T-Mobile US, Inc.

Welcome to the T-Mobile third quarter 2020 earnings call. Following opening remarks, the earnings call will be open for questions via the conference line by pressing the star followed by one and via Twitter by sending a tweet to at T-Mobile IR or at Mike Sievert using cash tag TMUS. I would now like to turn the conference over to Mr. Judd Henry. Senior Vice President and Head of Investor Relations for T-Mobile U.S. Please go ahead, sir.

Thanks for joining us for T-Mobile's third quarter 2020 earnings call. With me today are Mike Sievert, our President and CEO, Neville Ray, our President of Technology, Matt Staniff, our Chief Marketing Officer, and of course, Peter Oswaldek, our CFO, as well as other members of the Senior Leadership Team. During this call, we'll make forward-looking statements that may include projections and statements about our future financial and operating results, our plans, the benefits we expect to receive from our merger with Sprint, our business operations in light of COVID-19, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially, including the risk factors set forth in our filings with the SEC. Reconciliations between GAAP and the non-GAAP results we discuss on this call can be found on the Quarterly Results section of the Investor Relations webpage. I also want to remind everyone that the results prior to the second quarter of 2020 in our earnings materials represent the historical results of standalone T-Mobile prior to our merger. I would also like to note that we are currently in a quiet period for auction 107 and will therefore be very limited in any comments that we can make related to that. With that, let me turn the call over to Mike.

Thanks, Judd. Great job. Hi, everybody. Well, for obvious reasons, hopefully you can tell by now, we are so excited to share our Q3 results with you today. Today's report shows that T-Mobile's momentum has continued to accelerate quarter after quarter as we profitably take share and outpace the competition. We surprised the skeptics and the optimists yet again with strong results across the board and increased our financial guidance across every metric for the balance of the year. I'm proud to say that this quarter we delivered the biggest subscriber growth in our history. In our history, with over 2 million total net additions, this is our 23rd consecutive quarter leading the industry. And this quarter, we delivered more than AT&T and Verizon combined. We've now surpassed 100 million total customers. And we're pulling further ahead of AT&T as the nation's number two wireless provider. We did all of that and delivered the strongest financials in our history. ARPU and ARPA went up from last quarter. Churn went down with the best year-over-year churn performance in our industry for postpaid phones when you look at estimated pro forma combined from last year. Our $7 billion of adjusted EBITDA beat expectations and by a lot. We delivered over $14 billion in service revenue, also beating estimates handily. And importantly, we also accelerated CapEx spending as Neville and team are running at full speed ahead on our synergy-driven network build. Even with all of this outsized growth and accelerated network investment, we're actually increasing guidance today on operating cash flow and free cash flow for the balance of the year. big steps forward in growth and profitability at the same time. All that is possible because these results begin to reflect the benefits of operating in a synergy-backed model, allowing us to pursue both simultaneously versus the age-old tradeoff of going after growth versus preserving margins in a given period. Our operating momentum didn't just deliver growth and profitability. It delivered amazing progress on our network. I will share more with you in a moment about all that, but the country has never seen anything like this network build, which is tracking well ahead of schedule and is clearly beginning to differentiate T-Mobile as the bona fide network leader of the 5G era. I'm just so proud of the team for being able to execute at such an incredible level in a highly competitive marketplace while simultaneously driving integration faster and better than expected to capture our merger synergies and deliver value for both shareholders and customers. We're working hard to go big and go fast, and we expect to realize over $1.2 billion of synergies in 2020, way ahead of our plan, and we're only a few months in. Breaking it down, we expect to achieve more than $600 million in network synergies, primarily from avoided site builds and early decommissioning. And at the same time, we expect to realize about $500 million from streamlined marketing efforts under one flagship brand and with expedited retail rationalization. And we're now done with the initial process to evolve our organizational structure to become one team that's organized to deliver results for the business, which is expected to enable about 100 million of back office synergies this year alone. Last quarter, I told you I was even more confident in our synergy plans than I was before the merger, and that continues to hold true. These early results in 2020 demonstrate our focus on lightning-fast execution. I'd also like to announce we plan to host an analyst day in the first quarter, shortly after we report our year-end results, where we're going to share with you more details on synergies and our outlook for the business in the next few years. And just to leave you with a little bit of a teaser, we expect synergies in 2021, including cost avoidance synergies, to be more than double what they were in 2020. So stay tuned for more. Coming back to our strong customer results for a minute, I also want to add some important context to what we delivered. First, the industry continued to feel the impact of COVID-19 in Q3 with a much slower switching environment than a year ago. As a share taker, that is a clear headwind to growth. And yet, we still led the industry in post-paid growth ads for phones and net ads. This is particularly exciting when you consider that we also essentially retired the Sprint brand for new customers at the beginning of August, which immediately shut off a certain flow of gross ads. So our Q3 results reinforce this team's execution and the growing strength of the T-Mobile brand to capture what we did in the market during what I would describe as a transition quarter. We continued to see very strong growth in postpaid other devices, including continued traction in T-Mobile for Business this quarter. This reflects how we were the most responsive carrier to the needs of school districts nationwide as they've increased availability of digital learning solutions due to the greater demand for remote learning this fall. We also saw particularly strong growth in enterprise and government, and recognition of our amazing customer service just continued to roll in. For four years in a row now, businesses of all sizes have ranked the un-carrier number one in wireless satisfaction in the annual J.D. Power U.S. Business Wireless Satisfaction Study. We think we have about an eight or nine share in this market among enterprises, large enterprises and governments. So that's a lot of share-taking potential. It's going well. And like the saying goes, we're just getting started. Next, I want to touch on our investments to expand our 5G network leadership. As you know, we are miles ahead of the competition at the dawn of the 5G era, and we're well positioned to stay ahead. There are really two things that matter when it comes to unlocking the potential of 5G. And I'll tell you now, T-Mobile is far and away the clear leader on both. The first one is coverage. Having reliable 5G service where you live, work and play. Coverage is king. We have America's largest 5G network that covers 270 million people across 1.4 million square miles. Did you know we provide more geographic coverage right now than AT&T and Verizon combined on 5G? To be more precise, our 5G coverage is double AT&T and 3.5 times Verizon's. They claim to be nationwide, but they really only cover a fraction of the geography that T-Mobile does. Verizon showed up late to the party by using dynamic spectrum sharing to avoid being the only carrier without quote nationwide 5G coverage when the iPhone 12 launched. But because they're sharing spectrum between LTE and 5G, their 5G median speeds and availability overall are the lowest of the big three, and not much better than LTE. While our 5G speeds on low-band extended-range 5G are twice as fast as LTE, thanks to our dedicated 600 MHz spectrum. Okay, the second element that really matters is the high-capacity, high-speed capabilities enabled by bigger channels of spectrum found in mid-band and high-band. This ultra-high-capacity 5G is where exciting things can happen. And that's why our 2.5GHz mid-band spectrum is the real Goldilocks band for 5G. because it has both massive capacity and it has reach measured in miles from our towers, not meters like the other guys. We now have 2.5 GHz deployed in over 400 cities and towns covering over 30 million Americans. And we're targeting more than 1,000 cities and towns covering 100 million people with our mid-band high-capacity 5G coverage by year-end. That's just two months away. With plans to have nationwide 5G on 2.5 GHz by the end of next year. This high-capacity 5G is delivering average download speeds of around 300 megabits per second and gigabit peak speeds, and that will continue to grow. For all the crowing that Verizon's done around their high-capacity solution, ultra-wideband, one analyst recently estimated that it only covers an estimated 2 million people. This aligns with the recent Ookla report, which shows that Verizon customers only connected to the ultra-wideband 5G less than 1% of the time. Said simply, our fast 5G reaches 15 times more people than Verizon's today and could reach 50, 5-0, 50 times more people by the end of this year. Our 5G network is well ahead of the competition and it just keeps getting better. Lastly, as you know, we're expanding our un-carrier strategy to leverage our leading 5G network and brand and scale to capture new market opportunities. And we're doing it without losing sight of our core focus. We are continuing to expand our home internet pilot. delivering broadband service at better prices to households across the U.S. with a special focus on small towns and rural America. We just expanded our pilot to parts of 450 cities and towns that were somewhat abandoned by AT&T, and we continue to lay the groundwork for our wider launch of 5G wireless broadband service for homes and businesses very soon. And last week, we had some exciting and long-awaited news with the nationwide launch of T-Vision. We are all about solving pain points and serving customers, and this latest Un-Carrier move showcases that yet again. Wow, there are just so many pain points in the TV arena. Customers are so tired of being forced into contracts with exploding bundles and massive unadvertised fees and huge overpriced packages just to get live news and sports. We're providing customers with the content that they want at an incredible value, which highlights the benefits of being with T-Mobile in the first place. This is all about driving our wireless business, and it serves as an important enabler for our emerging home internet business that I just talked about, as satisfied customers rely on T-Mobile more and more for their connectivity services. So what should your main takeaways be? Just make sure we do a mute check. So what should your main takeaways be from all this, you guys? This was a stellar quarter, really buttressing the thesis that so many investors have about T-Mobile. We showed we can deliver incredible growth. In fact, the highest subscriber growth in our history while simultaneously beating expectations on service revenue, EBITDA, and EPS, and increasing guidance across the board, including for cash flow. Simultaneous growth and profitability fueled by the rapid and faster than expected unlocking of synergies, a gift which we'll keep giving for years to come. Far from being distracted by the merger, we're already putting the results of our integration to work as a source of strength. We did it all while pulling away from the pack on what really matters, network and the customer experience, setting the stage for T-Mobile growth leadership in this market for the duration of the 5G era. Only one company will be positioned to provide the best network and the best value in the 5G era, and that's T-Mobile. The benefits of all of that to our stakeholders is just an exciting story that's rapidly unfolding. Okay, now I'm going to ask Peter Oswaldek to take us through the financials and our guidance. So, Peter, take it away.