T-Mobile saw $1.3 billion in 2020 post-merger run rate synergies; guiding up to $3 billion in 2021
T-Mobile US this week touted 2020 as it’s “best year ever” as CEO Mike Sievert put it, and laid out an ambitious plan to extend its mid-band 5G coverage to 200 million people by year-end, up from approximately 106 million covered today.
“From network to synergies to operations and new investment areas, T-Mobile showed again this quarter that we’re positioned to win,” Sievert said according to a transcript from The Motley Fool. “The thesis for our company has never been more clear. We’re very rapidly leaping ahead of the pack on network, with the best assets, the best team, and the most loved brand in our space. And if we play our cards right, T-Mobile is positioned to stay ahead in the 5G race for years to come.”
On the network side, T-Mo has nationwide coverage using its standalone 600 MHz 5G network and is steadily deploying the 2.5 GHz spectrum that came along with the Sprint merger. Mid-band coverage is currently at 106 million people according to Vice President of Technology Neville Ray.
Ray said the new goal is to up coverage to 200 million people by the end of 2021. “We built an incredible network machine in 2020,” he said. “And we have to build and upgrade a lot more sites in ’21 to get to that 200 million covered people with the Ultra Capacity [2.5 GHz network]. So we have the machine, we have the resources, the supply chain, the commitments and we have the processes. And so this machine is moving at real pace.”
In terms of the $1.3 billion in synergies realized in 2020, Sievert noted that figure is above earlier guidance and otherwise ahead of plan. He attributed it to migration of Sprint customer to the T-Mobile network. Specifically, 4 million Sprint subs have come onto the T-Mobile network. Sievert maintained guidance that 2021 synergies would be double 2020 reporting, in the $2.7 billion to $3 billion range. “These synergies allow us to make smart investments in the future, and that starts with the network.”
Chief Financial Officer Peter Osvaldik, commenting further on realized synergies, attributed it primarily to “avoided new site builds and early decommissioning.” The other big bucket, around $600 million, came from “streamlined marketing efforts…, expedited retail rationalization,” and organizational changes.