Good morning, and before we begin, disclosures are available at the registration desk. For those of you I haven't met, I'm Mike Rollins. I cover communication services and infrastructure for Citi, and it's a real pleasure to welcome the T-Mobile team back to the conference. To my right, we have Chief Operating Officer Jon Freier, Chief Financial Officer Peter Osvaldik, and Chief Commercial Officer André Almeida.
Thank you.
Thank you guys for being with us today.
Thank you for having us.
Thank you for having us.
Maybe just to get started, Peter, some recent news for you. You announced you'll be retiring at the end of your contract mid next year. Just maybe share with us why now.
Sure. Let me. Before I jump in, of course, we're going to make forward-looking statements subject to risks and uncertainties, speak about non-GAAP financials, and please refer to our SEC filings for risks and the reconciliation. Sorry, I have to do that or I get in a lot of trouble. I think it's important partly to always frame up what's a motivator of individual decisions. For me, retirement goes way back to I immigrated with my parents to this country when I was six from a communist country. We definitely lived very frugally. I'm more than grateful for all the opportunities that I've had and been given.
Then for me, what was really important, and I started talking to Mike Sievert about this about three and a half years ago, is I'd like to step away from the totality of the corporate world, otherwise I'd be right here, and focus on things like family, philanthropy, start giving back as a result of all the luck that I've been given. That wasn't a very successful discussion. As you can see, Mike is a great salesman. Here I was. But we did put in place a three-year contract with the intent that it would be a retirement post then. When we knew that there was a CEO transition happening, I had worked with Srini in the context of the Board knew him well. I was super excited to have him join.
I think he's exactly the right person for this next era of growth, which is going to be even more exciting. I'm sure we'll talk about that a lot. It was I convinced my family, and we extended a year. That's been it. We've chatted a lot. Srini's tried to get another extension out of me and, if I was staying anywhere, it would definitely be right here because you can see we love the team. We actually loved working together and how we tackle problems, and that's a big part of if you're working long hours, you better like the people you're working with and be successful. That was primarily the motivator. But there were two things as I step back that we'll get into today that were very important for me.
One of those being the business had to be in a place that I saw massive opportunity for the next five and 10 years to continue the growth that we've been seeing. The second one, of course, is you've got to have the right person to come in and be the successor. I think in Jessica, we found somebody absolutely fabulous. Yes, outside of a telco, but a lot of parallels in terms of thoughtful capital allocation, the way we do it around spectrum and network builds. She's very much a proponent of the culture. I think these guys have spent a lot of time with her to make sure she meshes because of how we work together, and she brings also, just as importantly, more than just a CFO skill set.
She's been a President at GE Vernova, scaled smaller scale businesses to something more significant, was focused on AI adoption. Those are the things that I think really endeared her to. This is going to work great because we work as one team. It's a lot different than other teams in the telco space. I think Jessica's going to be fabulous. Those were the motivators for me. I know we'll get into the business side of it a little bit more. I'm not going to pop up anywhere else, I can guarantee you that, not in a full-time role. Else I'd be right here.
Well, we're glad you're here and get to take advantage of your insights along the way. So, that takes us to the wireless industry backdrop. It feels like this industry has traded one uncertainty for another, right? The question of what DISH is going to do into the industry to Starlink. How do you view the possibility of competition expanding in this category over the next five years, and how does that inform T-Mobile's operating and financial strategies? You look across all the things you do from the mobile value proposition, convergence, broadband costs, et cetera.
Yeah. I definitely acknowledge the overhangs that are sitting on the industry, but from where we're sitting, we don't see those as being real overhangs. It really hasn't changed the nature of how we're operating or what the strategy is. We'll get into DISH, obviously, and EchoStar. That's put to the side and bed, and we'll get, I'm sure, into SpaceX in a little more detail as to why we're so convinced that this really isn't a competitive threat, particularly in the wireless space. What we're continuing to focus on is what sounds really simple, but is actually uniquely differentiated. We keep repeating it because it's really just a consistent approach to deliver the best network, the product, at the best value, what you get for what you pay, and make sure you're doing it with a focus on the best customer experiences.
When you focus on those three things, which are really actually difficult to achieve, and there's very few instances where you have the best product at the best value with the highest customer NPS score, as we do in this industry. But we're leveraging those to really focus on where the growth opportunities are for T-Mobile. If you think about the core business itself, one of the things that we've been able to unlock with the leadership in 5G and the consumer perception around network quality starting to dramatically change and will be a tailwind for a long time, is what we call network seekers. We've sized this opportunity based on all of our work at about 20 million families and accounts. Sorry, business accounts. So that's accounts not lines.
Obviously way more than that in terms of lines, but 20 million accounts where their top motivator for switching and selecting a wireless provider is network quality. Of course, they want value, and they want the experience, but the top motivation is network quality. That's exactly where we're going. We're there. The consumer sentiment is catching up. We've got all the ingredients to continue this leadership across not only the balance of 5G but also accelerate it into 6G. That's going to be a tremendous tailwind for us. Of course, you've got beyond just network seekers, the continued opportunity in smaller markets from rural areas, which about 40% of the U.S. population that were now roughly last reported at about a 24% share. That includes the UScellular acquisition, but continue to see significant growth with what Jon and team are doing there. That's the core business.
We've got T-Mobile for Business, where we were always a stalking horse, kind of not taken seriously in enterprise and government. But when you suddenly bring completely differentiated network capabilities that do more than connectivity, they solve real business problems. We've got a lot of examples around, PGA is a great recent one that we did. When they suddenly they don't have to show up at courses for weeks in advance and run cabling everywhere and be stuck with, "This is the place I've got to take my camera shots from." No, I can actually have a 5G network slice quality of service that's guaranteed. Come in there, change the angle. So you've solved the problem for me. You've taken cost out of my business. That means not only will I pay you for that, but I can then give you the core connectivity side of the house.
You've got broadband, both fixed wireless, which we'll get into a little bit more today. Such a tremendous opportunity. We took this business from nothing five, six years ago to now total broadband is near 10 million subscribers, and fixed wireless being the main portion of that on a product where the network technology and the CPE technology is rapidly evolving. And now on our latest gen device, delivering download speeds over Wi-Fi near fiber like with a trajectory of the tech going like this. So, we put out guidance around 15 million 5G broadband subscribers by 2030, 3 million-4 million fiber subscribers. And that didn't include, of course, the benefit that we can get from any incremental spectrum acquisition. That's all incremental fallow capacity. So that's a fabulous continued growth avenue for the business. Then you've got what really, really excites me are two adjacencies.
You're going to continue to see tremendous growth from there. Again, differentiation is the big driver. But two fabulous growth opportunities, one being financial services. And you may ask yourself, "Well, why in the world is T-Mobile getting into financial services?" Well, the reality is we have relationships with a trusted brand with a third of Americans. We have data that can actually create differentiated and beneficial credit decisioning on our existing customers. We've proven that to ourselves over and over again. And of course, we have distribution, both in the form of physical distribution, but now on T-Life, 30 million monthly active users that go there for way more than account maintenance. It's Magenta Status, all the benefits. It's becoming a lifestyle app, and it allows you to have interaction and touchpoints with customers that trust you.
What we did in financial services, and if you think about financial services, it's actually an industry ripe for disruption. And you have great ideas from certain fintechs out there that are trying to disrupt this massive industry. Their biggest problem is customer acquisition cost. If it costs you as much as it does for a new fintech with great ideas to acquire a customer, then the economic model just won't work to create differentiated products. So what we did is to say, "Well, let's test our thesis that we can dramatically lower our CAC as a result of the relationships that we have, digital and physical, and start with a co-branded credit card." And it, while never achieving what we want because we always want more and we're never satisfied, is one of the most successful co-branded launches that Capital One has ever seen.
The thesis is proving out on CAC, and just wait, there is going to be a lot more disruption as a result of that in financial services. The last one to me that can really, really, as I think about 2030 to 2035, it is physical AI, where network leadership, including into the 6G space. Suddenly AI, if you believe that AI is going to move from where it is today into the physical realm, then networks, and particularly T-Mobile, who is so far advanced in terms of technology, are suddenly going to be at the center of value creation around physical AI. We can actually, the famous Mobile Edge Computing that never came to be from Verizon's billion-dollar guidance way back in the day is actually, in a way, a little bit different because it is going to be way more tech-oriented and advanced, going to come to fruition.
You can actually help and offload some of the processing from physical AI units onto the edge of the network with a universal clock that allows them to see, as Dr. Saw would say, space-time coherency. That means you do not have to put as much GPU processing power on the unit. It does not drain as much battery. You are suddenly creating value for the manufacturers of physical AI because you are offloading processing. The clouds cannot do it. Too much latency, too far away. They do not operate on a universal clock. It is just, to me, this is going to be a TAM expansion for the industry and us as leaders since we are multiyears ahead of the runway. That could be even bigger than the entirety of the core wireless businesses today.
There is so much opportunity ahead of us, and it is heads down continued strategic focus because we do not really actually see disruption from SpaceX. I know we will get into that a little bit later. Sorry, I get really excited about all the opportunity ahead of us. Yeah.
We are done.
No.
All right.
That's all we have.
There's a lot to unpack there. So maybe, because, and we got a lot of things to get through today. As you mentioned. So, maybe just one more quick one to bring it to the numbers. Do all these opportunities give you an opportunity to sustain mid-single digit top-line service revenue growth and then grow the EBITDA, grow the free cash flow underneath faster than that?
Yeah. Without issuing multi-year guidance here. Absolutely, and I think it also, because of other ways that we're approaching, for example, efficiencies from a customer centricity lens, means margin expansion on top of the service revenue growth.
Convergence is a big topic, and T-Mobile's had a differentiated perspective on how you're looking at convergence relative to the industry. André, I'll throw this to you. Of course, welcome feedback from all three of you, but if your competitors are more successful with these offers, what are the impacts to the industry? Does it shrink the switcher pool? Does it shrink the revenue pie? What does it mean for T-Mobile?
First, you said it, so I don't need to repeat it, but we have never subscribed to the theory of convergence as a standalone sort of market-defining force. The reality and the concrete of what's happened over the last five or six years, which is how long convergence has been available widely in the market. If you think about 85% of U.S. households have access to at least one convergent option for more than five years. Throughout that timeframe or any timeframe you want to split the numbers, we've led in mobile growth, broadband growth, service revenue growth, ARPA expansion growth, financial success. We don't subscribe to the principle, not because we have a conceptual problem against it.
It's just we don't see it, and I don't think anyone actually sees them, because if you would just think about cable as being one of the first comers into convergence, their results from both the financial and churn perspective have not gone positively, I would say, over the last five years. We just don't see those forces playing through. What we do see playing through is just the strength of our, as Peter said, our advantage in terms of technology, our investment into features around 5G, and what that has brought to us in terms of our ability to continuously grow the market. If anything, we're more excited now, just given what we've seen also others say about how they look at their network investment in the future than we've ever been before.
To answer directly to your question, do we see CLVs or ARPAs or pool? We don't see it, right? You saw our results last quarter, 277,000 net accounts, ARPA growing 2% year-on-year, 3.7% organically. I think it's the 18th quarter in a row where we've led the industry in broadband net adds. We can discuss conceptually and theories around this, but the reality of the numbers seem points and is clear that that's not happening.
Just following up on that, you mentioned the success you're having growing broadband. Curious, and you're welcome to throw in, I think the movie term for this is Easter eggs. Feel free to throw in some Easter eggs of how the fiber business is performing relative to the fixed wireless business and what you're seeing from each of those.
Yeah. We're still far away from Easter. Let's start with, I would say the first part of it is the way we look at the business, right? We look at broadband overall. We actually don't have this logic of how does fiber perform against FWA because we see them as complementary products and complementary strategies within the market. We have, and we've talked about it extensively, a close to nationwide coverage of FWA and have invested in fiber in areas where we believe that the shareholder returns are significant and are outsized. Two, FWA, and Peter has mentioned it, we were always very hopeful and we were always very, I think, strategically convinced that it was a great product and would be a market-changing force, unlike convergence. But if anything, we've been positively surprised with how fast the technology has evolved from mobile networks being able to provide broadband services.
Because that wasn't something that both from a radio access network and from a device perspective, that wasn't something that was in focus either of the large RAN manufacturers or the large CPE manufacturers five years ago. I think we, just given our size, our scale, but also what happened afterwards with players like Jio stepping in also in FWA, this is an industry that has developed significantly, and it has evolved leaps and bounds faster than what you see in DOCSIS, even what you see in fiber. Now, obviously, fiber being optical cables are from a data transmission perspective, it will always be the best technology. But Peter mentioned a couple of numbers that I think are very interesting.
Number one, in our latest generation routers and with the advancements we've made in our mobile network, today from a Wi-Fi experience perspective, in our latest gen routers, the average download speeds of FWA are very close to fiber. Which means that from a lived experience, but from a customer perspective, FWA is now one of the fastest broadband products in the market, right? Think about it. five years ago when we started to launch the product, there was always the comment and the concern that this was very focused on the low-end segment of the market, right? And therefore, it would have a natural limit. As the technology has evolved, this has become a product that can serve any family in America. And therefore, it's really, really exciting if you think about what's still ahead of us, right?
As the product keeps getting better and better, if you think about it is a bit counterintuitive. We have more customers in the network, and the product is better, performs better on average than it did a year ago and two years ago and three years ago. That is, I think, one piece for us that is very important. We are obviously extremely excited about the future of 5G broadband and FWA. The second thing, you mentioned fiber, right? As I said, fiber for us is a complementary product, and one of the reasons why it is complementary is the way we look at FWA is as a fallow capacity model. That means that specifically when we add a fiber customer in a specific area, we are actually freeing fallow capacity in FWA to sell to other customers.
It actually is really complementary. We are not competing these two technologies. Whenever we sell a fiber customer, that means we can sell FWA. The radius of sales in wireless are usually larger than the sales of fiber, so we are actually freeing capacity elsewhere. Now, we have always been very clear on how we look at fiber, right? We look at fiber not as a strategic necessity of hitting a certain number of homes or a certain number of customers. It is an opportunity to generate outsized financial growth and outsized returns for our shareholders. Your point is how do we look at these? When there are opportunities, not just to acquire companies, but also the way we look at our own expansion within the assets we already have, we look at it, does it generate returns for our shareholders?
Because we are not bound or held by we need to hit a certain number of homes. We have said sort of what our targets are, but again, those are subject to being able to deliver financial returns.
One more on this. The team expressed its interest in the upper C-band. On the 2Q earnings call. When you look at the opportunities from that, is it really about turbocharging fixed wireless, or is it about something more than that?
I think we can. Do you want to start, Peter?
The thesis around fixed wireless continues to be, as André said, a fallow capacity model. What we look at in terms of any sort of spectrum acquisition, third party or an upcoming spectrum auction, be it C-band 2.0 or 2.7, is what does it do for the mobile business? Yes, there's a little bit of a catch-22 in your logic of, yeah, but if you have more fallow capacity, you get more 5G broadband, and that's true, and that's part of the thought process, but we are in no place buying spectrum or rolling out network CapEx simply for the purpose of fixed wireless. It is a fallow capacity model. That's what makes it so marginally attractive.
Jon, coming over to you, maybe we could talk about the latest rate plan updates that you've implemented, front book, back book, and the significant decision to extend the EIP plans to three years.
Yeah.
What that means for you.
Absolutely. We did take a series of actions this summer around really kind of simplifying a long tail of legacy plans. We took these plans and updated them and moved people from 3G and 4G-like plans to today's modern and contemporary 5G plan. We went through that effort, kind of announced it at the end of June, started rolling that out to customers throughout July, a little bit of August. All of that has gone exactly how we thought it would go. There was some temporary churn that's associated with that, as Peter mentioned in the Q2 earnings results, and that's reflected in the 250,000 overall postpaid account net additions for Q3. All of that's gone incredibly well. What we try to do on these things is give a more for more.
We want to give customers even more value, even more capability, because what you're enjoying on your 5G device today is certainly different than what you enjoyed on a 3G or 4G device years and decades ago. That's number one. Number two, it's easier for our frontline to serve customers, than if you're somebody that's starting with T-Mobile either in retail or in customer care and I'm having to learn 15 years of rate plans that change every two to three years, that's really difficult to serve customers in that way, and it also contributes to how we digitalize, moving everything to a T-Life centric environment that we can digitalize, and digitalization is foundational to simplification in the rate plan right up. That's gone extremely well. We've worked with our customers to work them through that and that's gone as we planned.
On EIP 36, or we launched some new Experience 2.0 plans that basically birthed 36-month financing. One of the things that we try to do as a company is really listen to customers and help them in every way that we can, and pay attention to what they need as the market changes. These devices today that Apple, Samsung, Google are making are incredible devices. They last longer. Customers are enjoying them longer. You can see with our upgrade rate, we have a little bit less of an upgrade rate than our competitors. We think that is attributed to the overall network performance associated with those devices. What we wanted to do is to be able to have a 36-month agreement, lowers the monthly payment for customers on EIP across 36 months versus 24 months. The big innovation is bringing EIP Flex to the market.
Because when you really think about some of the pain points that are out there, prime families, near-prime families, families of four switching to T-Mobile, you are still out hundreds of dollars out of pocket between sales taxes, between what we call device connection charges. All those things are big dollars out of pocket. It is a pain point. What we try to do is take out every morsel of friction in the switching process, and that was a huge piece of friction for prime, near-prime families. We addressed that. We launched that at the beginning of August. That has gone incredibly well. Our teams are really excited about that. Customers are loving it, and that is just the latest innovation that we have brought to the marketplace.
We are about 3 hours and 45 minutes away from the next smartphone cycle. Who is counting?
Exactly. This little company in Cupertino. Is that where your. Yeah.
Yeah, there's some company out there that. Curious from your perspective, what are you seeing in terms of more broadly in the industry, upgrades, device replacement? Is this a source for churn coming down further for you in the industry? Then as you think about it near term, how does that relate to then digesting maybe some of that churn push from the recalibration of the rate plans?
Yeah. It could be. We will have to see. We will see what Apple announces. We are not entirely sure. We do not know until they announce. We have our suspicions, but we will all find out together in 3 hours and 45 minutes on what they are announcing. A couple of things. One, if there's a lower overall switching and upgrade environment, we benefit from that. We have a playbook for that, and we can benefit from that. But if there's a higher switching environment, we benefit from that too. We like more jump balls and more opportunities for switching moments. So where that market goes, we will have to see, and how much it might change depending on what Apple announces. But we are prepared to win in any environment that comes about.
Earlier in the year, the management team made a specific point at your analyst meeting 4Q earnings that you wanted a more disciplined environment around device subsidies. What are you seeing competitively, and how do you feel that T-Mobile is participating in this?
Maybe I can lead off. We are very comfortable with our subsidy and our investment today. Whether or not prices change, that is for others to decide on the cost of goods. Our subsidy investment, we do not see that changing. We are very, very comfortable with our promotional constructs based on rate plan, based on trade-in, and the amount of subsidy that we are invested in the market. We do not see that really changing at all. How that is working competitively, the competitive environment has been remarkably consistent. This is always the second half is a little more competitive as you get into this new Apple product introduction. As you get into Black Friday and the holiday season, the second half is always a little more competitive than the first half.
We do not see anything that is really changing that is given us any anxiety, that is for sure. It is a great environment. We are winning. We are driving exactly what we said we were going to drive, and we feel great about the overall environment.
Yeah, you will always see, of course, at the announcement date exciting promotions for a small period of time. It is a little bit hard to discern because you have got to really look at, well, what are trade tiers and requirements to really understand the net subsidy. Net net, one of the things we talked about in both Q1 and Q2 is that we are seeing really favorable ARPA in versus ARPA out trends as well as CLV trends. That is the health of the business that we want to do. I think strategically we are going to look back in five years, and there is going to be a really interesting period as you reexamine it. You have got Verizon who has decided their network, the product that they sell is not important to differentiate. Their CEO is saying that.
You have got AT&T who has diverted CapEx from the wireless network into fiber, and their wireless network quality with third party data is going down. You have got Verizon who has decided to defeature and basically down market their main brand with simplicity in the hope of just, which by the way, has a lot of complexity. But it has taken out all the features, all the value out of there, commoditized their headline brand in the hopes of getting some more lines. I bet you it is going to work. I bet you in Q3 they will deliver more lines and maybe even less account losses, maybe some account nets. Who knows? But what it does not translate to is value creation. Service revenue, EBITDA, CLVs, ARPAs.
That is the important thing that we are focused on is it is not just one headline KPI and let us devalue my whole brand. Of course, we have simplicity type offers or really smart, thoughtful segmented offers sometimes through certain national retailers like Walmart. We're allowed to do that because we have the best product now and the best value. That's a long run trend I'd look at. But if your two major competitors are deciding that their product doesn't matter, that's a fabulous place to be as we look out mid and long term.
Maybe just extending this question on future potential competition. You referenced earlier Starlink and LEOs. On the one hand, you've got your direct-to-device partnership with Starlink. On the other hand, there's the question of whether they're going to become a direct competitor to you, whether they do an MVNO build, buy. What is the risk from that? How are you looking at that, and do you have any interest in giving Starlink an MVNO?
Yeah. Well, the answer to that is no for all the reasons that we've stated before. I think one of the most fascinating things and kind of what's showing you what's really happening there is imagine if we as a management team over the course of two months changed the strategy to how we're going to roll out a wireless network like a dozen times. You would laugh us out of the room and kick me out of the management team appropriately. I mean, when you look back, it was, well, direct-to-cell is going to take care of all terrestrial networks. It's gone. We went out there and helped, since we co-developed this with them, understand the physics. The physics just don't allow direct-to-cell to be a substitute product, right? You're 350 km up.
As we all know in the wireless space, signal strength diminishes with the square of distance, so it's not linear, it's the square of distance. So when you're 350 km away, the allowable power limits and what this device can actually do from an upload perspective means by the time you've gotten to here, you have so little signal strength left, or what we call link budget. You can't get through buildings, walls. You can't even get through a Tesla windscreen, right? So you can have a million satellites up there with all the spectrum in the world, you can't break the fundamental laws of physics. As soon as we put that out there, now it's onto the next thing.
Well, we're going to have an MVNO, and I think we certainly put out our rationale and how we think about MVNO partnerships and how this doesn't fit the nature of where we would want an MVNO because we already have the ability to compete for these customers tremendously well ourselves. Then it was going to be a backdoor MVNO by buying some other company, who I think we're all very clear, there are change of control provisions. That's not a path to do it. Then it was going to be through FCC-required roaming. Well, that doesn't work because that's not on data, which yeah, kind of hard to have a network without data if you only have voice.
The latest one, which I think everybody's in the know kind of laughing at and has betrayed the fact that there is no strategy there is the femtocell strategy, where we estimate you'd need probably over 1 billion femtocells to have the equivalent outdoor coverage with all the interference problems, backhaul problems. I mean, it's just not fathomable. Then you had one more in there, kind of losing track of all the different things that they've said is, "We're going to build our own network." Well, you have no path to the right level of spectrum assets. You need the layer cake, the low band, the mid band. You've got to deploy them in a way that we've done, and you've got to lead from a tech perspective. I would also just, I stepped back and said, "Well, hold on.
On your earnings call, you're saying I have AI data centers with a payback of a year to a year and a half, and I'm going to spend $100 billion+ on building a fourth non-competitive network? Either I'm the world's worst capital allocator or this isn't really going to happen. I'm going to focus over here." It's not a competitive threat from a wireless perspective at all. On the broadband side, it's a different answer. I think it solves some of these challenges because you're different spectral assets, external powered antennas, and what we're I think going to continue to see there is them being successful going from the deep rural into suburban fringe, while simultaneously we're attacking from urban into more dense and mid-size suburban.
At the center of it all is cable with 60 million homes that I wouldn't want to be sitting at as a management team or an investor in.
Very helpful. We've got a few more questions. We're going to try to do a little bit of a speed round to fit a few in.
Right.
All right. First one, are you seeing any evidence that account churn can start to subside along with user churn as you get to this anniversary of the broadband acquisition?
Yeah, remember, account churn is really what's happening there is a math equation at the moment in time. We gave you color around Q2 postpaid phone churn being down 5 basis points year-over-year to 85 basis points. Fabulous results there. What's happening with account churn is you're seeing a few things. One, more broadband-only accounts as we're growing that business. Earlier in life broadband accounts, so obviously early life subscribers tend to churn more. You're going to see just structurally, broadband has a higher churn rate in the U.S. than wireless. It's simply a math equation. There's nothing to it. I'd expect to continue to see these trends move on.
We'll fit in a couple more. Jon, bold goal, 75% reduction of inbound customer care call target, leveraging AI, the T-Life app. How's that going?
It's going great. We laid out these ambitious targets at our Capital Markets Day in September of 2024 that we wanted to reduce 75% of our inbound customer care calls thanks to all the advantages of AI. We have reduced 55% of that 75%. We're well on track. Customers are happier than ever. Record-setting NPS scores and I just couldn't be more pleased with how this is going.
UScellular integration?
UScellular.
Notable.
UScellular's on track. The integration's on track. We closed that transaction in August of last year. The year two synergies was about $1.2 billion, $950 million of OpEx, $250 million of CapEx. All of that's well on track against a large, very ambitious set of targets. We couldn't feel more great about how that's going.
Capital allocation, any room to lean further into, whether it's the buybacks, you've talked about the possibility of spectrum investments or incremental network CapEx to drive your advantage?
Yeah. I don't see a step change in network CapEx. We're going to be on a natural cycle for 6G when it comes towards the end of the decade. So we're fabulous there. We obviously have the best positioned balance sheet. We've done a lot to get ourselves there. We've got growing core EBITDA, creates capacity. We're going to continue to follow the same disciplined capital allocation framework that we always have, whether that's spectrum assets or anything else. No real change there in philosophy. It's the one that's created all of this value. It's the one I think that's going to continue to create value.
Last question, and maybe love to get a perspective from each of you. The thing that you're most excited about with T-Mobile, and the one thing that you think is often missed by the market.
I can start. What I'm excited around is my 15-minute diatribe. All the growth opportunities. We're coming to a moment in time where the growth opportunities in front of us are much greater than what we've even delivered to date, and simultaneously, our two major competitors are de-emphasizing their product. It sets you up for phenomenal growth runway. I think what investors miss from that perspective most of the time is, put these overhangs aside, is what we're delivering in terms of not only margin growth and margin expansion, but also free cash flow delivery in the margin. I think they don't quite see yet because we have to prove it to them with execution of what these opportunities are and beyond just core wireless and how they're going to manifest themselves into great shareholder returns.
I've been a part of this company for 32 years, so I started in 1994. So between T-Mobile, VoiceStream, Western Wireless, I have never been more excited about our growth prospects than where we are right now. If you think about what Peter just said, everything that we've achieved over the last 15 years in particular has come from a position of extraordinary weakness. Just think about what we can achieve from a position of extraordinary strength. So long as we're hungry, so long as we're still fighting and that same scrappy fighting spirit that we had when we're trying to turn around the company and scale the company, that is still here in spades at this company, and I couldn't be more excited about the prospects over the next five years.
I think all of what Jon and Peter said. I just maybe double-click on a couple of topics. Number one, I think we stand in a position, and it's difficult for people to factor that into their numbers and the way they look at us because it's so rarely happened in the industry, that the company has the best network and the best value. So you have the best product and the best value. That's things that usually don't happen, not just in telco, they just don't happen, right? And we've fortunately been able, because of our heritage, been able to put ourselves in this position due to our heritage being value and the transaction with Sprint and the extraordinary execution of that merger giving us by far the best network in America. And I think that's very difficult to factor in.
It's both what leaves us extremely excited because we see a path not just to lead in 5G, which we have since the beginning. Peter mentioned, just because of the natural cycle of capital, we've invested early into the 2020s. That means our natural replacement cycle will be at the end of the decade, beginning of 2030s. That's exactly when everyone expects 6G to come. So we will be, just by the nature of where we are, we are very certain, very convinced, very motivated to not just lead in 5G, but lead in 6G. So that will make us the first time that one company leads not one G, but two Gs in a row. And perception lags reality, so our perception of network leadership is increasing significantly, but it's not yet a universal truth. We believe it's going to become a universal truth over the coming years.
Thank you so much.
Thanks.
Appreciate all of you.
Thank you.
Thank you guys for h aving us.