Hello and welcome to the T Mobile Analyst Day. I'm Jud Henry, Senior Vice President and Head of Investor Relations. We have a very exciting agenda today. But first, let me get a few administrative things out of the way. During this presentation, 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. A replay of today's event along with the presentation materials And a press release recapping today's event will be available on the company's Investor Relations website at the conclusion of the event, as well as reconciliations between GAAP and the non GAAP items we discussed today. All right, on with the show. Today's event will consist of 4 Each one will be followed by a Q and A session. That way, we can keep it interactive as we go along.
Our event will, of course, be kicked off by Mike Sievert. And then we'll dive into a discussion of our network and spectrum advantages, why they are durable and how we will translate those into brand fame and business results led by Neville Ray and Matt Staniff. 2nd, we'll dive into our 4 consumer growth opportunities, showcasing How our customer first formula has legs that will fuel our growth for years to come, especially as we focus on underpenetrated segments. That section will be headlined by John Fryer and Cali Field. 3rd, a discussion on our big growth adjacencies, business and broadband led by Mike Katz and Dow Draper.
And finally, a discussion on value creation, including synergies, mid and long term financials and shareholder return aspirations led by Peter Oswaldic. We have a lot to cover. So without further ado, let me turn it over to Mike.
Thanks, Jud. Hi, everyone. Thanks for tuning in. Welcome to our first ever T Mobile Analyst Day. I've been looking forward to this event for a while now And I'm excited to share more details on our simple and straightforward business plan and our vision for growth and value creation.
We're coming to you virtually this afternoon in our socially distant setup here in our Bellevue headquarters, where as Jud said, I'll be joined by a few of our senior leaders to share our plans for T Mobile's future. Now let me just start by saying that as we approach a year since closing the merger, I am really proud of how our employees have united As one combined company to serve our customers and deliver Outstanding business results, often under very difficult circumstances. This success just simply reinforces that we've assembled the Best team of leaders and employees in the industry. Our 1st year of progress says a ton about our people and about our culture, Because this is when many mergers really struggle. We've persevered through a pandemic and economic crisis and of course difficult times socially and politically.
I am so proud to see our team rally together around our love for our customers, something which will always set T Mobile apart. As I stand here today, our entire wireless industry is embarking on the 5 gs era, an era that's been a long time coming And one that T Mobile is poised to lead
for the next decade, if not beyond. Now even though we'll allow Neville to do a
little bragging, we're really not here today to tell you about our head start in 5 gs. What we're here to tell you is why our advantage will last for the entirety of the 5 gs era and translate into business results and we believe extraordinary shareholder returns. Listen, it's no secret that wireless has changed the way we all live and work. And this year has made clear that more than ever connectivity is central to nearly every aspect of our daily lives. In this work from anywhere, connect from anywhere world, the Internet is going mobile and 5 gs is the catalyst.
When we look ahead as the country's Leading pure play mobile Internet company, there are opportunities for innovation and growth that most of us can't even imagine. The innovation that came from 4 gs has been transformative. The innovation that 5 gs is bringing will again be life changing from gigabit speeds, ultrafast network response times and True mobile broadband coverage that reaches Americans across the entire country, T Mobile's 5 gs will power everything from connected cars to connected farms, From everyday healthcare to emergency response solutions, let alone next level mobile speeds that will free consumers to download movies in seconds And deliver AI and AR fueled experiences we've only ever seen in the movies. As the supercharged uncarrier with our huge lead and superior assets, Our newfound scale, our strong balance sheet and this customer loving team, we have the opportunity to lead in the 5 gs era and we are taking it. We're setting our sights higher and taking on new growth ambitions like never before.
Our mission is to be the best in the world at connecting customers to their world. And our strategy to get there isn't complicated, but it is differentiated. We plan to deliver both The best network and the best value. No company in our industry has ever been able to do that before. We've always made businesses and consumers Choose.
Only T Mobile is positioned to do this with our superior assets and resulting cost structure. Couple that with the best experiences from the best team and you have a formula that allows us to chase our vision to be number 1 In customer choice and number 1 in customers' hearts. We'll get there by focusing on these 3 core pillars. First, building the world's best 5 gs network and delivering product leadership by turning our combined network and spectrum assets Into a truly superior wireless experience, an experience that T Mobile becomes famous for and one that's here to stay. 2nd, unlocking the potential of our scale and the superior cost structure that results from our network assets To deliver ongoing value leadership across both postpaid and prepaid wireless and in new categories such as home broadband, Merger synergies and scale will allow us to simultaneously lead in value while also expanding margins.
And third, delivering the best experiences from the best team as we build on our uncarrier strategy to make customers happy in both telecom and broadband. I can't wait to free customers from the long standing trade off Having to choose between a better network and a better value, only T Mobile has the assets, the team and the brand to offer both. As we deliver on these strategic pillars, we're focusing on some simple ambitions that showcase our balanced approach to long term value creation. It's not lost on us that we're now stewards of a massively important and valuable category and we understand our role within it as a leading company. Our ambitions are simple.
1st, our goal is to continue to consistently and profitably lead the industry in growth, Particularly once the major elements of our integration are behind us, we expect to continue to outpace the industry in total customer growth While simultaneously focusing on growing revenue per account through deepening customer relationships as we ultimately seek to lead in service revenue growth year after year. 2nd, translate that growth into an increasingly valuable business, focusing on synergies, Scale Economies and Cost Transformation. We're on track to not only unlock the value of our merger synergies faster than originally anticipated, but we'll also Exceed our original plans while transforming the business to provide the best customer experiences and maximize operating efficiency. And third, We'll do all of this without borrowing from tomorrow. We'll continue to make the right decisions and investments to position T Mobile for long term success.
And it all starts with sustaining and expanding on our established 5 gs leadership for the duration of the 5 gs era And further strengthening our customer loving T Mobile brand and its fame for delivering the best experiences and serving the happiest customers. We've already delivered on some of these ambitions in the 1st year since the merger closed. And we're truly just hitting our stride as we now begin to progress through the most Important phases of our integration and transformation efforts across the company. Okay. We have a lot of important information to share with you today and I'm particularly looking forward to some great Q and A throughout the event.
To help frame up the priorities we're going to focus on through the day, we'll be taking you through 4 core areas. First, our industry leading 5 gs network, which is already miles ahead of the competition. Most of you already know that we're well ahead in the 5 gs race, But you want to know 2 things. Will we be able to stay ahead, especially on the heels of this massive auction? And will the public give us credit for it?
Will we be able to translate our network leadership into a stronger brand that customers prefer to an even greater extent? This is the bedrock that opens up So many new opportunities for our business and complements our already industry best value proposition. So we'll share where we are in the 5 gs race, How far we are ahead, why we're positioned to stay that way for years to come and why customers will notice and care, rewarding T Mobile with their business as
a result.
2nd, we are significantly expanding our addressable markets It's deepening customer relationships in a number of ways that will consistently and profitably grow our business. Today, we'll share how we intend to expand on our winning playbook Into new and underpenetrated markets and segments to deliver that growth both in terms of customers and service revenue. And third, we are delivering on our commitment to unlock our merger synergies faster and bigger than planned. Our progress here is exciting And these synergies are what continue to power the record breaking build out of our 5 gs network. I look forward to sharing our updated expectations today.
And 4th and probably most important to all of you, this planned growth and execution will deliver even greater financial results And the ambitious numbers that we put in front of you nearly 3 years ago when we announced the merger, these growth, transformation and synergy plans set up the potential for significantly Larger shareholder returns and earlier than previously anticipated. In addition, we'll outline areas of upside that we see and are ambitiously pursuing, Upside that's not yet factored materially into today's numbers nor into the already highly attractive value creation that the plan we're sharing today delivers. Value creation that we now forecast will exceed the original mid term and long term merger goals that we shared with you in 2018. This is a plan that unlocks greater benefits for customers and greater value for shareholders. We've built strong momentum in each of these areas in 2020 and now We have the foundation in place to continue that momentum in 2021 and beyond.
Now let's take a closer look at each of these points. First, I think it's important to start with the clear success that we had in the recent C band spectrum auction. Now that the results are out, what we knew all along Should be plainly evident to all that we are well positioned to maintain our 5 gs leadership for the duration of the 5 gs era, not just for a year or 2. Our position and advantage here will be longstanding. We came out of the auction with the best mid band spectrum assets by far, while our competitors spent Unprecedented amounts trying to catch up.
As you know, we had a strong hand going in. That's not because we had and still have more mid band spectrum. It's because our mid band spectrum is mostly comprised of frequencies with superior propagation to C band, Which means they're superior not just in reach, but also in deployment costs. We focused on acquiring C band spectrum in the areas that it is well suited for. That's why we concentrated on major urban and suburban areas, securing 40 megahertz of spectrum in top markets where it will have the most impact.
We accomplished exactly what we set out to in this auction and consumers and businesses will be the big winners as we bring even more capacity to market where the demand is the greatest. We came out with a superior asset base while also having a strong balance sheet And a capital plan that's fully funded with current capital run rates more than sufficient to deliver and sustain our network superiority. That's a big differentiator. People keep quoting the prediction I made back in September that AT and T and Verizon would absolutely kill each other in this auction, Spending tens of 1,000,000,000 of dollars that they didn't have to try to catch up to our spectrum position. And that's before they invest Tens of 1,000,000,000 more for deployment.
And as we all saw, that's exactly what happened. As you know, the big numbers being quoted don't even take into account the massive Deployment costs that will be necessary if they were to densify their networks to the extent that would be required to monetize their spectrum spending. In short, We won this one. We were able to effectively accomplish our objectives while others fell short of their aspirations to close the mid band spectrum gap despite Massive spending. While others will be looking for the benefits of this auction 3 years tens of 1,000,000,000 of dollars from now, We've been heads down, rapidly deploying our spectrum for the benefit of the American consumer and businesses already 2 years into a 5 gs build that's Happily becoming a big differentiator for T Mobile.
One of the main takeaways I want you to understand from today is that this spectrum and network lead isn't just A head start. We're well positioned to keep the 5 gs advantage that will last the entirety of the 5 gs era. Post auction, we have the most mid band spectrum, which will result in the most 5 gs capacity. But we don't just have more, We have better spectrum with superior propagation and that results in superior deployment costs to deliver a competitive outcome and by a lot. Because of our prudent approach to C band, we'll remain ahead in this race with low costs and a strong and flexible balance sheet.
So we're able to defend our leading position if we choose to. Our capital plans are funded by synergies and the dollars are already in our plans And the vast bulk of our spectrum is rapidly being deployed now after 2 years of ramping and preparing the engines to run at this pace. So yes, we're a few years ahead considering that the bulk of C band doesn't become available until 2023, but we're also positioned to stay ahead For all of these reasons and others that Neville will expand on. Of course, the C band spectrum is just one piece of the much broader 5 gs network Strategy, we started rolling out at scale 2 years ago. As a business, all of our short and long term goals start with building the best 5 gs network.
It's the underpinning of virtually everything we will talk about today. The country has never Seen anything like this network build, which is tracking well ahead of schedule and is clearly differentiating T Mobile as the undisputed network leader of the 5 gs era. Frankly, so far it's not even close. We're building on a great LTE foundation as well and not being forced to borrow from LTE capacity, Something our customers strongly appreciate. One place you can see this is in churn and our T Mobile branded postpaid phone churn was the lowest of all national carriers in 2020.
We all know that Verizon led this industry into the 4 gs era back in 2010 and it served them very well And for many years and in 2020, as you know, T Mobile led this industry into the 5 gs era. T Mobile is now America's 5 gs leader and only T Mobile offers the fastest, biggest and most available 5 gs network in America. We're already delivering 5 gs across more geographic coverage than AT and T and Verizon combined. And our ultra capacity 5 gs utilizing our depth of mid band 2.5 gigahertz and millimeter wave spectrum has been rapidly Standing on our way to cover 200,000,000 people by the end of this year. This year, The other guys are scrambling and it's nice to be in the front of the pack this time around.
While Verizon's 4 gs legacy may have Help them over the last decade, T Mobile is positioned to be famous for our network and solidly take that crown. That's a perception shift that we're laser focused on And we're already starting to see the tide turn. Matt will outline how we plan to take that momentum to the next level shortly. And thanks to our merger, which was ideally timed at the dawn of the 5 gs era. We're essentially funding this entire build through merger synergies As the process of integrating gives us 2 for the price of 1, since we have to touch nearly all of these sites anyway in order to integrate and unlock those huge synergies.
So now let's talk about the opportunities that our industry leading 5 gs network and spectrum portfolio can deliver for the business. We see a great opportunity to grow consumer wireless with our expansion into smaller markets and rural areas across the country. Our network has expanded significantly in the last few years, delivering LTE coverage on par with the other national carriers and our 5 gs coverage is miles ahead of the competition, Like a 1000000 square miles ahead, as I mentioned earlier. And when we categorize and say smaller markets and rural areas, That represents 50,000,000 U. S.
Households, almost 40% of all households in America and where our market share is in the low teens today Compared to our national average market share of roughly 30%. With our significant expansion of distribution into smaller markets in rural areas across the country, We will finally bring real competition to these areas and our plan has us increasing to close to a 20% share over the next 5 years. You've You've seen T Mobile execute this retail expansion playbook very successfully before. So with our network and added distribution, I know we have a license to win And our assumptions here could prove to be modest. John Fryer will provide more details on this in a little while.
Another space that's ready for real competition and disruption It's enterprise and government. For example, remember shared data plans that were so common in consumer postpaid until we forced AT and T and Verizon Into Unlimited about 4 years ago? Well, guess what? They're still doing that to business customers. After having successfully redefined consumer wireless For good over the past 8 years, it's time that we bring that freedom to businesses as well.
Our un carrier value proposition has performed well with small businesses in recent years. And of course, we'll look to continue to grow and support that part of the market. However, our share in the large enterprise and government space is less than 10% And it's a space where we're winning. There are over 50,000,000 corporate liable lines today and growing. That is a big opportunity.
We like our game plan here, building on strong 2020 performance. With our 5 gs leadership, businesses no longer have to make the trade off Between the price they pay and the quality of the network, they can have both. We see room to run here with a market share over the next 5 years reaching About 20%, still quite under indexed versus fair share. Mike Katz will share more on our plans with you for enterprise and government in a bit. These are just 2 of the big growth opportunities that we see ahead and our team has mobilized and energized to realize them.
And our plan doesn't even require us To get these underpenetrated segments up to anywhere near fair share nor approach the benchmark that we've already set in urban markets where our market share is 35% to 40% today. Now let's look beyond traditional mobile wireless. One of the immediate opportunities is the home broadband market, where we'll bring real competition to an estimated $90,000,000,000 market that's either monopolized or underserved across so much of this country. We grew our 4 gs LTE home Internet pilot throughout 2020 with great feedback from customers. You might be surprised to know That we ended last year with over 100,000 home broadband customers in our limited pilot.
The demand greatly exceeded our expectations And we had to turn so many away. So it's time to move beyond pilots. You may have heard Mike Katz and me last week when we announced T Mobile's new home broadband solutions for business users. And later this month, we will share our launch plans for the immediate Much wider availability of our consumer high speed home broadband service, including launch markets, service levels, price points and a lot more. These are all steps in our plan to take home broadband nationwide as quickly as possible And capture what we see as an opportunity that goes far beyond rural America.
As Dow Draper will share later, we're targeting 7,000,000 to 8,000,000 home broadband customers over the next 5 years, taking advantage of our differentiated 5 gs network asset, Which is ready right now. Our focus is going to be on great service at attainable prices, because remember, our business plan isn't burdened With significant capital costs, given that the network is funded by the mobile plan, our competitors don't have the same upside here because in various ways They are all already in the broadband market. We're excited for everything that's ahead here. At the end of the day, Real customer growth is about both establishing and growing household relationships, usually reflected as accounts and ARPA when you look at KPIs. These household relationships still generally start with the smartphone as the primary purchase decision.
So our compelling value proposition coupled With the reach and capacity of our 5 gs network, we'll allow us to expand our addressable market by establishing new account relationships with prime consumers Who value network quality and who might not have considered us previously due to legacy perceptions. And we have upside to our plan when we tap into customers who switch to us Purely because they're looking for the best network, they represent even more opportunity. Our network also earns us the opportunity to deepen our relationships with our customers through enhanced Or additional services or devices over time. Those may be additional phones or it might be increasing growth in data devices that have practical utility to the customers' daily lives like wearables, tablets and emerging categories or our home broadband offering. 5 gs is rapidly bringing new revenue opportunities and expansion of this category.
These are all value accretive That Matt Staniff will dive into a little deeper in a few minutes. T Mobile continues to win customers because of how our company creates experiences. We love our customers and they can tell. With our customer centric, uncarrier moves and our completely unique approach to customer care, It'd be easy for us to rest on our laurels, but that's just not who we are. And we're relentlessly looking for ways to simplify and optimize the customer experience.
Cali Field will talk more about our plans here because we have a different take on digitalization, building on our already differentiated approach to service. For us, It's about serving the customer how they want to be served. We believe that when you provide customers with the best network, with the best value and the best experiences, They will become loyal ambassadors for our brand. That's one reason we have net promoter scores that are up 68% since 2016, putting us in the top 5% of industry benchmarks and leading to recognition from JD Power again as the best customer care. Okay.
Now let's talk about merger synergies, which I know is a big part of why many of you have joined us today. I'm incredibly proud of the team here for being able execute and perform in a highly competitive marketplace, while simultaneously driving integration faster and better than expected to capture our merger synergies And deliver value for both customers and shareholders. We delivered $1,300,000,000 of run rate synergies in 2020 and expect to realize $2,700,000,000 to $3,000,000,000 in 2021. Looking ahead, we now expect our total run rate synergies to reach approximately $7,500,000,000 per year,
up 25%
from the original merger case of $6,000,000,000 About 2 thirds of the increased synergies are run rate P and L savings from better execution and there's some incremental cost avoidance in there as well. Our team has been incredibly adaptive and creative in finding ways to go faster in areas like retail rationalization, marketing and organizational design. While positioning at the same time to go bigger and faster in areas like network, Customer migration and IT. This faster paced and increased run rate culminates in a new net present value of an extraordinary $70,000,000,000 or more than 60% higher than the original $43,000,000,000 NPV in the merger case. When you consider the incremental synergy Combined with our lower than expected cost of capital, the markets helped us here, but even controlling for that, our finance team has achieved fundraising beyond all expectations On the strength of this company's assets and opportunities and the result has a big impact on NPV.
But even with the same cost of capital assumption from 2018 for the sake of operational comparison, we're delivering over $60,000,000,000 for shareholders, An increase of more than 40%. This is multiples higher than the $3,000,000,000 of incremental NPV we delivered in the MetroPCS merger that was such a huge success. Peter will take you through more details on these synergies later. But needless to say, the team is pushing hard to execute our integration playbook And we're all so excited about the opportunities ahead. And remember, at the same time, we're continuously looking at business transformation opportunities As we build this new company to maximize our capabilities and margins, this is much more than just a synergy story when it comes to how we look at the margin and free cash flow opportunities for the business over the long term.
Okay. Now let's move on to the financial performance that will flow from these business Plans. I am pleased to tell you that after a year of over performing against our goals and seeing the strength of our hand and our team's execution, We are now improving our financial targets such that they now exceed the mid term and long term targets that we shared in the original merger plan. We're raising our midterm and long term guidance across the board with higher service revenue, higher core adjusted EBITDA and higher free cash flow, including raising our mid term free cash flow guidance by $3,000,000,000 or 30% more than the original expectations. This plan is expected to deliver cumulative free cash flow through 2025 of up to $65,000,000,000 Up nearly 20% from the original plan.
Peter will give you the full rundown later, but I'll give you the mic drop right now. With our increased cash flow generation, this sets up the flexibility for substantial shareholder return options and potentially Up to $60,000,000,000 in buybacks from 2023 through 2025. And that still leaves up for us in a number of the opportunity areas that I highlighted earlier, as well as so many unforeseen 5 gs opportunities that we can only imagine. This industry is working to unlock new 5 gs use cases every day and T Mobile is right there. Things like consumer and commercial IoT, mobile edge compute driven solutions, innovative enterprise networking solutions and many other projects that we're working on.
Today's guidance doesn't include any material benefit from these areas because they're still developing. Now I recognize that others may take a different approach and they may be Counting on these nascent opportunities to justify massive spending on spectrum purchases and the required densification to realize all the opportunities. For us, these opportunities represent upside and we're pursuing them ambitiously. Now, before I hand it to the team to go deeper into these things, I do want to briefly Shift gears and give you an insight into another important focus area here at T Mobile, making an impact that matters for our team and for all of our stakeholders and on the communities that we serve. Throughout the merger, we talked about how we'd not only become a bigger company, but also a better one Using our unique high capacity network, our scale and our resources for good, our marquee initiative is Project 10,000,000 focused on the audacious goal of helping to connect every single student and eradicate the homework gap in the United States, so kids can get the access they need and the education and equal opportunity that they deserve.
We launched this unprecedented dollars 10,700,000,000 project last year and then actually enhanced the program to address the more pronounced inequities that have arrived in the wake of the COVID-nineteen pandemic. This is really critical work. And to date, we've delivered free or highly subsidized connectivity to over 2 1,000,000 students and we're just getting started. At the same time, we're also continuing to make connectivity affordable by providing low cost wireless services through T Mobile Connect and Lifeline and our work is far from done. We've also focused heavily on our people over the past year because we believe Only the best team working together and inclusively can deliver the best experiences.
Our strong commitment Diversity, Equity and Inclusion plays an integral role in our culture. And this past year, we launched our 5 year Equity in Action Plan, which includes a $25,000,000 investment in our community over the next 5 years. And we continue to build diverse talent in our leadership ranks to reflect our highly diverse employee group and the communities we serve with more ambitious programs in this space than ever before. Simultaneously, we continue to follow through on our long standing enterprise sustainability commitments. T Mobile was the 1st major U.
S. Telecom to commit to 100% renewable energy back in 2018, a goal which we expect to achieve later this year. In recognition of our efforts, we were recently named To Global Environmental Organization CDP's A List for climate change, the only U. S. Wireless provider to achieve that distinction.
All right. I'm excited for you to hear from our senior leadership team on how we plan to go execute and win on all the things I talked about. At the end of
the day, I want you to
leave with a clear understanding of 4 important facts around the future of T Mobile. 1st, Our industry leading 5 gs network, which is miles ahead of the competition today, it's going to be the network leader for the 5 gs era. Customers will notice and value this and our differentiation will be a catalyst for ongoing profitable T Mobile growth. We're taking our 5 gs network to a level that others simply can't follow. 2nd, we are significantly expanding our addressable market and deepening customer relationships in multiple ways to consistently and profitably grow our core business and exciting new businesses.
We're a pure play wireless company with the best assets, strong execution and with lots of room to run. 3rd, we're delivering on our commitment to unlock our merger synergies bigger and faster than planned, executing the Complex business of merging these companies with bigger impact than expected. 4th and most importantly, this growth and execution will deliver Even greater financial results than the ambitious numbers that we put in front of you nearly 3 years ago when we announced the merger, setting The potential for significant shareholder returns and earlier than we anticipated. We're significantly over delivering on our synergies and On our mid and long term financial targets, with higher service revenue than we originally guided from the growth initiatives I spoke about earlier, More synergies than we expected and more free cash flow generation from the business. We will create greater opportunities for the business And for our shareholders, for me, this is a once in a career value creating opportunity.
We have an excellent hand And to me that means the industry's best assets, a clear and incredibly simple business strategy that's already proven, lots of room to run, Exciting new businesses where we have permission to win and a team with a demonstrated track record of delivering. Add to that a strong balance sheet and a compelling financial plan And the result is a business with massive cash flow potential. And on top
of it all, we have
the opportunity to change and improve this industry yet again as the un carrier To the benefit of customers and businesses everywhere, to be the best in the world at connecting customers to their world and to earn their hearts in the I am tremendously excited about our future. Now let me turn it over to Neville to tell you how T Mobile's 5 gs network is leading this industry into the 5 gs era.
Thanks, Mike. Great to be with you all today and excited to update you on our network journey And the exciting progress we continue to make. As many of you know, I have been personally invested for many years In creating a leading network here at T Mobile. But there has never been a more exciting time in the growth of our network than now. We are set to take a commanding lead in this new 5 gs era.
We are uniquely positioned To become famous for network as we continue to combine our superior assets and execution to deliver a demonstrable And sustainable 5 gs and overall network advantage. Our team has thrived for years as the scrappy competitor, Leveraging strong execution and innovation to go from being the last national carrier to launch LTE to reaching parity On covered LTE population and having the fastest LTE network throughout most of the 4 gs LTE era. This history of innovation fostered our 5 gs strategy and a path to 5 gs leadership that is now showing its full potential. While our competition was focused on the deployment of millimeter wave spectrum, we started our 5 gs journey in a very different place. We were America's 1st nationwide 5 gs network in December of 2019, the first with 5 gs in all 50 states and Puerto Rico In June of 2020 and the 1st nationwide stand alone 5 gs network in July of 2020.
And we are the only carrier to make the game changing speeds of ultra capacity 5 gs broadly available with extensive coverage, Performance and Mobility. This vision and speed of execution has culminated in the cold hard fact But only T Mobile offers America's largest, fastest and most available 5 gs network. Let's talk first about that Extended range 5 gs provides reliable coverage where customers live, work and play. And just less than a year ago, After reaching nationwide 5 gs, we now cover 287,000,000 people with 5 gs, Delivering average speeds twice as fast as our LTE. Our competition is barely out of the starting blocks on coverage And some only by sharing spectrum with 4 gs, resulting in slower 5 gs speeds and limiting precious 5 gs capacity.
Our extended range 5 gs covers over 1,600,000 square miles today, nearly 4 times More than Verizon and nearly 2.5 times more than AT and T. Delivering broad 5 gs availability was a critical first step in this 5 gs journey. While others have seemingly made a conscious decision even with dynamic spectrum sharing to not provide meaningful 5 gs coverage to their customers. I guess we'll see how that will turn out. At the same time, our ultra capacity 5 gs delivers game changing speeds across the country When others are nowhere to be found, literally.
We are the only operator to have deployed dedicated low band and mid band spectrum for 5 And deliver on the promise of 5 gs by making ultrafast speeds averaging 300 megabits per second Widely available, reaching 106,000,000 people at the end of 2020, and 125,000,000 people Already in 2021. Others tease customers with a smattering of millimeter wave small cells that they can only find less than 1% of the time. Their strategies have struggled to deliver any real impact or customer benefit at all. But we all know there is no faking King it when it comes to customers' actual experiences and third parties that rigorously test the networks. Sure, A carrier could probably find a 3rd party for hire that would agree to only test the network a very specific way to make them look good.
But real customer usage doesn't lie. New independent data from OpenSignal based on billions of handset measurements from real customers Proves T Mobile customers get the fastest 5 gs download speeds, the fastest 5 gs upload speeds and they get a 5 gs signal More often than anyone else. Likewise, Ookla speed test data for the year to date is showing T Mobile has the fastest median download speeds. It appears AT and T's only 5 gs claim has been short lived. Additionally, extensive mobile testing from research firm, Umlaut, Formerly P3 across multiple major markets including New York, Chicago, Houston, Tampa, Atlanta, Washington D.
C. And many more also shows T Mobile leading in 5 gs speeds. Seems to be a pretty consistent theme here. T Mobile Is the undisputed 5 gs leader today, period. Next, I want to walk you through the 5 major and compelling reasons Why that 5 gs leadership position today will be a durable advantage into the future and post the utilization of the spectrum from the recent C band auction.
First, we have the 5 gs leadership position today that I have just outlined, validated through our deployed 5 gs coverage And 3rd party benchmarking. And we have massive momentum on deployment of equipment and spectrum and the vast majority of our spectrum It's free and clear for use today. 2nd, our network upgrade program is fueled by synergies from our network integration. 3rd, we maintain a meaningful spectrum advantage post the C band auction. 4th, through this synergy funded deployment, we have the financial capability to smartly invest And maintain this network advantage as Peter will describe in his comments later today.
And 5th, but by no means least, We have the most technically advanced network and a clear leadership edge on 5 gs innovation. And to think we're just hitting our stride. Our 5 gs network is moving at an incredible pace and will be substantially complete By the end of 2023, we are putting our multilayer spectrum portfolio to work across approximately 85,000 macro sites Compared to peer networks at around 70,000 sites today and complemented by approximately 50,000 small cells To create the densest and broadest network to end the digital divide. Our network enhancement is running at a Truly unprecedented pace and efficiency with some 1,000 radio upgrades underway each and every week, A process that we have worked tirelessly to develop and execute and that took much of the last 2 years to fully implement. This is a material competitive advantage The others will struggle to match as it takes material time to build these capabilities.
This fast and efficient 5 gs site rollout Creates a multiyear lead over the competition. It will be tough for them to catch up to the 5 gs coverage and capacity we deliver today, let alone where we will be in the future. We're expanding our extended range 5 gs to cover 300,000,000 people by the end of this year And expect to cover 97% of Americans by the end of next year. We are the only carrier currently on track To bring 5 gs to every corner of this country. After a remarkable ramp to bring ultra capacity 5 gs To 106,000,000 people by the end of 2020, we are on track to bring those game changing speeds to 200,000,000 people by the end of this year, Expanding to approximately $250,000,000 by the end of next year and on our way to bringing ultra capacity to nearly 90% of Americans by the end of 2023.
A plan that brings unprecedented speeds and capabilities to businesses and consumers alike From urban centers to smaller markets and rural areas, enabling a differentiated experience for mobile wireless And Home Broadband across this country and all within a time frame ahead of the release of the majority of C band spectrum. And keep in mind, the game changing speeds we see today on ultra capacity 5 gs, that's approximately 300 megabits per second on average With 1 gigabit peak speeds, they're generated utilizing only 60 megahertz of our average nationwide 160 megahertz of 2.5 gigahertz spectrum. We expect to increase that to 80 to 100 megahertz over the course of this year, delivering an anticipated 400 megabits per second with higher speeds to come as we increase the greater than 100 megahertz channels Upon completion of our network integration. Perhaps most impressively, we are delivering faster on this deployment and a broader rollout The 2.5 gigahertz for less total capital than originally planned in the merger announcement. This is a result of material procurement savings From new agreements with key partners and working with our radio vendors to develop products with higher supportive bandwidths to reduce overall radio counts.
We are also realizing significant savings from an efficient deployment engine, including adding multiple spectrum bands on a single site At the same time, as well as more effective controls via a lean deployment model effectively reducing the time to deploy. This network rollout is powered by synergies that will also be substantially delivered by the end of 2023. That's right. Our 5 gs build is essentially a 2 for 1 as we upgrade and add spectrum to all of these sites To support integration of the legacy Sprint and T Mobile networks. Our competitors on the other hand have to foot the bill for their 5 gs build Out of their cash flows, which may explain why they still have so much to do.
Our deployment delivers both LTE And 5 gs capacity as we upgrade the network. This is a direct result of deploying dual technology radios For 2.5 gigahertz and 600 megahertz to support both LTE and 5 gs. And in addition, we are already transitioning PCS spectrum From the Sprint network to the New T Mobile LTE network to provide capability and faster speeds to all of our customers. We expect to decommission approximately 35,000 macro sites by the end of 2022, a full year ahead of schedule With 7,000 to 8,000 expected to be decommissioned by the end of this year. This network integration is to deliver approximately $3,000,000,000 of hard cost run rate synergies by 2024, With more than 80% of that realized by 2023.
We are also upgrading thousands of retained Sprint sites With 5 gs capable radios for 600 megahertz, PCS AWS and 2.5 gigahertz, which will be completed By the end of next year. This combined network also allows for approximately 16,000 avoided macro sites And 50,000 avoided small cells compared to the sum of the standalone pre merger plans, and it's fully consistent With what we shared with you nearly 3 years ago. These avoided sites are expected to deliver approximately $2,000,000,000 of additional synergies To our shareholders by 2025. So let's now discuss the C band auction. The $94,000,000,000 question was recently answered.
And you saw that we acquired 40 megahertz across the top markets with a very prudent spend to complement Our multilayer spectrum portfolio, solidifying our mid band leadership and further enriching our broadband and enterprise opportunities. We invested smartly in C band to add to our ultra capacity 5 gs in urban and suburban areas where our site density is high And can readily support ubiquitous outdoor coverage using this spectrum. And the deployment is included in the capital envelope we are sharing today. Let me repeat that for you. The capital required to deploy the C band spectrum is already included in the financial plan we are presenting today.
And looking at the overall results from the auction, it's clear that T Mobile's spectrum leadership is maintained both in the early years And the longer term time frame. While there is 100 megahertz of the C band expected to be cleared by the end of this year, That spectrum was split between 2 operators and it's only available in a subset of markets, meaning that it's not going to provide Meaningful nationwide capacity or coverage for either carrier. In December of 2023, more of the C band spectrum will be available, But for both T Mobile as well as our competitors, considering all of that spend by AT and T and Verizon, T Mobile still has more mid band spectrum than Verizon and AT and T, even after all of the C band spectrum is available for use. Mid band spectrum is clearly the global sweet spot for 5 gs, but we felt that C band specifically Didn't make sense for us to use on a nationwide basis due to the necessary site densification, which is difficult to achieve outside of urban areas. I've seen several sell side analyst reports in the last several months analyzing the propagation differences of various spectrum bands.
And I would say that in general, they are spot on. By our estimates, to provide ubiquitous coverage, C band would require a full 1.5 times more sites than 2.5 gigahertz and 2 times more sites than PCS and AWS spectrum, But most carrier networks are engineered to today. And even then, there are in building coverage concerns. Bottom line, deploying C band in non urban areas is going to be a very expensive proposition for our competition to address. It's also important to remember that with our layer cake strategy, we have already deployed extensive 5 gs spectrum in lower spectrum bands.
To secure the great benefits of 5 gs carrier aggregation extended coverage, which we estimate on average at 30% for T Mobile, Our competition will also have to modernize their low or mid band radios to be 5 gs capable. And it's clear from their limited geographic 5 gs footprints today that little of this work has been completed, yet more cost to carry if they help to secure carrier aggregation coverage benefits, Benefits they can ill afford to lose in non urban areas. At the end of the day, our plan is to bring ultra capacity 5 gs To nearly 90% of Americans. And while we're super excited to add new C band assets to our powerful existing spectrum position In urban and suburban markets, there is no practical path for others to follow us with meaningful mid band coverage with C band alone Outside of massively expensive network densification coupled with expensive 5 gs upgrades to all of their sites. While I'm not entirely surprised that AT and T and Verizon spent a combined $80,000,000,000 in the auction And a hefty premium because they really had no choice.
I do scratch my head about how much it will cost them To deliver meaningful coverage across the nation, utilizing that C band spectrum. I would estimate
The
T Mobile's cost per gigabyte may be half of that of Verizon and AT and T in 5 years If they attempt to deploy meaningful coverage breadth because of the costs of required site densification. This leaves others with the unfortunate dilemma of permanently depressing their margins and cash flows to only still have an inferior network, A stark contrast indeed. Not only are we building the densest, deepest and broadest network, We are also building on our history of 5 gs firsts and embracing technological evolutions as they are ready to improve customer experience, lower costs And unlock new revenue opportunities. 1 of the immediate tools that we are using with our 2.5 gigahertz spectrum Is taking advantage of the TDD nature of that band to dynamically allocate 80% to downlink Given asymmetric traffic. When coupled with 5 gs capabilities of 100 megahertz channels, we can provide tremendous capacity and fast speeds, Something not possible today in any lower bands or FTD mid bands.
In addition, we are deploying massive MIMO integrated radio and antenna In a 64x64 configuration, which allows better cell edge performance and increased capacity. As previously referenced, we are leveraging 5 gs NR carrier aggregation for better utilization of spectrum assets And extending that range of 2.5 gigahertz by pairing it with 600 megahertz for Uplink, allowing Ultrafast to go ultra far. And we are planning to roll out VONA or Voice Over New Radio, which has the benefit of moving to an all 5 gs architecture With no dependence on the legacy LTE network, allowing us to drive faster through rich 5 gs user experiences. Being the 1st in the industry to capture these capabilities enables us to realize the true benefits of 5 gs, Supporting future applications like massive connectivity, ultra low latency apps and ARVR use cases. Through our T Mobile Ventures, Innovation Lab and Accelerator program, we are working to foster new Innovative capabilities in the 5 gs ecosystem with both developers and innovators.
T Mobile is uniquely positioned To realize these benefits on a large scale with its extensive 5 gs network and coverage. In addition, This network expansion creates a huge opportunity in home broadband from our accelerated deployment and expanded mid band coverage, Providing deep mid band 5 gs capacity. It also provides T Mobile the network leadership to expand our addressable switcher pool As we can increasingly win share with prime families and enterprises. And we are the only carrier bringing 5 gs to rural America To end the digital divide, as customers in these geographies are already benefiting from access to much faster speeds for both mobile and home broadband services. In summary, I am so excited that T Mobile is leading what I expect will be a 5 gs revolution.
We have all the tools to succeed, a robust plan and a powerful team to go execute it. Let me now pass the mic to Matt Staniff to tell you how we plan to be famous for network and how we're using network integration To quickly migrate and improve the experience for our Sprint customers. Matt?
Good afternoon, everyone. I'm Matt Santaff, Chief Marketing Officer at T Mobile. As you heard from Neville, his team is not only building the nation's best 5 gs network, but one that is positioned to be the best 5 gs network for the Higher 5 gs era. In tandem, my team is hard at work correcting outdated network misperceptions with the clear message that T Mobile is now And always will be the undisputed leader in 5 gs. As I share how we're going to do this, I'd like you to keep one thing in mind about our brand and how we operate.
We mean what we say. And we have everything in place to back it up in a big way. Unlike our competitors, We have a clear path forward to simultaneously deliver an unparalleled 5 gs network, amazing value And the industry defining customer experience that's made the Un carrier the success it is today. And we also have the marketing strategy to support it all. Let's start with how we're moving the needle on network perception.
Over the past year, T Mobile has already been positioned as the clear 5 gs leader, Both in the media and among those who follow our industry closely, I think we all know that. We've also made unprecedented gains Across all network perception categories, most notably on reliability and speed. Over the past year alone, We've cut the gap with the market leader on network perception by a quarter, proof that we're moving fast and in the right direction. These key metrics had been essentially flat for a decade until now. As we look to accelerate progress and amplify our message, We'll lean into 3rd party network study wins, coverage maps, new and more meaningful network comparison points and trusted brand endorsements To demonstrate that T Mobile is the undisputed leader in 5 gs, one area where we'll see an immediate impact It's with our own customer base.
We have a huge opportunity to shift the focus of our customers' passion and advocacy toward T Mobile's 5 gs leadership. How do we know this? Because our customers love and boast about their amazing on carrier benefits. We know they actively recommend T Mobile's network less than 20% of the time, yet network satisfaction among our base ranks among the highest in the industry. So as we continue to expand our ultra capacity 5 gs network, We'll hit a tipping point when our customers not only recommend our brand for amazing benefits, but also for the 5 gs experience.
We'll close those perception gaps and finally put to rest any remaining doubts about our network with a multidimensional approach focusing on real world value and network experiences we're delivering. Of course, we'll continue offering The most robust portfolio of 5 gs devices from low priced options to top tier superphones, but we'll also add new services, mapping to real world use cases, Starting with tangible experiences like better video calls and evolving those into exciting new uses of business, ARVR, gaming, connected life and so on. At the same time, our customers will see the impacts of our 5 gs advantage, Experiencing firsthand the growing relevance of 5 gs to their daily lives. I want to be clear, Closing the network perception gap is going to be the icing on the cake. It's just one part in delivering our growth plan.
Network Quality drives roughly 1 third of switcher decisions. Total value generally drives choice. And T Mobile already wins on value. So becoming famous for 5 gs will be the moment we pull away from the pack for good. We've delivered remarkable Without consumers meaningfully seeking us out for our network, which means we still have another gear to go as we offer both industry leading value And network together.
As this happens, we'll accelerate gains in some of our underpenetrated markets, Like prime consumers and businesses, as customers increasingly specifically come to us For the best 5 gs experience. Speaking of value, we sure shook things up 8 years ago when we launched the young carrier, didn't we? It's been a highlight in my career and a deep source of pride to have played a pivotal role in launching every one of our on carrier moves. And I don't plan to change this winning approach. Our overall value proposition will remain the mainstay of our growth story And we will continue to drive future share gains.
What's good for customers is good for business. It's that simple. And it works. Some of our best uncarrier moves fundamentally changed what customers expect from a network. We were the first To make unlimited, actually unlimited, we partnered with dozens of carriers to provide coverage in Canada, Mexico and around the globe So you can stay connected while traveling without having to pay more.
We pioneered in flight messaging and free connectivity so you could stay connected while flying. There was Binge On and Music Freedom, putting our network capacity to work to deliver customers more of what they want. We developed industry leading scam and robocall protection for customers at a time when they needed it most. These are all now industry norms and they provide a taste of how we'll lead the industry through the 5 gs era, Serving and connecting customers in these new and innovative ways. It's this kind of unconventional thinking That led the T Mobile brand to the industry leading churn rate in Q4 of 2020.
It's this kind of thinking that led to JD Power dominance Across customer care, mobile purchase experience and business. And it's this kind of thinking that took an industry once labeled as utility And turned it on its head, creating customers for life and having fun along the way. And because we are the Un carrier, You know, we won't stop. So let's talk about the next chapter and how we're going to go about deepening and expanding our customer relationships. First, keep in mind, 5 gs is going to be the technology powering the next decade of innovation.
And nobody is better positioned than T Mobile to build out massive new capacity and new capabilities on 5 gs. We are too far ahead and we will have ubiquitous coverage. This is why customers, businesses and innovators will choose us. One way we'll create value at this capacity is by deepening our existing customer relationships to grow our ARPU. T Mobile will no longer be just a wireless phone company, but one that sells connectivity through a platform.
We'll use a multi pronged approach To win new accounts and introduce them to our family of mobile offerings, from smartphones to data devices to entertainment to home broadband and other new services, There's a rich opportunity emerging from our 5 gs network to unlock new relationships today. We're still in pilot mode, But already 35% of our pilot home broadband customers are new to T Mobile. This is just one example of how developing compelling new products off of our network will enable us to win new accounts as we move beyond just smartphones To drive margin accretive service revenue growth, we see another opportunity to grow beyond the smartphone by expanding Into a rapidly growing set of data devices and services that have real practical utility to customers. Today, Only 25% of smartphone accounts also have a non smartphone device. This represents a big opportunity for ARPA growth.
We've seen continued growth across the industry over the last couple of years with the advent of the connected watch. And I expect more growth with new products that will come with 5 gs. This includes all the things you've heard about for what seems like years now, From gaming to AR and VR, wearables, smart cities, industrial applications and other products that take advantage of ultra low latency, Edge Computing 5 gs capabilities and ultra high data speeds. We're going to be a major player in all 5 gs applications. And with our lead in 5 gs today and throughout the 5 gs era, no one is better positioned to deliver more scale, Drive faster time to market for these and other products to launch into the marketplace.
We are the natural destination as the network leader for the 5 gs era. These data devices and services referred to as postpaid other Our great way to profitably expand our customer relationships. In consumer, this category tends to have ARPU similar to adding a 4th or 5th line on a family plan, yet the devices are only a fraction of the cost of high end super phones and the operating costs are low. Additionally, offerings like our new Magenta Max Premium Unlimited plan will attract new types of customers. And this is just one example of how we'll drive incremental revenue from the network at essentially 0 marginal cost.
We've constructed our offerings to allow most of the incremental revenue of each tier to be accretive to our own margins. Others may load content into the high end plans that allow them to gross up service revenue, but that provides significantly less margin benefit When you pass most of that back to the content provider, our mid and long term plans conservatively assume the same playbook you've seen from T Mobile in the past, With generally stable ARPU declining about 1% per year through 2023 before leveling off. However, our plan is built on consistent ARPA growth. Additionally, if our premium offerings end up more successful than planned, This will be upside to our plan and even more accretive to ARPA and service revenues. Delivering on the promise of the merger In successfully transitioning the Sprint customer base to the T Mobile network, value proposition and customer experience model.
We've made huge progress on this already, with more work to follow this year and beyond. In Q4 of 2020, We enabled cross provisioning of the Sprint customers to the T Mobile network while maintaining separate billing systems. As we expect to continue to ramp and scale and having over 60% of the Sprint base migrated by the end of this year, The exciting news is that we now expect full network migration by mid-twenty 22, way ahead of our original plans. At the same time, we're gearing up to fully transition our Sprint based customers to the T Mobile value proposition and customer service experience. The beauty of our plan is that it keeps some of the more difficult system changes out of the customer's way.
This summer, we'll begin our full back end billing conversion process. And again, we expect to beat our original timelines for completion. By Q2, we expect to migrate 100% of legacy Sprint customer plans To go forward T Mobile rate plans. We expect to have about a 1% sequential headwind to ARPU in Q1 As we on the side of the customer, we're matching them to the best plan. However, we expect ARPU to be stable In the second half of twenty twenty one, to keep us within the 1% range for the full year.
This is an important step for smooth billing conversion. Delivering the full on carrier experience to legacy Sprint customers also means addressing irritants that subtract from the customer experience, Like device step ups, exploding promotions and unexpected fees. When we combine a radically improved network, The best value prop in the industry and award winning service, the real prize here is within reach. That is driving down Sprint churn on an accelerated schedule. This churn, mind you, was roughly 100 basis points higher And T Mobile in 2019.
We'll follow the same worst to first playbook that delivered the lowest postpaid phone churn in the industry in 2020 For our T Mobile brand customers, network improvement, the young carrier value proposition and our team of experts level care. We're very encouraged by the early numbers from the initial cohort of Sprint customers that's completed a full transition. Legacy Sprint customers that have migrated to the T Mobile system have a net promoter score that's nearly 100% higher Then their counterparts who have not yet migrated. This success story will evolve over time as more and more legacy Sprint customers get the full T Mobile experience. A few years from now, there is no reason churn among those legacy Sprint customers cannot reach T Mobile levels.
Although I will tell you that our plan for the next 2 to 3 years conservatively assumes we only cut the gap Between Sprint and T Mobile churn in half, meaning there could be further upside to come. And lastly, There remain solid growth opportunities with the Sprint base, as it had the fewest lines per account Among national carriers, when we completed the merger. In addition, we have the potential to roughly double the pool of T Mobile Network Ambassadors as the legacy Sprint customers migrate to the T Mobile network and then join our value proposition. As I step back and we put this all together, we are in an incredible position as a company. We are positioned to be the 5 gs network leader For the entire 5 gs era, we have a heritage of innovation and creating unmatched value And a winning, worst to first approach at taking care of our customers, deepening their relationships and creating brand ambassadors.
It's going to be an amazing ride and I can't wait to get started. So with that, let's get to your questions.
All right. Welcome again, everybody. We're here for our first of 4 Q and A sessions. And Listen, let me just start out by saying thank you to everybody who's joined on a couple of fronts. First of all, thanks for your patience with us on our prepared remarks.
Prepared remarks aren't really our thing. We all feel like robots when we share prepared remarks with you. But I got to tell you, this story and this future for our company is so powerful. We wanted to be very precise with you today. And we also wanted to manage the time because that gets me to my second thank you.
Thank you for your patience with a long and substantial meeting. We've been waiting to do this for a long time. It's not a quick check-in after the end of the C band auction. It's a comprehensive look, a year into our merger and the creation of our new As to our future and the huge opportunity that's ahead. And we just really appreciate you and we appreciate you diving in deep with So let's get right to it.
I'll hand it over to Jud Henry and
he'll tell us how it works.
Thanks, Mike. All right. We've got some questions queuing up here. It Let's take our first question from Craig Moffett with MoffettNathanson. Go ahead, Craig.
Hi, Craig.
Hi, guys. First, thank you for doing this. My first question is for Neville. And I want to dig into this issue of the propagation advantage of 2.5. Maybe you could cast it in terms of the percentage of time that you think a customer will be on the network Experience of what might be the highest speed with millimeter wave, but then kind of the workhorse, Which is going to be your 2.5 or mid band, and then the time that they'll roll off on to LTE and how that might compare in your expectation to what you think Verizon and AT ENT will be offering along those same lines.
Yes. Thanks, Craig, and happy to dive straight into what's happening with 2.5 gigahertz. As I outlined in my comments and Mike mentioned too, that's the powerhouse behind our 5 gs story. And this 5 gs leadership position that we have today and we continue and will extend as we go through this 5 gs era. And that 2.5 gigahertz spectrum, I heard some stuff yesterday, which I think shook us all a little bit.
I don't think anybody really understands some of the statements that came out from one of our competitors. We're going to put out 2.5 gigahertz broadly across the country in the U. S. We've already got 125,000,000 people covered, Craig, 200,000,000 by the end of this year and that's not where we stop. We take that footprint for 90% of Americans.
That's 2.5 gigahertz. Underneath all of that is our low band footprint, already our extended range LTE, already at 287,000,000 people. So to your question about How much of the time are you living and working and enjoying our network on 2.5 gigahertz? The vast majority. Now after that maybe you're going to be moving to some extended range low band 5 gs experience.
But our goal is all in on 5 gs, Not hanging around on some shared network like Verizon's doing with DSS and LTE. Our whole story is about massive rollout On 2.5 gigahertz. And we are way out in front. I heard some stuff yesterday. I think Verizon said they were kind of happy to be in last place Through 2024, at some point in time, they're going to try and catch up with the material lead that we've established and we will continue to extend As we go through the next 18 to 24 months.
Craig, one of the things
I think is interesting here is that And I think we made this clear in some of our prepared remarks. It's that we don't really just think this is about the quantity of Spectrum that we have, which is of course still the greatest in the mid band arena. And we have the balance sheet to defend that position if we choose to. But it's about the strength of our spectrum. I actually was Really interested in a couple of key things when it comes to the difference in our positions.
First of all, we heard Verizon say That they plan to spend about $10,000,000,000 incrementally on capital. And as Neville was just saying, that to us is fantastic news because it basically indicates That they have no plans to densify their network to a material degree. And what that means is rather than spending tens of 1,000,000,000 of dollars to chase A competitive position, they're going to be satisfied with a network that's not properly densified for the asset that they have. And that's why Neville's Which is it sounds like they're pretty satisfied being behind, because we know physics are physics. It would take a great deal of densification in order to make that work.
Now our grid is already at the appropriate density for 2.5 gigahertz. We were already the densest grid. And in urban areas, it's dense enough For C band, which is why we spent $9,000,000,000 for 40 megahertz, right where it works best, but also where our network is Already appropriately densified to get the most out of it. And that's why what we told you today is we have every capital dollar we need Already in our plan, including the capital increasing capital efficiency of our plan and the turndown of capital in the out years That we'll get to in a little while. So we have every dollar we need to deploy what we have and we're way ahead.
So it's an exciting point of comparison, Which is really it boils down to 2 things. Either our competitors will pour in tens of 1,000,000,000 of dollars to densify and compete Or they won't. And if they don't, then they won't be able to catch us when it comes to the breadth and the performance of our network.
Thank you. All right. Let's take our next question from Jonathan Chaplin with New Street. Jonathan, go ahead.
Thanks, guys. A quick one for Neville. So I appreciate the phenomenal spectrum advantage that you've got in the balance sheet. The balance sheet capacity you've got to defend that advantage, you're going to have a chance to Extend that advantage later this year with a 2.5 gigahertz auction and a 3.45 gigahertz auction. And I'd love to get some insight into how you're thinking about those two opportunities to improve the advantage that you've got today even further.
Yes. Thanks, Jonathan. I mean, I'll share this. I'll ask Peter to comment too. We can't obviously comment on what we're going to do in future auctions.
But You know us. Look at this recent auction. We're disciplined, very disciplined in how we invest in spectrum and have been For years. And so there are future opportunities coming. We will be opportunistic around those opportunities.
Peter has talked through and Peter will talk through the cash flow generation opportunity that exists in this business. So we have capabilities if we want to commit and we decide that's the best use Of our funds to secure more spectrum. But I do want to come back to Jonathan. We're in an incredibly strong position. After all of that spend, dollars 80,000,000,000 worth of Ben from Verizon and AT and T.
You just have to look at the chart where we've just shared with you and look at the quality and depth Of the spectrum assets that we have. So we have a very strong position that we can leverage. If opportunities are right for us to increase and improve, So be it. But we will always be very disciplined in our investment around future opportunities. Peter?
Yes. I would just Jonathan, you heard Neville say 2 things there that are really important, disciplined and opportunistic. Those are the things you heard him say. The reason why we can't say more than that, Obvious reasons about competitiveness and rules, but also the rules for the auction themselves are still being worked out. As you know, Congress just mandated That the FCC act this calendar year.
And for one thing, our colleagues at the FCC, Chairwoman Rosenworcel and the rest of the team, they're doing a fantastic job, Moving this very quickly and efficiently to market and they're still determining the rules. And so we'll wait and see how it's structured. But what you can expect from us is a lot of what you saw and how we've always behaved, disciplined and opportunistic. And with this hand of cards, we can afford to be that way.
Thanks, Frank. Thanks, Neville.
All right. Let's take our last
Hey, Simon, we can't hear you quite yet. I don't hear you. Let's see. Maybe it's a mute button circa 2021 problem. Maybe it's on our side.
How about now? No, we don't have you yet. No, we wanted to hear from you. We'll get you in the next question session. If we can't hear you, say something else.
All right.
Can't hear you, Simon.
All right, Simon, sorry about that. We're going to try you again in the next session. That's why we've Four of these things. So don't worry, we'll get back to you. Listen, thanks to everybody for your participation in this.
As you know, we've got Four of these and we're going to give you lots of opportunities to dive in. But right now what we're going to do since we've been at this for a little while is we're going to give you a 5 minute comfort break And then we're going to be right back for an exciting session where John Fryer and Cali Field are going to dive into our core consumer business, our differentiated customer experiences And our ability to dive into underpenetrated segments where we have an incredible opportunity. So up next after a 5 minute break, Jon Pryor. See everybody.
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And with the highest Capacity network in US history comes the best value in wireless history, eliminating the false We don't wait for change. We make it. We use our brand, our people, and our But what it will be in bringing choice, value and simplicity to customers in entirely new ways, Becoming the best in the world at connecting customers to their world and earning a place in our customers' hearts
Welcome back, everyone. I'm John Fryer, Executive Vice President of Consumer Markets. My team and I have the responsibility For growing the business across all of T Mobile's consumer, postpaid and prepaid products and services. I'm here today to discuss the unique opportunity that we have To drive sustained Consumer momentum by further accelerating our winning formula into new growth areas to create shareholder value. What is our winning formula?
Well, I'll explain that in just a few moments. But first, let me set the stage that outlines our opportunities. Across the entire wireless market, the consumer segment remains the largest with approximately 310,000,000 Postpaid and prepaid customers in America. Thanks to years of industry best growth, T Mobile now serves just over 30% of these customers. While that's impressive growth, we also see a future Where we have a huge opportunity to further grow the business.
Our growth formula is simple. Build the world's best 5 gs network Paired with high quality distribution, supported by a strong value proposition and marketing efforts that unlock consideration And then providing the very best consumer experiences delivered by the best team in the entire industry. T Mobile has a deep and broad 5 gs network with a sustainable and durable advantage that will persist For the duration of the entire 5 gs era and with the full product portfolio that will allow us to reach the entire spectrum of consumers From prime suburban families to the most budget conscious, we've never been more capable to accelerate our business over the next few years. To do this, we're focused on driving new account growth across postpaid and prepaid products, deepening relationships with our existing customers, Delivering operational transformation that fuels our continued growth and being famous for the customer experience. All right.
Let's get into our opportunities. In prepaid specifically, we've grown Metro by T Mobile into a customer loving brand that provides T Mobile's world class 5 gs network at an incredible value, all with an award winning customer experience. Metro by T Mobile is a leading brand, particularly in urban areas, delivering the very best value to consumers and With one of the lowest churn profiles in the industry. Today, we operate Metro by T Mobile in some of the most economically challenged communities in the United States, Where the T Mobile connection is oftentimes people's only connection. We're so proud to be an indispensable service to the communities that we serve, Helping them stay connected to their world.
We see even more growth potential ahead for Metro by T Mobile as well. And speaking of potential, let's talk more about an even bigger potential for our company. We have a significant growth opportunity in smaller markets In rural areas throughout the United States. Many people don't realize how sizable this geographic segment is. So allow me to share some details.
Smaller markets and rural communities are the largest geographic segment of the consumer market. And as Mike highlighted, This segment represents about 50,000,000 consumer households or around 130,000,000 people. It's massive. T Mobile has made progress in this market since 2017, as we've expanded our distributed pops and more than doubled Our total customers in rural America. But even with that impressive expansion, we are still under indexed to our addressable market size.
We estimate that our rural market share is in the Of just over 30% nationally. Historically, Verizon and AT and T have dominated these rural markets, largely due to their scale, distribution and networks. To put it simply, we have not had the network capabilities Or distribution resources to truly beat out the competition. But let me tell you, the advantage that Verizon and AT and T have enjoyed for decades We'll now be their melting ice cube as we bring our winning formula to smaller markets and rural communities. As I said earlier, our winning formula is made up of 4 success factors.
We have the world's best 5 gs network with a sustainable advantage for the duration of the 5 gs era, deliver high quality distribution, Supported by a strong value proposition with local marketing and community engagement efforts that unlock consideration and last but not least, Provide the very best consumer experiences delivered by the very best team. We're ready to disrupt the competition in true Un carrier fashion By bringing real choice from America's largest cities to America's smallest towns. Our strategy To unlock this $50,000,000 household opportunity will require growth in areas where we already have both the network and distribution assets today, As well as growth in areas that will receive network investment in line with what Neville just outlined. Building the best 5 gs network Throughout rural America is foundational to unlock consumer switching. We will look to expand our physical footprint By building hundreds of new stores in small towns and rural communities over the next 5 years, including over 200 stores This year, across our existing stores, as well as our new stores in rural America, we plan to introduce Metro by T Mobile products and our own T Mobile Stores.
This move allows us to expand our prepaid reach and doing so in a way that's even better for our customers. After all, why should customers in smaller markets have to visit multiple stores for both postpaid and prepaid products? They shouldn't have to. When you walk into a T Mobile store in rural America, you'll be able to get everything that T Mobile has to offer. And with our strategic MetroPCS transition to Metro by T Mobile and unifying our T Mobile and Sprint distribution fully behind T Mobile, We've been working hard to unify all of our products behind a master T Mobile brand, driving simplicity and scale that our competitors can't replicate.
That will translate into operational efficiency, avoiding unnecessary costs of duplicative distribution in smaller communities. In addition to our own stores, we will bring T Mobile to nearly 1,000 Walmart stores in rural America. Walmart is one of the most Highly trusted brands and serves as a central shopping hub in smaller markets and rural communities throughout the country. We will bring a compelling Value proposition to the most underserved areas by evolving from a phone only player in the market to becoming the company that can increasingly serve customers With mobile, home broadband and emerging 5 gs products, we are in a unique position to win hearts and minds With a differentiated message of network superiority, community engagement and investment and personalized consumer offers that expand the switching pool. And we've more than doubled word-of-mouth advertising with the acquisition of Sprint, As Sprint's base of rural customers was actually higher than T Mobile's prior to the merger, the word-of-mouth advertising The effect in smaller markets is incredibly powerful.
And soon, We will be launching new innovative distribution programs to expand our reach even further. Now, I can't give away all of the ingredients to our secret sauce just yet, So you'll have to keep your ear to the ground for more to come here. And by the way, coming very soon. By delivering on this plan, we expect to increase our market share In smaller markets in rural areas, from the low teens today to nearly 20% by the end of 2025. In our larger markets, when we bring the full power of our network, our distribution reach, unbeatable value proposition In unleashing the best team to create the best experiences, we command an outsized market share.
As we bring that same winning formula to smaller markets in rural areas, We're confident that we can achieve the same overall share and perhaps we can overachieve. And if we can, that creates upside to our plan. Even with our growth focus on smaller markets and rural communities, we will continue to transform our existing distribution Across all geographies and all channels to achieve our growth aspirations and deliver on merger synergies. Last year, we executed the largest retail integration in wireless history and the largest physical integration in the history of retail, All during the global pandemic, and we did so faster than any other prior merger in the wireless industry. At closing, our combined retail store count was approximately 8,800 stores and we quickly accelerated the rationalization of hundreds of stores Beyond our original plan.
We currently have approximately 7,500 T Mobile branded stores and expect to continue to optimize Where it makes sense, primarily in urban and suburban areas. And we'll do all of this, while increasing the number of consumers we can reach With new cost effective distribution channels and through digital avenues that Cali will talk about in just a few moments. Additionally, we plan to bring T Mobile to nearly 1,000 Best Buy stores throughout the country. As one of the premier consumer electronics retailers in America, bringing T Mobile to Best Buy will further solidify our ability to appeal To prime wireless consumers and fuel the switching environment. We also plan to bring T Mobile to more than 2,200 Walmart stores, Including nearly 1,000 stores in rural America that I mentioned earlier.
And finally, we plan to open about 500 new Metro by T Mobile branded And multi carrier stores. And we're consistently evaluating new distribution opportunities that expand our ability To cost effectively reach consumers and create value to our business. I'll now turn it over to Callie Field to tell you about how we're serving our customers with our award winning
Thanks, John. Hi there. I'm Cali Fields, EVP and Chief Customer Experience Officer. I'm Excited today to talk about how we will deliver the best experiences from the best team, to share how our team of experts model for care With a big bet and investment in our amazing frontline, supporting our story from the worst to the first In customer churn and providing us with a massive hard to replicate advantage for our Sprint customer base. The best experiences ever At the lowest cost to serve, and we're not stopping there either.
We see tremendous upside as customers are increasingly more interested In digital shopping and service interactions and can further extend our lead in customer love with radically simplified experiences. We do love our customers and Team of Experts is an innovative way to listen and serve them with energy and empathy. When we launched Team of Experts in 2018 after more than 2 years of pilots, we rewrote the rules of customer service and put customers At the center of our business model, this unique and groundbreaking way of serving customers has 6 patents and has been Teddied by more than 100 companies around the world. What are these new rules, you might ask? Well, number 1, we make it easy for you to connect with us.
Number 2, you don't ever have to repeat yourself, not ever. 3, you have a team of experts who are empowered To get it right the first time and 4, if you'd rather fix it and never call us, we'll show you how. Traditional customer service models champion Average handle time is our critical currency. However, our success is determined by 4 key measurements. The first It's happiness because we're out to create happy customers.
Our Net Promoter Score has improved 68% Since 2016 and is in the top 5% of industry benchmarks with 50% fewer detractors, We've been at the top of J. D. Power ratings 7 times in a row and we've led the industry and customer service satisfaction every quarter for the last 4 years in Harris X Polling. In 2021, Metro was at the top of J. D.
Power for the 3rd time in a row, while TFB Was top ranked across all business sizes for the 4th year running. 2nd, we want customers to stay longer. From 2015 to 2019, we brought postpaid phone churn down from 1.39% to 0.89%. And in 2020, our Magenta base had the lowest churn of anyone in the industry. 3rd, We want to deepen our relationship with customers.
We've seen activations through customer care increased by 4 times Since the launch of Team of Experts and the fact that our frontline gets it right the first time, customers are buying more and calling less. And 4th, We want to make it as effortless as possible for customers to find resolution. Since the introduction of team of experts, we have cut calls per account in half And reduced our cost to serve per customer by more than a third. We believe that when you put the customer first, Care doesn't have to be a cost center. It can be a profit driver.
Each team of experts manager owns a market specific customer base. And when their customers contact us, they're always routed first to their assigned team of experts. We've baked P and L accountability into our team of experts model. Half of an expert's incentives are determined by team performance, 60% of which depend on the team's P and L metrics. Our experts operate as business owners and are empowered to make decisions that benefit both the customer and our bottom line.
In 2021, we are building on these successes and bringing the full team of experts experience to millions of Sprint customers. It takes considerable time to train and develop our teams to support this model, but we're already underway. In the interim, our retail and care teams are working together to improve the experience for these customers and get them over onto the T Mobile network. These changes have increased Sprint's Net Promoter Score 50% after interactions with our experts. Meanwhile, we're also engaging in one of the industry's largest market events with service partners from around the world Who are competing just to have a shot at working with us to deliver a team of experts.
This solidifies our partnership with the best of the best. Customers flock to T Mobile, in part because of the human touch of our mobile experts at retail and care. And yet COVID-nineteen is finally opening the door for customers to consider new ways of working with us, expectations that will outlast COVID. They want our personal touch, but now they want it increasingly delivered digitally. And that's a huge opportunity for us To pioneer new ways to differentiate with the customer and their happiness as our North Star.
And potentially, Some really big efficiency benefits to T Mobile as well. Over the next 5 years, we will use simplified digital capabilities To make it easy for customers to get help or find the product that they need, however, wherever and whenever they need it. We'll continue to provide world class experiences, creating additional value by reducing complexity and investing in our digital capabilities to drive even better outcomes in in several areas. We are enabling effortless purchasing of products and services by reducing switching friction to increase digital sales. As I mentioned earlier, we see an opening, very informed by COVID, to engage with customers digitally.
We can know their preferences for device setup and financing, help them set appointments at their favorite store with their favorite expert and have their order ready to pick up Or even deliver concierge service right to their homes. We are accelerating self-service and network migration efforts And we'll deliver on an aggressive goal of moving at least 60% of Sprint customers on to T Mobile's network by the end of the year. Additionally, we're driving revenue growth powered by data and technology to scale our home Internet and e commerce, tripling activation volume While reducing cost acquisition through enhanced digital tools like Next Best Action and Expert Assist. And finally, we are un Shackling our frontline in stores and in care to be supercharged customer advocates by automating simple transactions, creating personalized customer experiences And supporting our industry low postpaid churn efforts. Instead of putting bots between our customers and our frontline, We're investing in digital tools that turn our experts into superheroes, creating the ultimate profoundly distinctive customer experience.
Now let's get to some of your questions. It's time for Q and A.
Okay, welcome back, everybody. Well, you just heard John and Cali take us through the big upside we see in our core consumer business from getting after underpenetrated Segments going into smaller markets, a very different take that's much more customer centric to digitalization and so many other opportunities. We want to get into that stuff with you right now Whatever else is on your mind, so Jud, how do we get started? All
right. We're going to give us another shot. Simon, give us a try. How are you?
Yeah, can you hear me now? Yeah. Great. Thank you. My question was on broadband.
You put out some aggressive targets there, dollars 7,000,000 to $8,000,000 in 5 years. Is that a fairly linear Transition there. And I think one of the questions we get a lot is about usage and speeds and can the network compete with what the fiber and cable providers are doing. So maybe I could talk to that if he's out on the panel.
And Simon, if it's okay with you, what Neville and I can do, he's not here, but what I can do is give you just a Snippet, but we're going to have Dow Draper here in a few minutes. He's going to actually share with some prepared remarks all that and then we'll be available to talk about home broadband in a minute. This is just such an exciting opportunity for us. And it's very differentiated relative to how, as you heard us talk about in some of my upfront remarks, Relative to how our competitors are thinking about it. And one of the pieces is we are ready now.
So last week, Mike Katz and I announced our business For home Internet users, fantastic offer that we're off to the races. It's available nationwide. And then we also sort of signaled that later this month, We'll be unveiling our plans for immediate commercial availability of our consumer offering in big parts of the country and we'll be announcing markets, We'll be announcing price points, strategies, etcetera, coming right up a little bit later this month. But look, this 7,000,000 to 8,000,000 I think you'll listen to Dow about how we're getting after the market. And I wonder if what you'll take away is, is it a little conservative?
Because there's a difference, it really boils down to miles not meters. We are going to be able to serve vast swaths of this country with Hundreds of gigs per month, a terabyte or more per month, hundreds of megabits per second, huge capacity. And we can do it without extra capital dollars, with the capital dollars that are fully funded from our mobile plan. So if it's okay with you, I'll leave it That, because we do have a whole session planned on this and we'll welcome you back for a little bit more of a deep dive in a few minutes. Yes?
And I'm glad we can hear
you. Great. Thanks. Terrific.
All right, excellent. Let's take our next question from Dave Barden with Bank of America. Go ahead, Dave.
Hey, guys. Thanks so much for taking the question. I appreciate the day. I guess 2, if I could. The first was, Mike, you kind of called out a couple of open opportunities In small and rural markets in corporate, there's other things that you guys have talked about, 1st responders, 65 and over, I was wondering if you could kind of give us some of the details around maybe what the opportunity is there from a sales standpoint?
And then maybe a question for Cali. The marketing team seems to be budgeting for a 1.5% Churn rate, as a base case from the legacy Sprint base, Obviously, networks are part of that. Neville talked about what he thinks he can do there. What can you do on the care side To get that number to be closer to where T Mobile has been on the legacy T Mobile side. Thank you.
Dave, thanks. Welcome. Those are great questions. Let's start with John. And by the way, don't cut me out of this.
It's 55 plus. 55 plus. Sorry.
What was there?
So John, why don't we talk about those opportunities? Because you're right, in our prepared remarks, we probably didn't give them as much oxygen as they deserve.
Yes, you bet. So, hey, Dave. You're right, like on 55 plus, that's been a segment that we've been addressing for the last couple of years. But we're still under indexed in that particular segment. And that segment is disproportionately in smaller markets and rural communities.
But just think about smaller markets and rural communities for a second. What we talked about is that we have a market share nationally of about 30%. And in smaller markets and rural communities, it's in the low teens. And when you think about a lot of places, we just have gotten there in the last few years. I mean, just last year, we opened our first store in the state of Vermont.
We've never operated in all of Vermont. I know all of Vermont, probably a little, but we've never operated in Vermont And just in the last few years, we've introduced T Mobile to Montana, North Dakota, South Dakota, Nebraska, Wyoming, just in the last few years, this company has existed for 2.5 decades and we've never really operated in those states. So in so many places, even though our overall market share that we estimate in smaller markets from rural communities is around the low teens, So many places in the single digits. So we have a lot of runway to go. And 55 plus is one of those examples, there could be other segment opportunities that we're going to explore.
The great news is that we can get perhaps we can get aggressive in those places. We don't have an intrinsic base, so
we can get aggressive, but we
can go take share if we need to. And so we're really excited about this opportunity. This is a huge base like we talked about just a few moments ago. Out of 310,000,000 Host paid and prepaid customers throughout the United States, almost 130,000,000 people, 40% of the entire market Is in smaller markets and rural communities. And this is a place too, like when you think about some of those states that I rattled off just a few moments ago, it's 2 competitors.
Like it's really kind of a trip back to the 1990s in some of these places where you have carrier A and carrier B. And for us to be able to come in there and disrupt competition And to not have this position where customers have to choose the best price or the best network for the first time ever In rural communities, they're going to not have to make that choice, because T Mobile is going to bring the very best 5 gs network and the very best value With that unbelievable award winning customer experience that we're famous for.
Dave, I think the denominator there is important. What you just heard John say was 130,000,000 pops, 50,000,000 households, 40% of the country. We're not talking about just those states he rattled off. We're talking about vast swaths of the country where our market share is in the low teens and where we're already demonstrating that the formula we've already got Works and will get us to probably eventually fair share. But in our plan with all those billions in cash flows that Peter is about to tell you about, We only contemplate 20%.
And that to me feels like, wow, what an opportunity. And one of the things you're going to take away from today, I think What's really important is, and this is across everything, broadband, which we just talked about briefly, business we're going to talk about, all these underpenetrated consumer segments. We don't need any unicorns in order to achieve every dollar of aspiration that we're sharing with you today. We don't need to demonstrate things we've never demonstrated. And that's remarkable.
And it's in stark contrast to what you see from some of the other alternatives So with that, we'll does that sound good? We'll take it to the next question.
Actually, you got a Cali question too, didn't you?
Okay, great. And by the way, sorry, I forgot about that. The other question, I see your picture there, Mike. We're going to get to you in a second because I forgot. The other part of the question was Sprint churn.
That's really important. And the fact that in our plan, we said we'd cut the gap Between Sprint and T Mobile in half that Matt talked about. And obviously that represents some upside that Dave was also asking about. So Cali, want to tell us a little bit about that before we hand it to Mike?
Yes. Dave, you mentioned some of the uncarrier moves that we made that were really important to lowering our churn and creating This incredible relationship with our customers and happier customers. And when we created a team of experts as a key on carrier move and a very different way to change the customer service industry, We saw a couple of things. Our customers were happier. They were staying longer.
We were able to deepen our relationships with customers and also help them do anything that they want to do with far less effort. That's something that we're bringing to life with our Sprint customer base. We've been working on it now over the past year and you'll start to see the effects of that overall. Just as a reminder, when we brought team of experts to our Magenta customer base, our overall postpaid churn went from 1.39% down to just under 0.89%. We saw that our detractors were cut in half.
And we know that detractors, customers that aren't happy, they're 4 times more likely to churn and they call us Twice as much. And so we're bringing that same experience to life for our Sprint customers and have very high expectations for what we'll be able to do to get our customers to stay longer And really just love T Mobile, love Magenta.
And back to my theme of there's nothing that we're saying that we haven't done before. You heard Cali talk about worst to first, we didn't. That's the journey for the T Mobile brand. We are now the lowest churning major brand in the market with postpaid T Mobile. And we were for the entirety of 2020 and we unveiled that regarding Q4.
And we know what it takes. This plan gets Sprint customers that leading network, that Innovative customer experience that Kalle just talked about, the same rate plans, the same overall value proposition and an accelerated 5 gs that nobody can touch. And we only say we'll cut the gap in half. So that's an exciting opportunity.
Okay.
Can I just take
our last question for this segment from Mike Rollins? He's
the last already? Oh, man.
All right.
Go ahead. Mike, welcome.
Hi. Thanks and thanks for taking the questions. 2 if I could. So first, to reach your growth aspirations, how important is the size of the switcher pool? And if you could provide some context of the size of this switcher pool today versus maybe where it's been over the last few years.
And then secondly to Cali and the broader team, I'm curious if you could further unpack what you were describing in terms of the experiences of selling to customers During the pandemic, if you're currently seeing actual changes to the way customers want to buy new devices or switch providers Or receive changes to their service plans.
I love it. Well, let's start with switcher pool and what it takes to win switchers. I'd say that I'll hand it to John here in a second. But I'd say, Mike, that basically the assumption we're making is pretty similar to what you see analysts as well as our competitors are making, which is that this muted environment will start to give way. And And then we're going to start to see a more normalized traffic flow and switching pool as 2021 proceeds.
That's generally what I think most have as consensus. And look, we don't know. One thing you've seen from us is we've demonstrated that in many respects, It doesn't matter. If the pool is more switched more muted, we have found ways to navigate and concentrate on our base and deepen relationships. But obviously, as the share taker, we would sure like to see that return.
And that's the general assumption that we're making. And maybe, John, you have to talk about what it takes to win those switchers and then we'll hand it to Cali.
That really kind of goes to Mike, that goes to the point that we were talking about just a few moments ago On smaller markets for rural communities, because really when you think about it, that switching pool in large part hasn't been really available to us as a company until most recently. And we're going to be expanding the network as Neville talked about. We're going to be expanding distribution. We're going to be bringing T Mobile and Metro by T Mobile into Walmart and rural communities, 2,200 stores across the country, but 1,000 specifically in small town or rural markets, That's a huge opportunity for us to be able to expand the switching pool from what we have today. So we're really excited about that.
Great.
And then the last question I think you were asking was how is what customers expect of us and the human touch we give them both at retail and through the rest Our customer experiences, how is that changing? How did COVID inform it? And how does that inform our plans? We'll hand it to Kelly.
Well, we've always Every one of our interactions with our customers are at some point digital. But what we found during COVID is customers' willingness and interest And a more digital experience. And we're always going to say, hey, let's put the customer and their experience at the heart, at the center of what we build, not About efficiencies or deflection, but instead what's going to really make it effortless, easy and just a wow for our customers. And that's something that we're really building with the digital experience in mind, both in our stores, in our care centers, we have the opportunity to take our Incredible frontline experts teams, whether they're working in retail or working in care and turning them into like superheroes with Jarvis to be able to give Customers, the very best offer and the very best moment. So we have a lot of really exciting things over the next 5 years that we think customers will just love.
Mike, since we're customer driven here, I'll tell you, we could have pushed digitalization way faster. But we've been guided by the customer and our customers, our industry's customers, by the way, wireless in general, but Especially T Mobile's customers who really appreciate our human touch as a differentiator and it's one of the reasons they came to us. They've been kind of stubborn. We're guided by the customer around here and the customer hasn't really wanted a full digitalization, but they're open to it now. And that's something that's changed over the past year.
And our category, which has always been something customers have said, no, I want to see the whites in your eyes. That's they're open to that now more. And what Cali is talking about is what we're doing to get after it. We're not going to do it the way other industries have done it. We're going to infuse Our people into that digital experience, so the humanity of our brand keeps coming through.
And I'm so excited about the fact that this window is now open. And I think that takes us to the end of this section already. We have 4 sections. We have another one of this length and then a longer one at the end. And up next, we're going to talk about the big growth adjacencies.
We're going to hear from Dow Draper about home broadband. I know so many of you are excited about that. And the big push we're already winning in, which is getting after enterprises and governments. And so up next, after a quick transition will be Mike
Hi, everyone. I'm really excited to be here today. I'm Mike Katz. I lead our business markets team, which includes the work that we do with enterprise, Public Sector, Small and Medium Business as well as our wholesale and wireline businesses. And I want to talk today about how T Mobile for Business is uniquely positioned for market leading growth.
As Mike highlighted earlier, the opportunity in this market is tremendous. The corporate liable enterprise, public sector and small business markets are sized at around $27,000,000,000 for core wireless connectivity and adjacent services, With over 50,000,000 connections in 2020. And the market is expected to grow to over $40,000,000,000 with around 60,000,000 connections by 2025. While adjacent services are rapidly growing, core wireless connectivity will continue to represent the majority of revenues in this space. Historically, T Mobile had been a low share player across the business market relative to AT and T and Verizon.
Our historic share was of many years where the carriers use their prior network advantages as a moat to keep us and other competitors out. Just a few years ago, when we started this journey, T Mobile's market share in enterprise was around 3%, while Sprint share had been rapidly declining for quite some time. Since then, we've aggressively grown our share in the legacy T Mobile business, more than offsetting the declines in Sprint To approaching 10% share in enterprise. And this growth over the last few years was achieved in an environment where we were still playing catch up on network with AT and T and Verizon. This includes 2020, which was a record year for us.
We more than tripled our net customer additions and drove double digit percentage service revenue growth, While working through our mid year merger with Sprint. We also made massive inroads into large enterprise accounts and are now Doing business with more than 3 quarters of the Fortune 500. Not only are we getting in the door in places where we weren't before, But we expanded our relationships with a number of these large customers in 2020, making T Mobile their primary wireless communications provider. We're working side by side with our customers in a number of key industries such as airlines, oil and gas and retail To help them innovate and address their most important challenges in their organizations. This real world experience gives us a platform for expansion moving forward As we build out new 5 gs based services and capabilities.
And in public sector, thousands of local, state and federal agencies Chose T Mobile as their mobile partner in 2020. And now they are seeing innovation and benefits that we can bring to them as we make good on our promise of 5 gs for good. Over the past 12 months, we helped schools meet the challenges of COVID by connecting over 2,000,000 students, enabling remote learning With the paid versions of Project 10,000,000, which helped us rapidly develop relationships with hundreds of cities and states, including New York, Los Angeles, Chicago, Detroit and Texas. In addition, we expanded our support for first responder organizations with our Connecting Heroes program. Looking forward to the next 5 years, we are no longer playing network catch up.
We will be the leader in the 5 gs era and this Combined with the momentum that we've already been able to achieve, give me confidence that we can more than double our existing share in enterprise with plenty of room for over performance. To achieve our growth objectives and to continue our momentum, we have 4 key areas of focus. 1st, leverage our 5 gs network advantage. 2nd, disrupt enterprise and public sector with value and simplicity. 3rd, close the awareness gap with our competitors.
And 4th, win with the best team, including expanded and specialized sales and dedicated care. I'll touch on some examples of how we are bringing these to life in just a moment. Today and over the next few years, we're focused on one goal, To become the number one choice for enterprise and public sector customers and leverage the fact that for the first time in years, there's not just a viable, But in this 5 gs era, a superior alternative to AT and T and Verizon. So how are we continuing our journey towards becoming the number one Choice for enterprise and public sector customers. Let me start with how we're going to leverage our 5 gs network advantage.
You heard earlier from Neville, We have the broadest and deepest 5 gs network in the country by far. And the number one prerequisite for success amongst the customers we serve is network. So our 5 gs network leadership will be a total game changer. Our 4 gs LTE network already goes toe to toe with our competition And we know they won't be able to touch us in terms of 5 gs. And that is a huge benefit for us in a category where the buying approach puts wireless companies Through rigorous head to head testing versus the incumbent before a company will consider switching, our differentiated and rapidly improving network capabilities
Open
up a much wider part of the market that we weren't able to access before. Having been a part of T Mobile for 20 years, it will be kind of fun to lead the pack in network And see our competition try and play catch up, both today and over the course of the next decade. We want to leverage our 5 gs network advantage and bring disruptive, Compelling innovations to market today that matter most to organizations. In fact, just this last week, we announced some of the first Real world 5 gs services that solve real contemporary problems for enterprise and public sector organizations. Our T Mobile home office Internet product helps enterprises embrace the new world of work.
With everyone working, learning, gaming and streaming from home, we are all caught in a battle for bandwidth. T Mobile home office Internet allows organizations to provide their employees with in office connectivity out of the office With a dedicated secure enterprise grade broadband connection that enables work from home without competing with or replacing their current in home broadband connection. This product is designed as a single nationwide solution to cover all employees in an organization. And this is something only T Mobile can do, Thanks to the unmatched capacity, breadth and speed of our 5 gs network. We will start by launching to 60,000,000 households, More than any other ISP and will grow throughout the year as we continue to expand our 5 gs network.
And we are not stopping there. Our 5 gs network creates a platform for growth beyond core wireless and we're focused on helping our enterprise and public sector customers Realize value from these emerging technologies at scale. We have many trials underway, from helping 1 of the largest global banks Build better security experiences into their consumer mobile applications by leveraging mobile edge compute, to innovative applications of private Networks in the automotive industry, helping a global car OEM validate new use cases in their manufacturing and testing facilities. We're working side by side with customers to help them solve real world problems. And these are solutions that are being built today.
The second big focus area for us is to disrupt enterprise and public sector with value and simplicity. Our advantage over the competition is we're nimble, We're agile and we know how to solve real pain points using uncarrier principles to differentiate ourselves. And unlike AT and T and Verizon, we don't have to defend with large legacy businesses. Last week, we also announced an example of how we plan to help enterprises simplify And reduce costs in their wireless category with T Mobile Enterprise Unlimited. The incumbents have no motivation to innovate And business customers have been stuck in structures holding them back from modern capabilities and especially from the 5 gs era.
Many of the planned structures
in the market today look like they were designed in the early 2000s. They're complex, They're loaded with extra costs and they require entire departments to manage or worse paid third parties With just under half the enterprise employees on limited pooled or shared data plans, organizations have to try to predict How much data they're going to use each month across 1,000 of employees. Enterprises spend 1,000,000 of dollars Just in the unending battle to police wireless data plans on top of paying for the plans themselves. And with mobile data usage expected to grow by 38% a year over the next 5 years, these legacy pooled and shared data plan constructs are going to cost more And they're going to hold organizations back from reaping the benefits of 5 gs. Take Verizon, for example, their pooled plans don't even get you on Their real 5 gs network, customers get a version of 5 gs that runs slower than their 4 gs network.
With Enterprise Unlimited, we're helping organizations future proof their wireless investment by enabling them to easily move to unlimited 5 gs, By matching the price point that they are paying today for pooled and shared plans, allowing them to pocket the savings from all the extra costs spent on managing the complexity. Remember, core wireless connectivity, like what is delivered in these pooled and shared plans is and will continue to be going forward the most lucrative Part of this business. With AT and T and Verizon controlling around 90% of the market, nearly every win in this space is incremental to T Mobile And a loss for them, which makes helping enterprises simplify their operations and realize more value in this category, Both really exciting and highly accretive. We've been able to achieve some impressive growth over the last few years In an environment where many enterprises don't even know we compete in this space, and we still have a large awareness deficit relative to the consumer business. As we work to close the awareness gap with our competitors, you'll see us show up in more places, including in national advertising.
Now that we will have the best network and a winning strategy, we will invest in making sure that T Mobile is not just on the map, But we're on the top of mind for every CIO across America, opening up more of the market to us. And like I mentioned, We plan to win with the best team, including expanded and specialized sales in dedicated care. We expect That growth will accelerate as we expand our sales teams, while also advancing our specialist model targeted at key industry verticals, key segments and technologies. Our specialists are trusted advisors to our customers who know and deeply understand their business. And of course, we will continue to differentiate ourselves with dedicated, Best in class customer care, just like we do for consumers.
We have implemented a similar team of experts model for our business customers, So that we can address issues quickly and allow our partners to focus on what's important, achieving their goals, not talking to us. Putting this all together, we have everything we need to be the share taker in this market. We will be laser focused on leveraging our 5 gs network advantage, Disrupting enterprise and public sector with value and simplicity, closing the awareness gap with our competitors and winning with the best team, including expanded And specialized sales as well as dedicated care. Our ambitions today and over the next 5 years are big ones. We plan to more than double our nearly 10% market share in enterprise and build on our success in public sector where we've made significant strides in 2020.
This will drive solid double digit percentage CAGRs in service revenues in enterprise and public sector over that same time horizon. As you can tell, I am really fired up about the future for T Mobile for Business. And I look forward to taking your questions in just a bit. But first, let me turn it over to Dow Draper, who will tell you about the exciting growth opportunities in emerging businesses. Over to you, Dow.
Thank you, Mike. I'm Dow Draper and I lead the Emerging Products Group. I'm very excited to be here today to discuss how the merger with Sprint has created new opportunities for us to improve the home broadband experience for millions of Americans. This is a growing industry with about 90,000,000,000 of annual revenues. And the pandemic has certainly heightened the importance of having fast, Reliable home broadband service.
There are really two key factors that make this such an attractive opportunity for us. Our deep ultra capacity 5 gs network and the deep dissatisfaction consumers have with their Internet providers, whether that is due to lack of choice, Lack of quality, sky high prices or all of the above. With our spectrum portfolio and network assets,
Neville and team are building
a 5 gs network with a massive amount of While the build strategy is centered around mobility, there are neighborhoods all over the country where we predict that no normal amount of mobile usage We'll take up all the available capacity. Therefore, we are going to leverage that capacity to provide millions of Americans a better home broadband alternative. As we look at the market dynamics, we think there is a huge opportunity to disrupt this space. As high speed options are limited, Customer satisfaction is very low based on average net promoter scores and pricing structures are too complex. Many Americans have only one option for high speed broadband.
And in rural America, it's even worse as 28% of rural households can't get access to home broadband at all. And for those who can't, there's no competition. For nearly 40% of the rural households that do have access to broadband, there's only one option at their home. So how will we attack this market? The Un carrier way, of course.
We'll offer a reliable and high speed Internet product with Simple pricing that doesn't include exploding promotions. We won't charge equipment rentals or fees. There will be no annual service contracts. And what we think will be a huge relief to consumers, there is no need to schedule and wait for the cable guy. Our service is a simple self install.
Plug in your router, download the app and go. And all of this is backed by our award winning customer service. It's all the things big cable isn't. Now,
we know a lot of people think
this is just a rural place for us. But that is definitely not the case. We think we have tremendous opportunity across what we see as 3 main types of markets. And while we'll have a mix of marketing May include combining home broadband with content and or our wireless products, the emphasis in each market will be slightly different. 1st, About 5% to 10% of households are in left behind markets, located mostly in smaller markets and rural areas where customers have no options Or very poor ones.
Here, we'll be focused on the availability of higher speed Internet and we'll have the fastest speeds on our nationwide 5 gs network. This is also one step further in closing the digital divide as we bring critical and reliable connectivity to people that haven't experienced that basic freedom It's located mostly in smaller markets and rural and suburban areas where customers have some choices, but generally only one high speed option. The key here will be offering an alternate high speed choice at a competitive price that's simple and transparent for customers with no contracts, Hidden fees or cable guys that need to come into one's home. And finally, about 35% to 40% of households are in well served markets, Located mostly in suburban and urban areas where customers have multiple high speed options today. If our competitors think we won't be attacking these markets, They are sorely mistaken.
While we have all the benefits of an excellent product to compete here, this is also where we plan to leverage the strength of our T Mobile brand, Our strong retail presence, amazing customer experiences and our ability to offer double and triple place, we have plenty of options To be a meaningful player here. The great news is that in all these markets, we'll be able to leverage existing and growing distribution channels across retail, care, Telesales and digital. Thus far, we've been marketing our home broadband service as a pilot primarily on our LTE network. And we've learned a lot. 1st and foremost, customer satisfaction is very high.
So we know we're delivering a high quality service that is creating incredibly sticky customers. We've accepted just over 100,000 customers in our pilot. And quite frankly, we've experienced demand that far exceeds that number. I guess we should have planned for a bigger pilot. But a key premise of our testing over the past year was to hone our skills at direct and localized marketing And ensure we were aligning customer acquisition with the ever evolving growth of our network capacity.
We're seeing average customer usage in the hundreds of gigabytes per month, Including about 20% of customers using more than 500 gigabytes and all of this has been on our LTE network, which is delivering great results, Giving us even more confidence in our ability to meet customer usage demands with our 5 gs product as we deploy additional spectrum and capacity. Now, as Mike mentioned, we moved out of our pilot phase later this month. And we're expecting over half a 1000000 customers by the end of this year, Followed by a significant ramp in 20222023 as more capacity becomes available. And ultimately, We'll reach 7 to 8000000 customers by 2025 in our financial plan, which would still only represent a mid single digit percentage of total US households. This presents such a great opportunity for us.
Unlike traditional cable, we won't have any incremental costs Associated with passing homes, last mile installations or truck rolls. We'll be able to leverage our existing wireless cost structure and therefore limit incremental network Distribution and servicing costs, plus 5 gs router prices are rapidly declining. Overall, We think it's really an attractive model for us
as you potentially have the same ARPU and churn potential
of a postpaid phone customer With much lower equipment costs and little incremental investment required. I do think it's important to highlight that moving away from cable and satellite is new for most Americans. And we believe providing streaming services from T Mobile and or our partners at attractive price points will make switching that much more exciting. This is already embedded in how we approach wireless. We plan to carry this philosophy into how we help get people motivated to switch from their current broadband provider.
We just have so many ways to win here, including our phenomenal brand, ultra capacity 5 gs, National distribution and the option for double or triple plays across the country. We've even been pleasantly surprised to learn that 35 of our pilot applicants are new to T Mobile customers. This means our home broadband product can also act as another front door into our wireless business. If someone is getting great home Internet service from us, then it's a strong bet they're also going to have amazing mobile service in and around their home. We'll use our home Internet relationship to market our wireless services in the future, just as we're doing the opposite today.
All of this enables us to deepen our relationship with both existing and new customers. With that, let's get to your questions And welcome Mike and Peter to join Mike Katz and I for Q and A.
Okay. We're ready for our 3rd of 4 discussion sessions and we'll get right into it. You might have noticed that in each of these Peter and Jud and I all attend because we're your hosts today. But this session It's focused on broadband and on our business and government opportunities, which are both huge adjacencies we're excited to talk about. So we have both Mike and Dow, who you just heard from here.
And let's get right to it. Jud, how do we get started?
All right, Mike. We're going to kick this one off with Peter Cepino from Bernstein. Peter, go ahead. Hey, Peter.
Hi. Glad we finally got to today. So one on FWA, With the broadband home consuming like perhaps 15 wireless accounts in terms of gigabytes per month, I'd love to know more about how the company can have long term visibility on excess capacity in these well served markets where The company's cells are presumably already highly utilized. And then if I could squeeze in the I'm sure a lot of people would let us know the balance of rural and urban subscribers assumed within that 7000000 to 8000000 FWA customers in 2025.
Sounds great. I'll start and then toss it to Dow. Thanks for joining, Peter. Yeah, it's very interesting. I mean, the whole premise here is that and this is very different than what you see from some of the other Wireless Broadband Initiatives is that this network has massive capacity in all kinds of pockets around the country.
And what we're able to do is forecast multiples of current usage in mobile, multiples, not percentages, multiples versus current usage in the future, And then just forecast all of our share gains implied in the plan, and then some in case our plan is a little conservative. And then basically, you're able to look at it and say, you know what, with the assets we have today and the capital plan we're already fully funded for, There's massive capacity remaining, already fully funded. And that's where right here, right now, we will begin Proving applications from consumers for home broadband service. And it's a fantastic opportunity because it allows us to be no regrets. We know they're going to use and Dow can talk to what we're already seeing even on LTE, it's massive usage, and it's going to get a lot bigger, and we can support it.
And that's what's kind of exciting. That's without even getting into things like the extra capacity we can add. We've hardly said a word today about millimeter wave Spectrum, of which we have the 2nd most in the country and where with the right business model, if we need to, we'll go in and light up opportunistically millimeter wave Spectrum just to support this business plan. Differently from our competitors though, we don't need to. That'd be upside.
And I really hope we have upside beyond the 7,000,000 or 8,000,000 Scribers, as Dow mentioned a minute ago, that's a mid single digit. Dow, what do you want to say to add to that?
Yeah, no, thanks Mike. I would say that we're We're really going to be guided by the customer here in terms of the speeds and service that we deliver. And the reason we can do that is because we have this massive amount of capacity that Mike and Neville have referred to on this network. And what's been great is in our pilot, Which we've just been running on our LTE network, which is a very good network. We've been seeing customers with extremely high NPS scores.
So we know that we're serving them very well. And they're using hundreds of gigabytes. And as I mentioned in my comments earlier, 20% are using over 500 gigabytes a month, and they're very happy. And So as we take that and roll that to our 5 gs network, where we'll have more speeds, obviously, much more capacity, We know customers are going to be even happier. And what I love about this is that while we can compete in well served urban markets, and certainly there's even people who are not served in those places, but we're going to be able to compete there.
We're also, because of the way that network that Neville and his network team have built this network, As we'll be in suburban and rural, small town and rural markets, where most of majority of the customers have either one choice or really no choice. So this allows us to provide a really competitive alternative with the capacity that we have and even expand the market because a lot of those people either aren't getting Broadband today or maybe have something that's like 1 or 2 megabits per second. So it's really, really not quality at all. So this allows us to address a much, much broader Segment of the market and expand things. And this is something we're really, really enthusiastic about.
And what can you say, Dow, about the relative opportunity in the different market categories that you talked about? You Ted, we're tackling all three. We'll do it very differently. Peter's asking, I don't know if you can give it, but Peter's asking a little bit of color on how you see the opportunity, maybe near term versus longer term.
Yes. So near term where I think we're really going to focus is in those rural and small town and some suburban areas Where quite frankly, there's people who are underserved, right? That's where the need is most. So that's where we're starting. And again, the way Neville's built this market, This allows us a very different approach than our competitors.
So if you think about how maybe cable or even millimeter wave deployments are, You know, they have to build out blocks, right? When they build out those blocks, they need to sell a certain number of homes within those blocks to make money. Well, for us, kind of the way we look at this is we compete in miles, not in meters. And so we can get those homes across blocks Or neighborhoods or even over broad territories in this country. And so we think for us starting in rural and some of the suburban areas is going to be really, really important.
Then of course over time, we'll continue to serve there, continue to expand there, but also compete in the urban markets where I think we have a very, very relevant Product, we certainly have the speeds. We've got our distribution. We've got our brand. We've got our customer service. And so we're really well positioned to compete in all markets.
Good deal.
Thanks, Peter. All right. We'll take our next question from Colby Synesael from Cowen. Colby, go ahead.
Great. Thank you. When you first came up with your plan in, I think, 2018 to go after the in home broadband market, It was a bit more nuanced than what I would argue it is today. You're seeing obviously Verizon talking about that yesterday, 50,000,000 homes passed as their goal by 2025. If you look at RDOF and who actually won, there's a lot of fixed wireless providers that actually won there as well, a lot of them going after that real And then you even have StarLink on the satellite side, intending to go after certain opportunities.
Just given what appears to be a much larger competitive set going after the opportunity than what you might have thought back in 2018, I guess, what's the conviction That you're going to be able to hit the penetration goals to which you have. I mean, your pricing, for example, seems like it would be fairly similar to what Verizon's pricing is. Verizon has a bigger market share In the wireless space, if you're talking about the value of the bundle and so forth, it just seems like it's going to be a lot harder sliding Going forward, then maybe what is assumed in your expectations? Thank you.
Thanks. Yes, I'll get started. Yes, we do it differently. First of all, our pricing has never been similar to Verizon's on much and we're hoping to keep it that way. And one of the differences is how our model is funded.
This entire network build is funded by synergies. And as Neville talked about, because we're getting 2 for 1, we're going and touching all these towers And adding the 5 gs technology while we're doing the integration work, we're just getting way ahead, way faster than the competition. And your question is an interesting one, Which is they're common. Some of these guys are common. We may be in different places, as Dow just got done explaining.
We don't even think about it in terms of Holmes past. It's a different model for us because of how widely distributed we will be able to go fishing in the vast portions of this country, Eventually, substantially all of the country, but it will be certain areas within that. And we're going so fast That by the time that the others finally get there, we may have soaked up an awful lot of the opportunity. Because the truth is somebody who's been always with one choice, they've had this one choice That Dow just talked about. And somebody arrives in town with hundreds of megabits per second, hundreds of gigs that we can support a lower price than they've ever seen From a national brand with great distribution and fame for loving its customers, they'll either consider switching or they won't.
If they do, now they're ours. Let's suppose Verizon arrives later or one of these small companies nobody's ever heard of arrives later. Okay, that customer has made that decision. What's going to extricate them now from that decision? What will they have to offer that's better?
Because that will be the new standard. They have to be able to offer something better. And what we're finding when we start to hear their plans is that not only will they not be in a position to offer something better, except in places with deep millimeter wave capital investments And suction cups on windows and the trees, the leaves shouldn't be on the trees and stuff. Except in those circumstances, they won't have something better to offer. And that'll be their problem.
It's very much I think it's very similar to when we came out as the un carrier at the very beginning of the journey and said, we're going to be this value player and we took up all the oxygen on that. And that left other value players that wanted to be the un carrier very little room to maneuver.
And so that's kind
of what happens a lot of the time. I don't know, Doug, do you want to add to any of that?
Yeah, only a couple of things I'd add would be that one is I think that all the things that you all The people you mentioned getting into this sort of validates the opportunity for us and why this is so important to us. But as Mike said, the other piece is We're ready now. Like we're here. I mean, you hear Mike Katz and Mike last week talk about offering a work from home solution. It's available to 60,000,000 households Right now, in a couple of weeks, we're launching our commercial home broadband service.
It's going to be available to millions of customers and will be growing in 2022 and 2023 especially. And then of all those people you mentioned and even the others out there, there is not one Group that has the assets that we have. No one has the brand we have. Nobody has the retail distribution we have. And nobody That's the customer service and reputation for providing high quality customer experience that we have.
So when we put all those things together, we think we're in a really great place to win.
Thank you. Terrific. Thank you. Appreciate it.
We'll take our last question for this segment from Eric at Wells Fargo. Eric, go ahead.
I can't believe it, Eric. It always goes by so fast. But the last of our 4 question sessions is actually a little longer. So that's good. So welcome, Eric.
Great. Thanks, everyone. Appreciate the time today. Curious on the business side, a lot of your peers have kind of bundled wireless with large Enterprise and other services leveraging their wireline footprints, whether that's fixed broadband, managed services, private cloud. So How do you go to improving your share in the enterprise segment, unpacking those bundles from your peers to take share?
And then Maybe you could talk about it all if you've leveraged the legacy Sprint wireline assets to help you sell into that market. Thanks.
Something Mike? Yes. Thanks for the question. It's actually not something that we're seeing. In fact, when we work with large enterprises, very, very rarely do we see them Actually either asking for or bidding together with their wireline assets when they're bidding with wireless.
They're typically separated out. Oftentimes, even in enterprise, They're managed by 2 different groups. So we haven't found a problem in competing for wireless when we're not the wireline incumbent. And in fact, our growth is, I think this last year, helps demonstrate that 300% year over year growth in our enterprise business. So on the Sprint wireline business, one of the things that we've immediately been able to take advantage of is they did have they do have a robust Customer portfolio.
And very few of it was very few of those customers they had sell in with their wireless product. And we've been able to immediately take advantage of that, leverage the relationships that were built and start offering T Mobile wireless inside those customer accounts. So we found that Extremely valuable early on.
Let me add something that I want to make sure every person listening understands about Our whole business plan, but in particular the plan that Mike took us through a few minutes ago. And that's this. There is absolutely nothing That has to happen in the future. It isn't already happening in order for us to hit this aspiration that Mike expressed. He said he's going to take the share from about 10% to about 20% over the next few years and that implies a certain amount of net adds per quarter, a certain amount of net adds that are already happening And have been happening consistently for a while now.
There's literally no catalyst we're seeking, no unicorn we have to catch in order to meet this business plan. And that is so different from what you see are hearing from certain alternatives that investors have in this category. And so look, we're going to execute the plan. What investors should be asking is, is there upside? What are those catalysts coming?
Because once we move from having a second to none network, which is where we are now, Let's face it, most people are still on LTE, we're at rough parity. To the demonstrably best network in the 5 gs era, Could there be upside? Because during that transition, we will continue to have the best value as well. And those are catalysts for potential momentum that are very exciting And are not calculated into any of the financial plans that we're sharing with you today. Good.
So that was the last question for this section, right? And we saved on purpose Peter Osvaldic for last. And we did that for a reason, because we knew you'd stay for him, Because what he has to say is really important and very powerful. And so up next, Peter Osvaldic. And then when we come back, the whole team will be here to take your About everything Peter said, who's waiting to take on your questions and anything else on your mind for our last session.
So up next, Peter Ozvoldek. Take it away, Peter.
There is Such an exciting future ahead for T Mobile and I hope that you sense that excitement and passion from our senior leaders as they shared insights into their parts of the business. All right, Time to get to what you've all been waiting for, starting with an updated look at synergies, our current view on the mid and long term potential for this business And how it all translates into the promised unlock of massive free cash flow, creating the flexibility for significant potential shareholder returns. As you already know, we beat our own aggressive synergy targets for 2020, realizing over 1,300,000,000 Or 4 times what the original merger plan expected to achieve in the 1st year. And we also guided an expectation to realize $2,700,000,000 to $3,000,000,000 in synergies in 2021, which represents a $550,000,000 year over year increase in avoided costs And a $1,000,000,000 year over year increase in P and L benefits at the midpoint of our 2021 guidance, helping to fund the investments in our network And growth initiatives this year. And we're not slowing down.
Today, the team has shared with you areas where we are moving faster than planned, such as the Expected completion of our customer network migration by mid-twenty 22 and network decommissioning by year end 2022, Both a full year ahead of schedule. This strong execution by the team leads to our updated expectations for total run rate Cost synergies of approximately $7,500,000,000 per year by 2024, up 25% from the original merger guidance of $6,000,000,000 While the full original and increased run rate synergies are achieved in the same timeframe, primarily due to the timeline for avoided costs, We overachieve in each year relative to the original plan. In fact, we now expect to see the original $6,000,000,000 target in 2023, Breaking the $7,500,000,000 down a bit more, we expect to achieve approximately $2,000,000,000 in avoided network costs And approximately $3,000,000,000 in network cost of service savings, a combined $1,000,000,000 increase above the original $4,000,000,000 target, Driven primarily by greater efficiencies and site costs. In addition, we now expect approximately $2,500,000,000 in SG and A run rate savings, Up from $2,000,000,000 originally, driven primarily by increased marketing efficiencies and IT savings. As we have said from the beginning, these massive synergies are unlocked with some one time upfront costs to achieve.
We continue to expect Approximately $15,000,000,000 of total net cost to achieve, delivering more synergies with no incremental cost. Consistent with the original merger guidance, the $15,000,000,000 includes approximately $11,500,000,000 in OpEx, With $3,400,000,000 of that incurred through year end 2020, which includes costs incurred prior to the merger. From a P and L perspective, we expect to incur materially all of the remaining merger related OpEx by the end of 2023 With the peak year in 2022. These costs will come through over a longer period on a cash basis as we take advantage of paying certain expenses over time, Such as for decommissioned sites. The remaining $3,500,000,000 of the total $15,000,000,000 merger related cost is CapEx for network, Retail, IT and other integration items.
We will continue to disclose the merger related OpEx costs in our reported results Just as we did in 2020, but we'll not plan to break out merger related CapEx due to lack of materiality relative to our total capital spending over the next several This faster pace and increased run rate results in a new net present value of over $60,000,000,000 for shareholders, More than 40% higher than the original 43,000,000,000 NPV in the merger case. And that is based on the original WACC of 8 Percent used by standalone T Mobile in 2018. However, if we used our current WACC assumption of 7%, Which reflects not only lower market rate conditions, but just as importantly, our scale and performance driving a lower cost of capital As demonstrated by our capital markets activity, that takes the total NPV to more than $70,000,000,000 An increase of over 60%. We are even outperforming what we achieved in the incredibly successful MetroPCS integration, Where we delivered the same original run rate synergy target, but executed faster to deliver $3,000,000,000 in incremental NPV. Here we are executing faster and raising our run rate expectations by 25%.
As exciting as these monster MPVs are, this is likely the last time we will provide an update from an MPV perspective As we focus on integration execution, and I know that you will judge us by our delivery of the run rate synergies And the massive free cash flow generation promised by this merger. Now let's take a look at how we see the medium and longer term Financial projections for the business compared to what we shared with you in 2018. First, let's discuss some of the Key things that have changed since the original merger projections were provided nearly 3 years ago in order to provide additional context around the updated guidance. To begin with, the merger closed about a year later than originally planned, but that was absolutely worth the wait. Perhaps the biggest change was the agreement to sell the Boost prepaid business as part of the conditions for merger approval.
Recall that business generated Approximately $1,000,000,000 in service revenue and over $400,000,000 in adjusted EBITDA contribution in Q2 of last year, Just prior to selling the business to DISH, which represents approximately $4,000,000,000 in service revenue and over $1,500,000,000 in Contribution to adjusted EBITDA on an annualized basis. And while partially offset by the wholesale agreements in the near term, That wholesale revenue is expected to go away over time in our updated guidance as we anticipate DISH to transition those customers onto their own network. In addition, the original merger plan assumed a continued stream of high margin wholesale revenue from TracFone, Which was approximately $750,000,000 of service revenue in 2020 that is now expected to go away in the coming years, also reflected in our new guidance. Operationally, the original merger also assumed the continuation of device leasing at roughly $5,000,000,000 of annual lease revenues, Consistent with levels at the time of the merger close, and this was implicit in the original adjusted EBITDA guidance. As you know, we deemphasize device leasing quickly post closing to make our device offers EIP centric And now expect lease revenues to reach between $1,000,000,000 to $1,500,000,000 in the medium term and less than $1,000,000,000 annually in our new long term guidance.
So as you expect, we will focus our discussion on core adjusted EBITDA to reflect the underlying business performance Without the distortion of declining lease revenues over the period.
The
exciting part of the plan we are sharing with you today Is the significant growth in service revenue, higher synergies and better capital efficiency, which more than offset the headwinds I mentioned. Our team's strong execution and our strategic plan is now expected to deliver financial results that exceed Both the original 3 to 4 year and longer term targets that we provided in the merger announcement. For reference, We are using 2023 as the comparable mid term point as it is the 3rd full year following our actual closing date. And as we think about the long term projections for the business, we are using 2026, which is actually earlier than the original long term guidance Milestones which assumes 7 to 8 years out. And of course, our ambitions include continued growth in the business beyond 2026, Driving a sustainable increase in shareholder value in later periods too.
All right, jumping into the numbers. Service revenue is now expected to be between $61,000,000,000 to $62,000,000,000 in 2023, Up $1,500,000,000 at the midpoint from the original guidance, driven by the strong growth in the business, more than offsetting the lost revenues from Boost and Trac Long term, we now expect service revenue to be over $70,000,000,000 above the top of the range in the original merger plan. Again, with growth in the business offsetting revenue from Boost and Tracfone in the original merger plan that is now Expected to be largely gone by that point. Core adjusted EBITDA is expected to be between $28,000,000,000 $29,000,000,000 in 2023 Versus the $5,000,000,000 to $27,000,000,000 a $2,500,000,000 increase at the midpoint, driven by growth in service revenue And higher synergy realization. Long term, we expect core adjusted EBITDA to be more than 36,000,000,000 More than $1,000,000,000 above the high end of the original target, driven by higher service revenues and the full run rate synergies by that point in time, Along with additional efficiencies highlighted by John and Cali, including in the areas of continued distribution transformation And an increasing consumer digital experience.
Looking at capital expenditures, we now expect CapEx in 20212022 To be between $11,700,000,000 $12,000,000,000 annually as we deliver our network integration milestones earlier And to build a nationwide multilayer 5 gs network with better capital efficiency, thanks to both material procurement savings From our improved scale and deployment efficiencies, which Neville highlighted, we expect CapEx in 2023 through 2026 To be between $9,000,000,000 $10,000,000,000 per year, reflecting the capacity and network efficiencies we expect After having completed our network integration and be largely done with our nationwide 5 gs deployment by 2022. And as Neville mentioned earlier, this includes all of our expected costs for C band deployment. I doubt You'll hear anyone else in the industry lower their expected CapEx intensity while adding C band deployments. And of course, This all translates into the promised unlock of free cash flow, which is now expected to be between $13,000,000,000 to $14,000,000,000 in 2023, A massive $3,000,000,000 or 30% increase from the original expectation of $10,000,000,000 to $11,000,000,000 Again, a Product of increased growth in service revenue and operating leverage, bigger and faster synergy capture and improved capital efficiency. Long term, we expect free cash flow to be more than $18,000,000,000 above the high end of the original target.
And similar to our 2021 guidance, our mid and long term free cash flow guidance does not assume any material net inflows from securitizations. And while we have laid out some specific expectations for mid term and long term milestones that are all above the original merger plan, Equally exciting is that this is really a story of cumulative over performance in every year, delivering cumulative free cash flow through 2025 Of up to $65,000,000,000 up nearly 20% from the original plan. And even with that over performance, We do not expect to be a material cash taxpayer until 2024 under current tax rates, thanks to utilization of our net operating losses. I couldn't be more excited about this updated plan. And of course, one of the things we are extremely proud of is our team's ability to meet or exceed the guidance we commit to.
We have done that now as T Mobile since 2013, And we have every intention of continuing to deliver on that front and maintain the trust you place in us. With that in mind, while the plan today represents our best view, there are multiple potential upside opportunities we have also shared, Which are not included in the plan, but can potentially over deliver faster and bigger against this plan. These include the ability to translate our durable 5 gs network advantage combined with our customer experiences and value proposition And to increases in market share over our assumed growth. For example, in smaller markets in rural areas where we are only assuming market share growth From our current low teen share to near 20% as John shared, or the enterprise markets where we are only assuming to get to roughly 20% share, as Mike Katz highlighted. We also have the opportunity to increase ARPA or postpaid phone ARPU above our plan assumptions.
For instance, by translating the massive capacity of our 5 gs network into higher adoption of premium wireless Plans such as Magenta MAX or the ability to expand our household relationships further, including through our home broadband product. We can also see a potential acceleration in reducing Sprint churn, where we are only assuming to reduce the churn gap compared to T Mobile in half Over the 1st 2 to 3 years, even after fully migrating them onto the T Mobile network, value proposition And customer experience, as Matt highlighted. And of course, there are opportunities in other markets and products not materially included in our plan. Products we know will come as 5 gs continues its evolution, such as massive IoT, mobile edge computing and private networks, But where it is too early to responsibly include material assumptions in our plan. Let me now come back to what I believe is the Ultimate value creation measure for this business and how you no doubt will measure our success in the form of the massive free cash flow generation this plan rapidly delivers.
To put the slope in context, our plan delivers an expansion in free cash flow of 2.5 times from our 2021 guidance To our midterm guidance in 2023 and 3.5 times by 2026 to more than $18,000,000,000 An expansion which opens up so many options for the business. I'll walk you through how we think about the capital allocation as this free cash flow expansion unfolds. Our first priority, of course, is funding our rapid 5 gs network build along with merger related costs to facilitate the completion of our merger integration work And synergy unlock as quickly as possible, much of which will be largely completed by the end of 2022 as we discussed earlier, While we are simultaneously investing in growth opportunities to capitalize on our durable 5 gs network leadership. And secondly, this plan delivers significant and accelerated deleveraging of our balance sheet with peak leverage to occur this year As we fund both merger related costs and our C band purchase. To fund our C band purchase, we plan to incur Additional $2,000,000,000 in gross debt and retire the undrawn term loan facility that we put in place ahead of the auction.
A no surprise next step since we have pre funded much of our purchase with record breaking capital market raises in late 2020 January of this year. This combination of strong deleveraging and commitment to a conservative leverage target should put us on a path towards an Investment grade corporate family rating in 2023. Achieving an investment grade corporate family rating has always been our plan, As we believe it is important to position the company for materially lower cost of capital by allowing access to the IG debt markets in the future When rates are likely to rise. These massive free cash flow numbers in the coming years obviously give us a lot of strategic flexibility And beg the question that we often get from many of you, which is when are we going to begin a shareholder return plan and what would it look like? While I don't have a board approved buyback plan to announce today, it is certainly fair to assume that a very significant buyback program could be on the horizon.
As Mike highlighted earlier, based on the core adjusted EBITDA and free cash flow that we expect to generate and assuming a conservative Core adjusted EBITDA leverage ratio in the mid-2s, we could see up to $60,000,000,000 in potential shareholder buybacks between 2023 And 2025. As you would expect, we will always focus on maximizing value creation for shareholders and we'll assess future spectrum purchases,
Any
M and A options and share repurchase opportunities to create the most shareholder value, but wow, what an amount. And of course, there is massive potential beyond 2025 as well. When you combine a proven team with the leading 5 gs network For the entire 5 gs era, executing against the plan that delivers tremendous profitable growth and massive free cash flow, Along with the potential for significant shareholder returns, while also having numerous upside opportunities, it is truly exciting days ahead. All right. I can't think of a better high note to end on than that.
So let's get to your questions. Please give us a minute as Mike will join me and we have
All right.
Well, as Peter just said, he and I are back for questions. And you know what, so is the rest of the team. First of all, we have Neville and Matt here
in the front row because we were
sort of cut short on that first Q and A session because we thought we might have had audio problems. We didn't really, but it's all good. So they're back and so is the rest of the team. So we can get into any topic. It's all fair game, but I kind of know you want to get your claws into Peter on this financial plan.
So Jud, where do we want to get started? All right.
Let's kick it off with Phil Cusick from JPMorgan. Phil, go ahead.
Hi, Phil.
Thanks, guys. Peter, up to $60,000,000,000 of buybacks $23,000,000,000 to $25,000,000 that's a big headline. What are some of the things that go into that up to? And then second, it looks like the revenue CAGR in 2024 to 26 is a lot faster than the 2021 to 'twenty three run rate. I understand there's some TracFone and Boost drag in there, but is the acceleration mostly an assumption of the new businesses coming on or is there something else happening?
Thank you.
Absolutely. Well, thanks a lot. So, yeah, a lot goes into that $60,000,000,000 but the first and foremost thing to know is that it assumes A conservative mid to core adjusted EBITDA leverage ratio, right? And leaves us the opportunities to look at other options, again, whether it's M and A, Whether it's any other spectrum acquisition items that we may be looking at, whether it's other alternative investments that we may look to increase shareholder value. So it's all development Off the plan and the massive free cash flow that we're generating here, the rapid deleveraging that this plan allows us and yet assumes still a conservative 2.5 Core adjusted EBITDA leverage ratio.
Without getting into any of the upside opportunities to the plan itself, that obviously if they increase free cash flow Could create more opportunity than the $60,000,000,000
itself. That last piece is kind of interesting, Peter, because we chose this up to language. And maybe it's a little confusing because it's up to with the business plan exactly as we laid out. But as we've spent the last couple hours outlining, We see a lot of upside in this business plan. And we have a pretty good track record around here of figuring out ways to exceed our plans.
And so obviously, that could be Accretive to overall cash flow generation that would be higher. We also want people to understand that in this plan, there's only a normal amount of kind of ongoing ordinary Spectrum purchases, so that could be something that we decide to do. There's not any big material inorganic M and A in there. So it's the investments that are in this plan to deliver these results are in. And we know and you know that as Time goes on, we may find options that are even better than this accelerated return to shareholders.
And we might not, But either way, the plan supports it. And it's just it's so exciting. So that's why we say up to, could be higher. But I think it's just an extraordinary moment for this company. After all the patience That people have had with us, we're now at a place where we understand with clear line of sight, with a business plan that's so simple And already demonstrated what that we are on the cusp of massive cash flow generation and we're making a commitment today that Our framework and how we think of it is as long as there's not a better plan, we're going to be talking to you about shareholder buybacks and other shareholder remuneration.
And then, Phil, on your other point around how service revenue development happens. First off, you know us, we're prudent in the First years, we're going deeper into smaller town and rural. We're seeing a lot more acceleration and traction in enterprise and business that Mike Katz highlighted. We talked about the home broadband opportunities. But we're prudent on how long that takes, right?
As you build out in Smaller towner rules, it takes
a little bit of time
to get the brand recognition, to get the distribution built out. That's all happening and part of the investment thesis That resulted in our 'twenty one guidance. And we promised you the investments would pay off. Now you're getting to see the other side of the story from the guidance side. And then Matt also highlighted some of the assumptions that we have around Sprint and the base there.
And both from a churn perspective, what our Assumptions are in the plan that certainly have opportunity to be beat, but they're built into the plan from a very rational perspective. So then you see as some of those Headwinds we get past and you did mention of course, yes, there's Boost as well as TracPhone, then we see a further ramp of service revenue and tremendous excitement from The entirety of the team on that front.
Thanks, Peter.
All right. Thanks, Bill. Nick, our next question from Brett Feldman from Goldman Sachs. Go ahead, Brett.
Great. Can you guys hear me?
Yes. Hi, Brett. Hi. Quick follow-up question on the buybacks and then another question about managing churn. So I know it's the Board's decision when you decide to implement
a buyback program. But can
you give us some context around the conditions in which you're going to be comfortable Recommending it. In other words, do you want to be at a certain level of leverage, do you want to have an investment grade rating? That would be
the first question. And then the second question,
it was Spring churn obviously still elevated and you talked about the game plan for bringing it down. But even today, Why are you still seeing Sprint customers leave the T Mobile family and go to Verizon or AT and T or cable, when you obviously know a lot about And what do you think is going to be the real inflection point for gaming to realize that T Mobile is really where they want to? Thank you. Terrific, Brett. Well, Peter and then Matt.
Absolutely. Thanks, Brad. So yes, how do I think and you heard me lay out how I think and we think about capital allocation. 1st and foremost, right now, the next 2 years Are the rapid rollout of this completely differentiated 5 gs network to get that benefit throughout the duration of the 5 Period. We're also funding all of the merger related costs and we gave you a highlight of how much is left there from an OpEx perspective.
But despite all that, this plan gives you tremendously rapid deleveraging. Now funding the C band purchase and funding the merger related costs Means we anticipate peak leverage to happen at the end of this year. About a low 3 on a core adjusted EBITDA basis and about a high 2 on an adjusted EBITDA basis, But as you know, we changed our discussion to be core EBITDA based. Then you have rapid deleveraging into the mid-2s By the end of 2022, as that free cash flow massive generation starts coming in front of us with the business. So That's 1.
2, absolutely wanting to get on the path and achieve Corporate Family IG rating. That's the prudent thing for us to do to get access to the depth of capital, As well as the lower cost of capital, right, to be able to invest it more prudently and get even higher shareholder returns. Is it an absolute precursor for us To achieve Corp Family IG to begin shareholder enumeration or give that recommendation to the Board? No. That's not how I see it.
I feel if we've got the free cash Flow generation happening as we've got planned. We have the Sprint integration happening as we have planned and we see the progression with the rating agencies. Certainly, I'd be happy and in a position to recommend it ahead of that. But ultimately, reaching Corp Family IG rating is an absolute goal.
Terrific. And Brett, your second question was Sprint Churn. What are the catalysts that are going to bring it down? Thanks.
Hey, Brett. So You know, on churn, what we talked about today was taking the difference between the Sprint and T Mobile branded churn cut it in half over the 3 year period On our path from worst to first, the formula is pretty consistent with what we've already done. The timing of it, the first piece of this is we're on the network migration For Sprint customers, we announced at the end of Q4 that we had transitioned 4,000,000 Sprint customers to the network. Today, we talked about getting that number to 60% By the end of this year as we go into 2022, getting that complete. So a big element to the churn reduction is going to be following the migration of Sprint customers From that network into the T Mobile destination network.
The other piece to what Kalle talked about was introduce a team of experts and really upgrading the service That also is not instantaneous. It starts this year and ramps. And it builds, as Cali talked about, as we build these relationships and deepen them as we go. The last piece is on the value proposition. And we're right in the middle completing by Q2, getting 100% of the Sprint customer base on go forward rate plans And value propositions.
That's important for a couple of reasons. One is it provides certainty for the Sprint customer base. So they know what their plan is, they know what the value proposition is, And what it's like to be a T Mobile customer as part of that transition. And it also provides some ease of us to go through and do the billing conversion on the back end Sure the customer can't see that starting this summer as we move forward. Part of what you've also seen from us consistently through the plan is we're prudent And what we're laying out expectations for what we hope to achieve.
Do I think there's upside in the churn? I hope so, because we're doing everything in our power To accelerate bringing the value and customer experience and network to the Sprint base as soon as we can. So that's kind of detailing out what we're doing and how we expect that to evolve over time.
I'd kind of personalize it a little bit. Brett, I've been doing wireless at the C level since 2002, When I had Matt Schaub, CMO over at AT and T. And I'll tell you one thing I've learned over the years, never get out over your skis on churn. Once you commit to a churn number That you can't make, there's just no making it up anymore in the P and L, you're going to be stuck. And so that's just kind of my way of telling you, I'm not going to allow the team to over commit.
And so if cutting the Sprint churn gap to T Mobile in half over the next 3 years sounds a little conservative, well, that's by design. Because remember, at the end, you're going to have the best 5 gs network on a predominantly 5 gs handset base With the better rate plans that have always made T Mobile famous, every single customer migrated and T Mobile branded and similarly situated to that T Mobile base By then. So we think we'll cut the rate in half. We'll see what actually happens.
Thanks. You bet.
All
right. Thanks, Brett. All right. Next question, let's go to Kannan at Barclays. Go ahead.
Thank you, Jud. So I guess, if you could touch on ARPU and some of the comments you guys made, and maybe I'm interpreting this too much, so I apologize if that's really the case. But It sounded like the ARPU trajectory you guys are talking about for the next 3 years is a little bit softer than the usual algorithm that you guys use Pricing, and this is despite the fact that you guys are getting into some markets where competition may be a little bit more limited and you Business and a number of new segments that you guys are targeting.
So I just wanted to see
if you guys can provide some context. Is that more on account of the Sprint migration Having a little bit of an impact versus just being a bit more aggressive in the market when it comes to pricing. And then I guess as a follow-up, when you look at fixed wireless and some of these newer opportunities, could you also provide some color around ARPA, right? I mean, so broadly, you're opening up new product lines, And it sounds like you're looking beyond even wireless devices inside
the house. So how should
we think about that cadence going forward? Thanks.
Kunal, those are fantastic questions. So we're going to start with Peter and Matt on the ARPU question. I'll tell you that generally what we're out looking on ARPU and ARPA is the following. We see ARPA expansion opportunities. And we spent a lot of today to your premise of your question, talking about the things that will not only grow accounts and welcome people to our franchise, But give them opportunity to deepen those relationships with us.
But we see ARPU specifically, which by the way refers just to smartphones. Remember, ARPU is of a subset. It's just the phone nets, The phone base, we see that as generally stable, plus or minus 1%, with the next few quarters being more on the minus, because of the integration dynamics that your question Premise. But then probably not just the stabilization, but perhaps even an opportunity. So I want to let Peter talk about the timeframes and ARPU and ARPA And then the catalyst for those chains, I'll quickly turn to Matt.
Yes. Mike, it's a lot Mike said it in regards to churn and the plan with regards to Sprint, right? We anticipated the typical algorithm that we've always said is generally stable, plus or minus 1%. Well, now we're going through It's an integration event. And the work is to get those customer experiences for the Sprint base as best And as quickly migrated onto the T Mobile value proposition and all that that entails from a value customer experiences as well as a network And the first part of that is getting them on to target rate plans, as Matt noted, which will create a very Seamless back end experience for them once we do the network migration, once we do the network decommissioning on the billing side.
And of course, as always our mantra, We on the side of the customer, right? It helps the entire CLV calc. It helps the churn reduction. So that's the thesis right now. And you heard Matt talk about that.
And there's more opportunity to develop those relationships further. Remember when we first started talking about the Sprint base that is really part of the Magenta family here Is that they had lower lines per account. And so there's an opportunity to deepen that relationship, which by itself is, yes, phone ARPU dilutive, but tremendously accretive To the CLV of that entire ban. So it's just like with churn, we want to be very prudent in what we're thinking about for the next Couple of years, 3 years as we go through this cycle. But to the premise of your question, is there opportunity for upside, right, in both ARPU as well as ARPA, Which we plan to grow, as Mike said.
As you see, this amazing network that Neville sitting next to me is building and that Is just going to be a tremendous expression of the best 5 gs network for the duration of the 5 gs period? Yes. And for that, I think I'll let Matt talk about that.
Yeah, thanks, Peter. You hit a lot of the points there. Just a couple of reinforcements to what Peter had talked about in ARPU. The Sprint branded customer base Did have a lowest lines per account in the industry when we completed the merger. So we see a big opportunity there.
It's under indexed relative to the market And just general households. That's going to help us also achieve these churn rates that Peter talked about. The other thing that's not in our plan, again, as Mike said, we're putting things in our plan That we know are real and we can count on. We recently this quarter introduced Magenta MAX, right, a higher end plant. To date, we hadn't had the network capabilities To really sell a service and offering that goes out that high end of the market.
We're just getting started on that. We didn't include a bunch of upside and Additional revenues that we have to get to achieve these numbers, we've got our playbook. And to the extent that that plan resonates with consumers in the marketplace And adoption grows, that translates into upside against these metrics and numbers we've laid out there. The other piece I'll say, and I talked about this in my earlier remarks, Is that only 25% of our accounts today have something beyond smartphones In their relationship, not tablets, watches, connected cars, all these other things. So to a large degree, as we go through the adoption curve Things like connected watches and tablets and such, we're going to get natural upside from that in terms of additional ARPA growth as we go forward.
Again, these are products that are known and here today. And as the 5 gs evolution grows and more and more businesses and products come to market, obviously we'll go and sell those and distribute them On the heels of this broad network we have. So there's a lot of opportunities there, not even to mention what Dow talked about with home broadband And what we're seeing is opportunities there to win new accounts and grow from there. 5 gs is kind of a
catalyst for all this, not just because of huge new use cases that haven't been invented yet, Because it brings down unit costs as well as network costs. And one of the big barriers to people adding end types of accounts to their account relationship has been the marginal cost. But you're telling me that's an extra $20 a month? I don't know. But now the network costs in our 5 gs phase will be so much lower, we're going to be able to make That an accretive decision for the consumer, but it drives ARPA for us in a high margin way.
I know we're filibustering you, but the last you, Asda. I think it is worth hitting. It was about unit economics in broadband and what we're seeing there and why that might be a high margin business. Won't necessarily drive ARPA unless it's a multi play because by itself, it's one account for the whole family. But it is going to be highly margin accretive and powerful business.
So what do we know about the unit economics after our pilot? And what do we anticipate? We'll go quickly to Dow. Yeah. Thanks, Mike.
As I mentioned in my earlier comments, the great thing about what we're seeing with broadband is that these customers Potentially have the same ARPU and churn profile of our postpaid customers, with much slower costs to actually bring those in. So the equipment cost is much less than an expensive smartphone. We don't have to provide incremental network, distribution or really even servicing costs. So we think the value of these customers is actually going to be quite high. And what I what we're also really excited about is that Not only can we sell this product into our base, right, so it expands the account relationship for us.
As I mentioned, over a third Of our of the customers that have come into our pilot are new to T Mobile customers. And so that's really a front door, not only to just generate Home broadband revenue, but also if look, if they're getting great service in their home from broadband, then they know, wow, T Mobile is actually going to be Great service for me and my wireless for my wireless needs as well. So we'll be able to bring that business in as well. And that'll be a great front door for John And others to increase their sales for our wireless products.
All right. Next question,
Let's go to John Hodulik from UBS. Hey, John.
Great. Thanks, guys. A couple of them. First, Quick clarification, is the $65,000,000,000 in free cash flow, cumulative free cash flow, 2.25, Just to make sure I got this right, does that include the $15,000,000,000 in integration expense? That's number 1.
And then number 2, If we could benchmark a couple of the sort of key drivers of the longer term guidance. First of all, the service margins, 51 ish percent, AT and T is mid-50s, Verizon is higher than that. I mean, how should we think of the 2? You should I mean, obviously, you have greater scale, That 51% just seemed a bit low. And then similarly on the other side of the ledger, and maybe we can bring Neville in here, CapEx, the CapEx is a little bit lower than we thought.
You have competitors there that are spending significantly more than the $9,000,000,000 to $10,000,000,000 you guys Laid out for the outer years, obviously, they have wireline businesses, but it's seemingly within an apples to apples comparison on the wireless side, that number seems a bit lower than those competitors. So Just the clarification and then how should we think of those variables would be great.
Sounds good. Well, let's go
to Peter first. So is the cash flow net of cost to achieve, Peter? And also Thinking about margins, maybe this is a good chance for you to talk about margins as you think about cash flow per revenue dollar, Cash flow per service revenue dollar. Because what's interesting is that all the big companies have different geography. And that might be a great leveler for you to understand our margin story.
But Peter,
Yes, absolutely. First for clarity, yes, those free cash flow numbers are fully burdened with the merger related costs that we anticipate. And again, the peak is going to be 2020 And then 2023, little bit of a tail there from a cash flow perspective as again, we take advantage of paying over time. The cost to achieve peak you made. Yes, the cost to achieve peak.
So as it relates to mergers or sorry, as it relates to longer term margin, The way I think about and you're absolutely right. First off, the plan that we just laid out in front of you from a core EBITDA margin perspective actually overachieves what we laid out in 2018 When you do it on an apples to apples basis. I think we've talked in earnings in a couple of conferences about, yeah, there are some structural differences, right, between us And AT and T or Verizon, one of the primary ones being the concept of Owen versus Lease Fiber. And it manifests itself differently for us on the P and L, For them as a CapEx line item. There are other things, of course, which is, hey, our aspirations are not being done with growth, Right.
So we're going to have always a higher S in that SG and A function, even in that 26 period in that outer year, because we strive to continue to grow And drive enterprise value creation that way. But and of course, then you have another thing, which is power density. We don't know ultimately where, for instance, Verizon will go. But certainly right now, we have a much denser network and a superior propagating spectrum portfolio, which translates into the massive 5 gs network advantage So take all those things aside and to try to look at some of these structural differences. And by the way, AT and T, as you said, Typically, I think it was 54% in mobility for 2020, 50% in Q4.
Verizon, I know there's hypotheses out there around what they do, but we really don't know. We haven't really known for a while with the way they report as to what their true wireless margin is. But when you try to normalize across all of it, and this is what Mike said, look at the free cash flow generation, Which normalizes across this owned or leased fiber thing as well as other things, free cash flow generation as a percentage of service revenue. And if you look at the guide that we put out here, we actually beat both AT and T and Verizon By our mid term guide and significantly exceed them if you look at it that way by the long term guide. So it tells you despite the fact that we want to grow faster, Sure.
Despite the fact that we're going to have a denser network, and despite the fact that again, we want to continue to grow and have a tremendous amount of upside to this plan, We are more efficient and that's the proof in the pudding because it normalizes for all this stuff across OpEx or CapEx in generating free cash flow, The ultimate measure of value creation for shareholders as a percentage of service revenue. So I couldn't be more excited about that part of this guide. And that's the way I think about it, Mike.
These businesses are also different. They capitalize a ton of their backhaul, most of ours is OpEx, etcetera, etcetera. And that's why we wanted to answer it as and I think it's very important that every single person listening understands this, that in our view, with this financial plan and its intended conservativism we've been trying to demonstrate today, We deliver already by 'twenty three more cash flow per service revenue dollar than anybody else. And it really shows you and that's why when we talk about the exciting cash Well, potential, because that's the great leveler. And I think it's really important that people understand that because frankly, you don't get a lot of transparency out of our competitors, Not because they're not trying
to be transparent, but they're in lots
of businesses and they slice and dice it differently. You do from us because we're a pure play mobile Internet company. And what you'll find is that that business, even at before all of our aspirations are met in the longer term view, is highly productive From a cash flow per revenue dollar and we think compares favorably to anybody out there, even by 2023 and even without all the upsides we've been talking about today.
And I know, Neville, I think there was a question around CapEx.
Can you really do it with this CapEx and the detoxifying CapEx Per revenue dollar in the out years, Neville.
Yes. Hey, John, good to see you. So the capital story, a couple of things to think about, right? If you look at the 5 gs rollout from T Mobile, We've been at this a long time. So if you look at our extended range in our low band footprint, we started building that back in 2019.
So there's already multiyear expenditure that's gone into the ground. On our mid band and our ultra high capacity 5 gs, We're already at 125,000,000 people covered today. So the next couple of years is where we perfect that footprint, That 5 gs capability and that 5 gs leadership. So that's kind of the peak cycle in terms of CapEx. And after that, we start to lower down some.
Now if you compare to well, we'll hear from AT and T tomorrow, John, I assume, right? But Verizon is in this denial phase about Densification for C band. And so they have a huge amount of work left to go do. Yesterday, They talked about, well, C band alone is going to cost them $10,000,000,000 I mean, that's probably a conservative estimate. They have a lot of work to do in terms of densification.
And ultimately, they're going to have to upgrade this nationwide footprint more than nationwide towards 300,000,000 people with low And so is their capital intensity going to be higher than ours? For sure. They're way behind and we started much earlier.
Thank you. Terrific.
And
now we're going to go I think we have about 15 minutes remaining. So we're going to go into our Good fire mode, where I'm going to ask my team to give quick answers so we can get to several more questions if we can in these last 15 minutes. So Jud, where do we go next? All right.
We're gonna Quick back to Simon. He had a question earlier for Neville and Matt. And so now we got everybody on set. Let's get that one quick and then we'll keep moving.
Great. Thanks so much. So Neville, I think the question was around the ability of the network to handle the traffic on a home broadband solution. And one thing that you showed earlier on the slide was how much mid band spectrum you have versus your peers, particularly in the early stages. Perhaps you'd help us understand as you shut down the Sprint network, I think you'd only been using 60 to 80 megahertz of the 2.5 for 5 gs.
So how does that translate into 100 megahertz, 120 megahertz and the sort of speeds and performance both for Traditional wireless and for home broadband and anything on homes passed for home broadband would be great as well.
So thanks, Simon. Good to see you. Sorry, I missed you earlier. I mean, clearly, we've started on 60 to 80 megahertz as we're migrating customers. But as we move through the balance of this year, that's going to start To move to 100 megahertz and past this year, past the end of 'twenty one, it will be even more.
And that capacity and scale, I have the slide in the deck That talks to how we can compare to what T Mobile standalone could do. We can increase our capacity a multiple of 14 times. And this is like an old memory to me now, but we litigated this heavily with some of the best engineers in the country from the FCC and the DOJ. And that capacity comes from more sites, a lot more spectrum, deeper channels and of course the spectral efficiency of 5 gs. I mean, that's probably printed in the front of my head for the rest of my life.
We talked about it so many times. But those capacities and efficiencies are absolutely real. And that's what this combination has always been about, building a much denser network, piling up with very, very powerful layers of mid band spectrum And then using that 5 gs efficiency to really push towards these higher capacities and performance. So we're very confident on that Capacity profile. And we're even more confident today because of the size and scale of the rollout that we've delivered As of today, 125,000,000 people on mid band and speeds approaching and averaging today 300 megabits per second.
And really, I said this in the presentation, we're just getting started. This next 12, 18 months is going to be phenomenal For the growth and capacity generation and for our customers.
And that's
why we're starting now. We waited until this moment to get going in broadband because as good as Dow and Matt and John and the team are, we believe we've hit the point where Neville will be able to outrun them. And so we're going to go build a big broadband base. And there's no way that we can be successful enough to outrun this Rapidly coming on capacity that's now assured in our plan or as assured as things can be in the business world. So That's so exciting, because this capacity is rapidly expanding.
And so we're going to get going and we're not going to be able to catch this guy, which is great.
So, all
right, Good.
Next question then.
All right.
Next, let's go to Tim Horan with Oppenheimer. Tim, go ahead.
And the equipment you're deploying is spectrum flexible. Does that mean this stuff you're deploying now, can it handle the C band, can it handle CBRS And maybe the other which spans spectrum rate that might be deployed in. Also, are you leveraging it in new cloud based technologies to kind of Get some of the efficiencies out there. And then I just had
a quick follow-up for Mike. There's an
opportunity here too, Neville, to talk about the difference in our low band deployments And the fact that the radios are already out there and what they can do and how that compares to others in the space as well. But talk about the flexibility of the radios that we're deploying.
Yes, I've missed the very So I'll answer your question there, Tim. But in terms of what we're deploying today, I mean, we've been deploying state of the art radio from the get go. And a big part of the story of the efficiency and capability that we've been able to deliver is everything we've been putting out, 600 megahertz, for example, Fresh virgin spectrum for us, LTE and 5 gs capable radio out of the gate. So we're in this great position where we could future proof the network. And that's exactly what we've been doing with our 2.5 gigahertz radio too and other bands that we've been looking to deploy.
If you look at that 2.5 gig radio today, I think your question, can that support CBRS or C band? The answer is no today. And so it's going to take some time before you can create a multi band radio that can address Multiple segments of C band or the mid band spectrum base. But by the time we come around to deploying our C band, again, we purchased That latter tranche of C band, which clears at the end of 2023, there's time to go work some more radio magic. So I never count anything out.
And the opportunity for us, we always seize those opportunities to try and kill multiple birds with the one stone. And I think we've got a great track record and history of doing that. The timing of LTE and these 5 gs moves was perfect for us. And here we have our competition Stranded with legacy LTE radio across their networks, otherwise their 5 gs footprints would be way, way bigger than they are today, Non-five gs compatible radio that they have to go and upgrade at some point in time, but they're stuck doing DSS or LTE centric radio solutions. Very different story from where we've been and the benefits of the very recent deployment that we have.
And Mike, you mentioned mergers a few times On the call. And I know the cable industry is maybe talking about merging with wireless. Can you talk about what would be the most logical merger? Is it with the cable industry or would be maybe with more of an Future company or an industrial company, any thoughts would be helpful.
Thanks, Tim. I love the question. What we've demonstrated here at T Mobile is that anything's possible. I think and certainly we've demonstrated that we're creative and flexible. We all wouldn't be here together if we weren't.
But it's hard to predict. And I know you know that in asking it. I think that broadly, what you do see is that if you take the customer's lens, and I'm not making any predictions for you. I'm I'm just telling you, we're a customer driven company. If you take the customer's lens, they don't increasingly they don't view it the way we view it.
We name our industries Based on capital we all put in the ground years ago, in some cases decades ago, the cable industry, the broadband industry, the wireless industry, And increasingly, the customers don't view it that way. All communications and content of all kinds have or Are quickly leaving their linear farms and going digital. And the digital world is going mobile. So here we are with this hand of cards as the best Pure play mobile Internet company in a world where all these former separate industries are converging, at least in the customer's eyes, Into a digital world that's rapidly going mobile.
Man, that's a great hand
of cards. So our job is to be the best at that, to go see that part of the market each Share to do the things we just talked about and go get a bunch of broadband customers and delight them and serve them and bring smartphones to them and transform the industry around 5 gs, Take advantage of this, not just head start we've got, but this superior asset base to lead through the 5 gs era, which is one of the main themes of today. And then you know what, we'll see and we'll be guided by what the customer really how the customer really sees the industry and ultimately guided by what is it You know, would maximize long term shareholder value. But I love this hand of cards. You know, this business plan, this business plan is so powerful and valuable, Which I think you can see in the forecast that we shared today.
Thank you. You bet. All right. Let's see if we can fit 2 more questions in. We'll start with Walt Piecyk from Lightshed.
Hi, Walt.
What's going on, Mike? How are you doing?
Great. We're all great.
My question is going to be for Neville. Thank you for giving the Depth of spectrum for where you're at today, which I guess is 80 megahertz. It looks like the opportunity that you would have And 2.5 is far greater than that. And let's take Verizon as an example. They have 160, maybe 200 in some markets.
Let's assume they come to terms and they do the densification, they build it out. That's they will be competitive at some point if they build that stuff out. So I guess the question is, How soon after getting to this 80 to 100, do you take it to 120, 140, 160? And then how much Work has to be done with those EBS licenses. Like what is the true opportunity?
I know you guys talk about it's $160,000,000 today. We have an auction coming up. And you have,
I think the opportunity to get
that to 200. So can you talk to us about plans to do that? How much that might cost and how quickly you can get to A much higher number than even 100.
Great to see you, Walt, and thanks for the queue. We talked earlier on about Our position on white space and future 2.5 gigahertz spectrum options, we'll see. And we'll be disciplined and opportunistic. More to come. We can't say too much more than that.
To your question about How soon can we get all of that mid band spectrum, the 2.5 gigahertz lit up for 5 gs? It's really a function of customer migration. And so obviously, I want to put all of it towards 5 gs as fast as this humanly possible. And that's our march and that's our goal. We have other great mid band assets too, by the way, right?
So we did get a wealth of PCS spectrum Through the Sprint transaction on top of our strong PCS and AWS holdings. So the goal and we outlined it in the chart Is to get all of that mid band into a 5 gs space. Now, obviously, that's going to take some time. LTE is going to be here for a while. But to 2.5 gigahertz, which is really our powerhouse engine to drive this 5 gs experience, 100 megahertz channels by the end of this year, Think about where Verizon and AT and T are with what they pulled out of the C band auction.
I mean 60.
60 or 40 if they get it built.
But only will and not even on a nationwide basis, right?
They can't even do that. No, but you also said you're going to be the 1st to carry your ag, and that seems to be one of the challenges that Verizon Space, what is that possible? What is it that you're getting first to carrier ag? And what do you know about DSS's ability to get Carrier Ag. Do they need
a new semiconductor in order to get to that point? Or is it something that may happen later this year? There's Support for Carrier Ag with DSS. I'm confused as anybody made by many of those statements yesterday, Walt, from Verizon.
Carrier Ag
is going to be available as we go through the balance of this year. We already have handsets that support it right out in the market. But 2021 is the year of 5 gs carrier aggregation and the benefits from that are enormous. I mean, I was shocked yesterday Verizon couldn't seem to even Put a sentence together about 5 gs carrier aggregation, which is stunning to me and I think most folks that watch that webcast. So absolutely, carrier ag is a big part of our play.
It can extend that mid band coverage layer by up to 30%. So why wouldn't you take all of that beautiful TDD downlink spectrum and combine it with a more efficient uplink and overcome Many of the mid band coverage limitations that exist in 2.5 and they certainly exist in
Hold on. You're saying that For your 2.5, you're considering aggregating it with Uplink in
order to improve performance. Absolutely, Walt, right? I mean, why would you not take the limitation on coverage is always I'm just looking
from other engineers. You're right, it was Saad yesterday to hear that Commentary.
And well, I mean, I think more cues to come to the Verizon engineering team on that. But So clearly, are you going
to use some of your existing uplink or are you going to look maybe to
source some incremental uplink somewhere? No. We don't need
to source outside. Well, We have a lot of FDD spectrum. And think about that beautiful thing, I put it in the chart. If you combine a low band uplink With a 2.5 gigahertz mid band channel link, then you're in a sweet spot with that 30% coverage extension. So I mean that's just It's not like we're rocket scientists.
That's just good math and good physics and good engineering. And most teams that I talk to Are pursuing the same things. I actually believe Verizon is pursuing the same thing. They just didn't want to talk about it yesterday because it implies a lot more capital To upgrade all those underlying radios. I mean, that's probably the story we're in another show.
Or another special purchase perhaps. Maybe so.
What's interesting is we've already done So our 600 megahertz layer is 5 gs NR. It's all the future proof stuff. And so we can carry our ag with 600 Right away, as soon as that technology is ready to be deployed widely. And you think about one of the charts that we showed, we showed 2 charts that were really interesting. Neville showed a chart that showed How much we have that's TDD.
And when you're combining Carrier Ag with TDD, it's not so much that they can't do it, that DSS prevents When you combine the Carrier Ag capability with mostly TDD mid band spectrum, what that means is, Neville can dynamically assign me a bigger portion Of that 2.5 gigahertz mid band to the downlink, so it's not split in half anymore. He can allocate way more of it, Which makes it super valuable because the budget needed for the Uplink isn't as high and we can allocate some of the uplink to that 600 megahertz low band. The other chart that we showed that was really interesting was how our comparisons to the other guys are on sub-two 0.5 gigahertz spectrum. Why do we show that? Because the nation's macro cell grids are densified for effectively 2.5 gigahertz and less.
I mean, ours is the most dense macro network and ours, with some amount of low band for the uplink, will cover everything we need to do With the densification for 2.5 gigahertz, but we knew we would have to densify for C band outside the urbans where we bought it. The other guys are faced with that. And so we showed the differences in how much we have and will have even after all of C band clears And 2.5 gigahertz and below for a reason, because that's what this nation's macro cell grids are already densified for. And they're going to have to kind of deal with this at some point if they want a competitive product or they won't deal with it, Which would be great for capital efficiency, but that will result in a Swiss cheesy experience down the road. So it's going to be fascinating to see what happens.
I don't think we got we heard much on that yesterday.
Can I
sneak one more in for Peter?
All
right. We can just
on the just one it will be a quick one. The free cash flow comparison with Verizon, because I think Their margins are like 10 percentage points higher than you on EBITDA. So I don't think their CapEx intensity is going to be 10 percentage points higher. So is it Are you taxing
the free cash flow? How do
you just if you can go quickly through and just help us understand how you can have higher free cash flow margins than Verizon, given those Simplistic dynamics, I guess.
Yeah. Well, all I did I only have access to their 10ks too. So it's really hard
You might have the wrong EBITDA margin for
it, there
at 60%. Maybe go look at it, right? Show me where they have a wireless margin of 60%. It's hard to tell with Verizon, Because of the way they're reporting their segments. Again, nothing wrong with that.
That's the way they've structured their business. You get a company, you get us, You get Verizon, you get AT and T. So I'm looking at and the only way to do it, consolidated free cash flow generated as a percentage of consolidated Oh, consolidated.
Understood. Okay.
Absolutely. That's what you're buying as an investor, right? And that's what the amazing opportunity here is in front of us is Our ability to translate our service revenue growth, which outpaces theirs, and again, we have ambitions to continue to grow even beyond the long term, And that ability to way more efficiently than anybody else translate that into free cash flow is just it makes us it makes, I guess, us the unicorn.
Well, our investors benefit from being us being a principally pure play company. And as I said earlier, a part of the wider Telecommunications market, that's a great place to be and that we're pure play in the place where you want to be. So Jud, I know we are already at time, but usually we go to one more Question at the end, so are we going to do one more? Rapid fire.
Rick Prentiss from Raymond James,
our last question. And there you
are in your Be careful.
Be careful.
I'm not driving. Okay. I'm not driving.
Fine order,
yes.
Good afternoon, guys. Hey, thanks for doing the deep dive and squeezing me in after Walt. I want
to go back to one of
the first things from today. Famous for network. It takes time to change perception. What's baked into the plan as far as you guys getting closer to parity or going to above parity? And what would the upside case look like?
Ash, I'm so glad you asked that, because I don't feel that our prepared remarks made this clear enough. We said it, But it went by really fast. Our view is that we have today all of the fame we need to achieve this business plan.
And that's remarkable when you think about it.
The fact that we've pulled up to parity on LTE, we've pulled ahead on 5 gs, customers are still side eyeing us a little bit on network wondering If we really have caught up and with that amount of network fame, we can achieve what we just laid out. What Matt said in his remarks Is that we're going to do better than that. We're actually going to cause people to choose us just for network, principally because of our network and to recommend us Principally because they love our network once they're customers. And when that happens, it's upside. Maybe you can unpack that a little bit, Matt.
Yes, Rick. The other thing I'll talk about As you look at the whole journey we've been on with the Un carrier, all the share we've grown and all the value we've delivered, that's been done with a steady gap to the leader, A steady gap the whole time, up until last year. And in a busy marketplace where there was a lot of noise out there, We've cut that gap by 25% already. That's the journey Mike talked about in terms of where we could go with the potential in the market as we go forward. Our plan doesn't assume that to happen.
But when we achieve it, we think this year there'll be some tipping point moments as Neville rolls up the network to over 200,000,000 Pop's covered with this ultra capacity network. We're going to start to see things really change. So that's just a little bit of a taste of where we're headed and the upside we can get from driving network perception of higher.
All right. Well, you guys are awesome. You've stuck with us for over 3 and a half hours. We've told you for months we were going to do this. The government made us wait a little longer than we thought.
As I said, today wasn't about a quick check-in after a C band auction. It was about our future And why we think it's so exciting. And I hope we've conveyed to you the major themes. I'm not going to recap them right now because you've been awesome to stick with us. But I hope you sense From looking at us in the eye and seeing this team's excitement that we're on it.
We're after creating enormous value for your company and we have never been more