go5G Plus, the ratios against each one of our competitors improving month-over-month, all the way into July, which is what we said during our second quarter earnings calls. It's been really, really good. Because when you think about these three-year device contracts, I mean, you know, just we're in football season, think about this metaphor.
That's like Tom Brady winning the Super Bowl, Tom Brady retiring, Tom Brady unretiring, Tom Brady playing another year, Tom Brady retiring, and then, having more than a year left to still pay for that three-year device contract. It's a long time, is my point. And so customers don't like that. They don't want to be trapped in those long-term agreements. So our innovation has been to have two-year, and then, with Go5G Next, having a one-year option. It's gonna be not for every single person, a minority of customers, for sure, on Go5G Next. But that optionality to give customers that choice to upgrade when they want is a hallmark of what this Un-carrier move is all about.
So let me kind of push back on that a little bit, which is to say that, you know, as the phones have gotten more and more and more expensive, the extension of the payment terms was not intended to trap people, that might have been a side benefit, but to lower the quantum of dollars and make it an easier purchase for people to get access to the most advanced devices. And therefore, it was supposed to be a customer enabler. By shrinking the time frame, you're actually raising the bill, raising the bar for people to get access to the best devices. Why is that working for T-Mobile in a way that other guys have decided that doesn't work?
Actually not. It's, it's actually not in favor of the customer, it's in favor of the carrier. Because when you think about the trade and the promotional offers, and being able to extend those credits over three years versus two years, that's in favor of, of our competitors, not necessarily the customer. Because the customer, assuming that they're trading it, they're on the right plan, they're traded in the right qualifying device, they don't see a difference. The only difference they see with our competitors is they have to wait a year longer to potentially upgrade to the next iPhone or to the next Samsung or the next Google device, versus at T-Mobile, it's two years, and perhaps, for the first time, in the only plan in the industry at T-Mobile, in as little as one year.
They just can't help themselves, Dave, right? I mean, let's be honest. But the proof is in the results.
Mm-hmm.
We've arrived at the station now with third-party validated, instead of just everybody saying it up on stage, the best network. We've long been known for the best customer value and, of course, the best experiences. When you put customer choice out there and go break these pain points... Remember, this is one of the original pain points that we broke as the Un-carrier.
Mm.
This whole subsidy contract model, the feeling trapped. And Jon and team did it again, and we've seen the results. Q2 came in, not only do you have the best postpaid phone churn in our history as a company, but you have the highest postpaid phone net adds in the industry, and actually, the highest gross adds in the industry as well. So customers are coming, they're staying, and that's just a proof point of what's actually happening. You give them the choice, you give them the option, they are buying up towards the higher tier rate plans in a self-selection methodology with us, versus what the carriers are doing to them. So, I mean, the formula works. We've proven it, and we're delivering the profitability, like we said, associated with all of that.
Of course, you know, second half of a year is always more promotional and more switching, and so churn's a little different than Q2. But we love that, because when you create switching moments, you create consideration.
Perfect. That's right.
Okay. So I want to talk about something, you know, addressing this kind of sense that, you know, we, we've had couple, you know, 2021, 2022 were great postpaid phone net add years, best in a decade. Prices have been rising for 18 months straight, and the whole industry, among all the players, cable and, and telecom have been coexisting as opposed to kind of co-extincting each other, as I think, you know, Mike has said. And everybody hates the wireless industry, and I don't get it. So I wanna talk a little bit about, kind of hear your thoughts on some of these things. So there's really three things I think that people are worried about. Number 1 is industry net adds are contracting.
Number two, cable has kind of asserted a very strong presence in the market, shrinking the pool of opportunity for the telco carriers. And then three, as the telco carriers are kind of watching the water evaporate in the desert, someone is gonna be forced to do something irrational to survive. So let's take those in order and start with number one is, the market has been contracting from about 9 million net adds to, looks like we're on track to do 7 something in 2023. You guys are having record net adds. How is it possible?
Well, it's. So from a full, full on at the macro industry level, I mean, it is, it's almost like a privilege to be in this industry. When you step back and really examine what's happening, you have growing service revenues, you have growing free cash flows, and you have growing customers. Everybody approaches that a little bit differently, right? But at the industry level, you've also shown, which was very interesting during the pendency of the pandemic, the economic turmoil, that this is a tremendously resilient industry because connectivity is becoming more and more central to people's lives, how the economy works, it's permeating more throughout businesses, and the advent of 5G is going to create more TAM opportunities beyond phone and the traditional connected devices. So, I mean, it's a fabulous industry from my perspective to be in.
Within that industry, of course, as you know, we're uniquely positioned, and that really was the promise of the merger that we're completely delivering on now, because we have now the best network, coupled with the longstanding best value. Best network validated by third-party reports. You can look at Q2. Best value, that's longstanding in terms of consumer sentiment and the best experiences. Coupled with what we always said the merger and this network was going to unlock, is these under-penetrated segments. I'm sure we'll get into some of them, smaller markets, rural areas, enterprise, government. One that we didn't even foresee at the time of Analyst Day when we said it, but this network has opened up the opportunity to continue share taking in top 100 markets, where network is just the prime choice. Network seekers, as we call them.
And, of course, fixed wireless and the opportunity that that's brought and how we've been able to capitalize on that. So I think it's a fabulous industry, but our opportunity, when you couple the best product with the best value and the best experiences, of course, that's how you arrive at the situation of not only having industry-leading churn, and again, we're still going to trade here and there before we get all the way through there, but also how you have the best net adds while delivering all of this enhanced service revenue growth, as well as free cash flow. So I couldn't be, you know, happier to be in this industry, but more so the, you know, the differentiated position that we enjoy within that industry.
But as we kind of go from an industry that used to grow at 5-6 million, peaked at nine, maybe do seven this year, is probably heading back to 5-6 million net adds. As that pool shrinks, can T-Mobile still perform?
Well, first off, we've demonstrated that. So in Q2, you already saw net adds on a year-over-year basis be a little bit lower, yet we delivered, you know, our best Q2 in eight years. I don't know where the industry, from a postpaid phone perspective, is going to go. I mean, there's been... You know, cable has pulled what appears to be a lot of prepaid customers into the postpaid pool, maybe expanded the total bucket as well, with the free line offers that exist out there. So it's hard to know where it's going, but we're very confident. And again, if you have the best product and the best value that you can deliver, and we've proven that in Q2.
So then we go to level two, which is kind of the battle with cable, and it has a couple of different levels to it. One of the basic ones is, you know, doesn't seem like a terrible idea if you can put wireline broadband and mobile broadband together in one discounted price. That seems like a pretty strong advantage over the wireless industry, which can do pretty much wireless only, and then in some places, can add fixed wireless access for a period of time. I think Mike, last week, kind of highlighted, he doesn't think fixed wireless access is going to revolutionize the broadband industry, and if I'm a cable investor, I'm pretty happy to hear Mike say that. So how does telecom and cable evolve in that context?
Well, let me start, and maybe Jon can add some color around, well, what he's actually seeing from consumers. But we always said, in regards to fixed wireless, remember, this was always a fallow capacity model. So how do you take this massive capacity of the network and utilize that fallow capacity in a very smart way of protecting mobile phone traffic to generate great returns? And so it was always going to be, you know, our target was the 7-8 million, and it was always going to be mid-single digit penetration. It wasn't going to be the substitute for 90% of customers. Where we're growing, it's going great, and maybe Jon can touch on, you know, what we're seeing from consumer NPS scores and beyond that.
In regards to this whole concept of the bundle, I don't think we've seen, and Mike said that last week as well, anything from a consumer utility perspective. I mean, maybe way back when, a bundle was great, because you could, you know, write one check to one, provider. That's not how consumers shop anymore. I mean, the vast majority of consumers are on autopay anyway. So then it becomes a, "Well, am I getting greater utility from the combination of the two?" And the answer is no, not really, right? Every phone basically offloads to Wi-Fi in your home. You really, I think what we're seeing from consumers is the wireless purchase is a very much a considered purchase. It has to work for them in their moment of truth, on the breadth, on the reliability, all of that.
And that's why, you know, frankly, we just don't see this as any more than a discounting mechanism. And then I take you back to the best product and the best value category, which is why, despite what cable's done with their free line promos and all of that, we've been able to deliver what we did, and, you know, I keep going back to Q2 as an example.
Yeah.
Jon, maybe you can speak to what you're seeing out there.
Yeah. I mean, we're we just couldn't be more excited about these trends that we're seeing. This is the Q2 was our fifth quarter of 500,000 or more high-speed internet net additions. And for the last five quarters, it's been more than AT&T, Verizon, Comcast, and Charter combined. So the overall growth rates have been fantastic. When you look at the NPS scores, they're 30 points higher than, you know, the average of DSL, cable, satellite, and actually higher than the average fiber category as well. So customers are loving this. They love the utility of it. They love the simplicity of it. You don't have to do truck rolls, you know, big, huge guy, you know, running through your house and hooking up all these cables. You just plug it in, the app walks you through the whole thing.
Customers really love it. And when you think about what's happening, too, within this business, it's actually given us a front door, in smaller markets and rural areas as well. Because, you know, when you look at those particular customers and the lack of choice, a lot of DSL, like, you know, products in those markets, it's given us a front door and a catalyst to establish household relationships in ways that, you know, we didn't really count on, I would say, two, three years ago. So it's been a nice catalyst for us.
So if we look at the third level, then, the interplay between the telecom carriers and whatever non-cable part of the market is open for you guys. Right now, let's just say run rate, round numbers.... T-Mobile's running 700,000, AT&T's running 300,000, Verizon's running 0. Do you feel that that's a comfortable, sustainable way for this industry to continue to operate? Or is T-Mobile overearning? Does T-Mobile maybe have to accept that maybe 500 for T-Mobile and 350 for AT&T and 150 for Verizon? Is a more normal, natural, stable, sustainable, disciplined, rational way for this industry to look rather than the way it looks now. How do you think about that?
Yeah, well, first off, the first premise of your question was there's some, you know, non-cable pool, and frankly, again, because wireless is such a considered purchase, the step change of growth you saw in cable correlates with the first free line promo.
Right.
And we've said that we've seen some interesting things in terms of port, non-port ratios. So we think the pool, overarchingly, consumers are looking at what's the right wireless carrier for them. And within that, our job and our aspirations are, we are in a moment where... think about any other industry. If you have the best product at the best value, you know, you should be rationally taking a large portion of the share.
Yeah. Everybody's working with dollars, no doubt.
Yeah. Well, yeah. Coupled with, again, the under-penetrated opportunities that we have that others don't have. And also in a lot of those under-penetrated segments where our network is completely differentiated, completely, where the competitors don't even have mid-band 5G, and we do, and coming from low penetration rates. So I don't know where the industry is going in terms of total, and again, because there's so much prepaid to postpaid displacement, there's kind of the expansion of the TAM with these free lines, and we'll see how, how those, you know, exist in the future. But our job is to continue to deliver against this plan that we put out there, which we've been doing fabulously against.
When you have the best network and the best value, that's what I keep going back to, is, you know, you have a great mechanism to continue to attract customers. And we're doing it on acquisition, we're doing it on retention. We have the customer value metrics that we continue to enjoy, you know, a separation from, and the customer, consumer network equities that continue to rise.
As we think about just the, that kind of interplay between the carriers, so the iPhone creates a switching environment where T-Mobile's had demonstrable success in the switcher pool. We've got Verizon has rolled through a new price hike that just went through, I think yesterday or the day before. So that's going to roll through the third quarter and the fourth. We've got the Spectrum One promotion is going to come up for its annual kind of refresh, and we're going to see what happens there. We don't really know what's going on in ACP with Charter, but that, you know, it's not going to be a big positive for them. So there's going to be a lot of events in the second half, which are going to create switching opportunities, potentially.
So how excited should I be about the some growth opportunity for T-Mobile in 2H 2023?
Well, maybe I'll switch to Jon about how excited he is in terms of anytime. This period of the year, when you have the new iPhone come out, where you have holiday promotions, and our job is to capture switchers. You know, we're not going to give you a number. We can't give you that.
All right.
I have to Q by Q, you know, quarter- by- quarter plan, but it goes back to the fundamental network value equation. I don't know, Jon, are you excited?
I am excited, yeah. As you would hope that I would be excited about this, but I'm tremendously excited for exactly these reasons when you think about it. I mean, you know, in a couple of days, it'll be my 30th year associated with this company between T-Mobile, VoiceStream, and the predecessor company, Western Wireless. And of course across kind of those my 29th year, I should say, on our 30th next year. But across almost 3 decades, we've never been in a more winning position from those elements that Peter talked about just for a few moments. I mean, the majority of our time has been, you know, scrapping with an inferior network. Now, we have a superior network. The majority of our time as being kind of, you know, being contained to the top 100 markets. We didn't have coverage, really, in rural America.
When you think about small markets in rural America, the way we define it, outside of the top 100 markets, 40% of the U.S. population, we still have a 16.5% share as of Q1. Tremendous more opportunity there. You think about the business sector and what's happening in enterprise and government and small business, more opportunity there. And to your point, with a lot of interesting things happening in the competitive environment in terms of what others are doing, we feel great about our hand. We feel great about where our equities sit with customers, how they feel about our value leadership, how they feel about our network leadership, and continuing to-