T-Mobile (NASDAQ:TMUS) finished the year triumphantly with $8.15 billion in fourth quarter revenue, a 19.4% increase year-over-year. Better yet, the company managed to turn a profit of $101 million.
The numbers show that despite generally charging less than rivals AT&T (NYSE:T) and Verizon (NYSE:VZ), and investing heavily in improving its network, the "Un-carrier" strategy has been paying off. Never hesitant to celebrate success, T-Mobile CEO trumpeted the results on Twitter.
Talked about killing it in 2014-- John Legere (@JohnLegere) February 20, 2015
Did some interviews talking about killing it in 2014
Told some employees how they killed it
Today killed it
Legere is boasting, but he is not wrong -- T-Mobile had had an impressive year. The outspoken leader used the year-end conference call to do more than boast, however, as he and the company leadership team laid out the next steps for the wireless upstart.
Legere wishes Sprint success
The CEO made it a goal to pass Sprint (NYSE:S) to become the third largest wireless carrier in 2014. That has nearly happened, as T-Mobile has just over 55 million total customers, while Sprint has nearly 56 million. Current trends would suggest that T-Mobile passes its rival at some point during the fourth quarter.
Legere, of course, wants that, but he also sees Sprint as a sort of brother-in-arms against AT&T and Verizon.
"We're rooting for Sprint," said Legere during the conference call, specifically speaking about the battle with Verizon and AT&T. "We need Sprint to take a few shots at the big guys and cause a little churn. And churn is good for us."
It is about Un-carrier, not price
While T-Mobile is generally the lowest priced of the four major wireless carriers, Legere credits his company's success to its overall Un-carrier strategy.
"2014 was a record year of growth, and T-Mobile continues to be the fastest growing wireless company in America, and we really blew away all of the competition," Legere said. "Our 18.3 million net additions clearly demonstrates the power of the Un-carrier approach."
In addition to pricing, Un-carrier means not having contracts, eliminating device subsidies, getting rid of overages, and generally being straightforward with customers. In 2014, the company added a number of new initiatives to the plan, including offering music streaming that does not count against high-speed data limits and allowing unused high-speed data to roll over.
"Our data is crystal clear that people are not choosing T-Mobile because of price," said the new COO Mike Sievert. "As John said, they are choosing it because of the overall value proposition."
Spectrum is going to be a fight
Legere said he was happy with how his company did in the recent auction for wireless broadband spectrum. He said his company used a disciplined approach in spending about $1.8 billion on mostly mid-band spectrum, but he was not at all kind to AT&T or Verizon.
"For sure, the unrestrained bidding by the largest two carriers in the recent auction confirms the need for a robust spectrum reserve in the upcoming auction for low-band spectrum," he said.
This reiterates a call he made in a press release prior to the earnings call. In that release, Legere charged that AT&T and Verizon were willing to buy up spectrum to "strangle competition and buy out the future of American wireless." He was also critical of DISH Network (though he did not mention the company by name), which has been buying spectrum and not using it.
He called on the FCC to do three things with the upcoming auction:
- Reject any efforts by AT&T and Verizon to delay the auction.
- Promote competition by reserving 40 MHz or at least half of the available spectrum in the next auction for sale to the competition.
- Change the rules so that this valuable spectrum is actually used to provide service to consumers rather than allowing it to be collected and traded like financial securities.
"If the government wants a competitive wireless market, they need to establish auction rules to reflect that," he said.
Of course, everything Legere is asking for would help his company, but AT&T and Verizon do have a massive spectrum advantage, which contributes to them earning enough revenue to freeze out other companies when more comes up for auction.