T-Mobile Activating 2.5 GHz Licenses Bought in 2022 Auction

T-Mobile will light up “over the next few days” part of the 2.5 GHz spectrum it won in the 2022 auction after the FCC said the licenses are being released (see 2402270084). Turning on the 2.5 GHz spectrum followed the carrier's multiyear push and required an act of Congress (see 2312190089). T-Mobile plans to auction 800 MHz licenses committed to Dish Wireless after cash-constrained EchoStar decided not to buy the spectrum (see 2403010041), T-Mobile executives said Tuesday at a financial conference.

“Thanks to years of planning, T-Mobile is ready to put this spectrum to use right now for millions of our customers, delivering game-changing Ultra Capacity 5G to more people and increasing speed and performance for others,” CEO Mike Sievert said of the 2.5 GHz spectrum. T-Mobile noted it bought more than 7,000 county-sized licenses covering in excess of 80 million people.

T-Mobile will initially activate spectrum covering nearly 60 million POPs over some 300,000 square miles “and the rest will be deployed as new towers are built out.” The carrier said it won licenses “in nearly EVERY county across the U.S. -- so even if you aren’t one of the 80 million+ people living in an area with this new spectrum, there’s a good chance you’ll get a 5G boost where you travel, work or play.”

Dish has until April 1 to commit to buying the 800 MHz licenses and still has time to decide to buy the spectrum, Peter Osvaldik, T-Mobile chief financial officer, said at the Morgan Stanley conference. “What we're obligated to do, should they not exercise that option, is to take the spectrum to auction with a floor price of just under $3.6 billion,” he said. The option to buy licenses was part of a series of agreements tied to T-Mobile’s acquisition of Sprint, aimed at helping Dish emerge as the fourth national wireless provider, essentially replacing Sprint (see 2308170065). EchoStar also said in a recent filing at the SEC it doesn't plan to buy the licenses.

T-Mobile still expects 400,000 adds Q1 to its fixed wireless access Home Internet offering, Osvaldik said.

One of the interesting things about FWA is “it's truly deployed nationally,” said Michael Katz, T-Mobile president-marketing, strategy and products. “You see examples of it literally in every corner of the country, in every geography of the country -- big cities, small towns,” he said. About half the adds are coming from the top 100 markets.

Katz said the carrier's average Home Internet customer uses 400-500 GBs of data monthly. T-Mobile relies on dynamic modeling to avoid capacity issues, he said. “In a neighborhood, we may approve two people,” he said. “As soon as you take the product, your neighbor would no longer get approved.”

T-Mobile expects customer growth to moderate “into 2024 and beyond,” with adds besting pre-COVID-19 levels, Osvaldik said. “There's still a lot of industry dynamics happening,” including prepaid customers converting to postpaid, he said.

New Street’s Jonathan Chaplin said Wednesday the FWA guidance from T-Mobile was “a little worse than what most investors assumed.” Chaplin noted adds came in at 541,000 in Q4. Verizon has guided to FWA adds of 350,000-400,000 “consistent with the second half of last year” and “investors have mostly taken this guidance at face value,” he said: “AT&T is the wild card. We suspect adds will accelerate from 4Q23, but we have no idea how much.”