T-Mobile (NASDAQ:TMUS) is the fastest-growing postpaid wireless carrier in the United States. That said, it still has a long way to go to catch up to the massive subscriber bases of AT&T (NYSE:T) and Verizon (NYSE:VZ).
But T-Mobile CFO Braxton Carter said there are two major growth drivers for the company that could allow it to continue adding millions of new subscribers to its platform for years to come. First, it's still expanding its distribution footprint to catch up to its nationwide network coverage. Second, its improved network coverage will allow it to penetrate the enterprise market.
Opening stores and getting customers in the doors
Carter says the company's current store footprint only reaches about 230 million people in the United States. Meanwhile, it expects its network to cover 320 million people by the end of the year.
T-Mobile is quickly expanding the number of stores it's opening. It expects to open an additional 1,000 stores by mid-year, with 500 more by the end of the year. Overall, Carter expects the stores to reach an additional 30 million to 40 million people.
Importantly, T-Mobile will be able to leverage its nationwide advertising. It already has brand recognition in these areas; it just doesn't have stores to serve the customer base. As it opens stores, it could quickly ramp up its share of the market.
What's more, the competition in these new areas is less intense than in the metro areas where T-Mobile currently plays. Instead of the four or more competitors traditionally present in metro areas, in these more rural markets Carter says there are only two or three. That means it'll be easier for T-Mobile to take share.
In established metro areas, T-Mobile takes as much as 30% of the market. Carter sees no reason T-Mobile can't eventually reach those levels nationwide. But in a five-plus-year time horizon, he expects "substantial inroads into the teens" in terms of market share. That implies an addition of about 5 million customers over the next five years.
More than likely, many of those customers will come from AT&T and Verizon. The two have had leading nationwide network coverage for years. But each has been bleeding subscribers to T-Mobile for awhile, and its store footprint expansion could exacerbate the problem.
Entering the enterprise market
There are over 100 million enterprise phone customers in the United States, according to Carter. T-Mobile has less than 5% of those customers. "Given where our network is today, there's no reason we can't have our fair share of that marketplace," he said.
T-Mobile plans to bring the same Un-carrier initiatives that helped it succeed in its retail business to the enterprise market. Things such as including text and data in over 150 countries with its plans or more transparent pricing ought to appeal to business customers as much as they do to retail customers.
AT&T's business-solutions segment continues to add new customers, mostly at the cost of its own retail customers. The company's enterprise segment now boasts over 82 million connections and over 50 million postpaid phone subscribers. That makes it likely the largest enterprise service provider in the country, putting a target on its back for T-Mobile.
The enterprise opportunity is massive for T-Mobile. It ought to be able to grow its share of the market to close to its current market share for non-enterprise, which stands as high as 30% in some metro areas. Even if it just reaches the mid-teens, that's another 10 million or so subscribers who could join T-Mobile over the next few years.
Combine enterprise with its expanding footprint as well as its continued execution in the territories it's already doing well in, and T-Mobile has a lot of subscriber growth left in it over the next few years.