T-Mobile US, Inc.

Opening remarks. The earnings call will be open for questions via the conference line by pressing star followed by one and via Twitter by sending a tweet to at T-Mobile IR or at Mike Sievert using the hashtag TMUS. Today's call is being recorded. I'd now like to turn the conference over to Mr. Judd Henry, Senior Vice President and Head of Investor Relations for T-Mobile US. Please go ahead, sir.

Good morning, everyone. Welcome to the T-Mobile first quarter 2022 earnings call. Joining me on the call today are Mike Sievert, our president and CEO, Peter Oswaldic, our CFO, as well as other members of the senior leadership team. During the call, we will 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. Our earnings release, investor factbook, and other materials that accompany our Q1 results, as well as reconciliations between our GAAP and non-GAAP disclosures, can be found on the quarterly results section of the Investor Relations website. With that, let me turn the call over to Mike.

Okay, thanks, Judd. Hi, everybody. Well, what an exciting time right now at T-Mobile. We have a lot to cover, but we'll keep our comments brief this time so that we can get right to your questions. We just celebrated the two-year anniversary of this merger. We delivered another exciting outperformance in Q1 to kick off 2022. We're in the home stretch of our accelerated integration, and we're raising our guidance for the year across the board based on the momentum that we see in our business. It's hard to believe that it's already been two years since we closed our merger with Sprint. I'm incredibly proud of what we've accomplished as we have consistently exceeded not only our own targets, but also Wall Street's expectations. One of the cornerstones of our merger advocacy was that we would lead the U.S. into the 5G era. And I don't think very many people anticipated what we've already achieved in just two years. We now cover 315 million people with 5G. That's 95% of all Americans. And our 5G geographic coverage with dedicated low-band spectrum is more than Verizon and AT&T have combined. which both, by the way, are still largely sharing spectrum with their LTE networks. Perhaps our greatest impact, though, was to awaken the industry to the transformational performance of mid-band spectrum for ultra-capacity 5G. We already cover 225 million Americans, and nearly 85% of all T-Mobile customers with these game-changing experiences. We caused others to pivot from an apparent willingness to leave fast 5G to a select few customers within arm's reach of a millimeter wave site, and now we see them greatly increasing their investments in mid-band spectrum and deployment. They are trying to chase us, but only to realize they will be and are years behind T-Mobile. Pre-merger, we laid out a plan to realize massive synergies from our scale and efficiencies, only to raise our run rate synergy expectations by 25% after closing the merger. We're delivering these synergies bigger and faster than expected to the benefit of our shareholders. And synergies are ramping up even further this year as we're approaching some of our biggest milestones, including moving the remaining customers off the Sprint network in the next couple of months. just over two years from merger close. And we're also on track to upgrade or decommission substantially all of the Sprint sites this year, less than three years from close. We've been selectively decommissioning sites since the merger close, and as of Q1, we've decommissioned roughly one-third of the 35,000 targeted sites, with the big push coming in the second half of this year. Remarkable execution by the team as we pulled these milestones forward by more than a year. As the un-carrier, we're committed to use our 5G leadership and synergies for the good of consumers and businesses, eliminating the biggest pain point in this industry, where customers were forced to make trade-offs between network quality and value. As the only national wireless provider with a clearly articulated goal and differentiated growth strategy, we have led the industry in post-paid customer and service revenue growth in the two years since the merger closed. In that time, we've delivered roughly 2 million post-paid account net ads and 11.5 million post-paid net ads, including an industry-best 5.3 million post-paid phone net ads. We were also the only national wireless operator to deliver double-digit growth in both service revenue and core adjusted EBITDA over that period. And we accomplished this while building the foundation for sustainable growth platforms across enterprise and government, smaller markets and rural areas, prime consumers in the largest 100 markets, and bringing real competition to broadband. we've unlocked new experiences for consumers, like the first truly unlimited 5G plan with Magenta Max. And we've established T-Mobile as the fastest-growing broadband provider, bringing a better product and value proposition to over 40 million potential households and already serving over 1 million customers, just a year after our commercial launch. We are carrying this momentum right into 2022, delivering another industry-leading quarter of both customer and financial growth in Q1 built on the incredible momentum of our Magenta brand. We added 348,000 postpaid account net ads, our highest Q1 ever, and the highest reported in the industry yet again. As I've said before, this measure of our total billing relationships is the best barometer that we're winning the switching decisions in this industry. While others appear to be leaning into adding lines to their base, we are focused on growing the number of customer relationships and then deepening them over time across our products and services. and we delivered our highest Q1 postpaid net ads in eight years, with an industry-best 1.3 million. That's more postpaid nets than AT&T and Verizon combined. This includes 589,000 postpaid phone net ads. Our postpaid phone churn dropped by a whopping... 17 basis points from Q4 to just 0.93. The industry invests improvement both year over year and sequentially. We were the only national wireless operator to improve churn year over year as our competitors saw their churn increase. This integration-driven churn improvement really matters because our phone gross ads were the highest in the industry yet again in Q1. In fact, if the Sprint churn was the same as the Magenta churn, post-paid phone net ads in Q1 would have been closer to 900,000. And I couldn't be more excited about high-speed Internet, where we had 338,000 net ads and I expect will be the fastest-growing broadband provider in the industry for the second consecutive quarter. Demand just continues to build, from dissatisfied suburban cable customers to underserved customers in smaller markets and rural areas. Our net promoter scores continued to improve quarter over quarter and are now more than three times the average NPS scores for cable customers. The best part is we're just getting started bringing the un-carrier to broadband, so stay tuned for what we have in store next. Magenta Max continues to see great adoption from customers, which is helping to drive strong ARPU and ARPA trends, and we still have lots of room for further growth. With the trends that we're seeing, we now expect post-paid phone ARPU to be up roughly 1% in 2022. In addition, we continue to see our prime mix of credit apps increase on a year-over-year basis each quarter, showing that our network and our brand are consistently attracting customers. the industry's best customers. We continue to see good momentum in smaller markets and rural areas as we expand the reach of our distribution and network. The team is executing our precision playbook here to a T, coordinating the network and distribution build-outs to unlock new experiences community by community. We ended 2021 effectively competing in about 30% of households in these markets and will continue to expand to more than half of households in smaller markets by the end of this year. Our new accounts from smaller markets in rural areas grew 40% year-over-year in Q1, and these markets are also a great example of where our high-speed Internet is helping to open doors for us to drive mobile penetration. T-Mobile for Business continues to build mindshare with enterprise and government customers on the strength of our network and our ever-expanding suite of products and services. We've built strong momentum across major verticals now, such as the financial sector, where we continue to expand the list of large multinational banks relying on T-Mobile for secure and compliant connectivity for their hybrid mobile workforce. Our network performance has also been a catalyst for over 30 first responder agencies to join T-Mobile just in Q1. We recently introduced the first 5G connected cars in America with Magenta Drive for BMW. And we continue to be on the leading edge of advanced 5G network solutions like mobile edge compute and private networks. I'm excited about building on our momentum with businesses in 2022 with our significant and durable 5G network advantage. Okay, let me wrap up. It's been a remarkable run in the first two years since our merger. We've unlocked better experiences for consumers and businesses by offering the best value and the promise of the best network for the first time in this industry's history. We've unlocked shareholder value through industry-leading growth in postpaid customers and service revenues while delivering merger synergies bigger and faster than originally planned. We're off to a great start in 2022 with a beat and raise quarter that not only led this industry in growth of postpaid customers, but also service revenue, core adjusted EBITDA, and cash flows, and positioned us to raise our guidance across the board just one quarter into the year. Our team is excited to carry all this momentum through the rest of 22, and I'll let Peter take you through our key financial highlights from Q1 and our increased guidance today.