T-Mobile US (NASDAQ:TMUS) delivered great results in the second quarter. The wireless network operator crushed Wall Street's sales and earnings estimates, powered by 2.1 million net new subscribers and particular strength in the coveted market for postpaid phone customers.
Thanks to these fantastic figures, T-Mobile shares have risen 12% in less than three days.
But the numbers never tell the whole story. As usual, T-Mobile's management held a conference call with analysts to discuss the quarter in greater detail. T-Mobile CEO John Legere is as much a showman as a business leader, always colorful and entertaining. Here are five of the most interesting points he made on that call -- occasionally amid chuckles and giggles from the analysts calling in.
Leading a parade of copycats
"We spent the summer giving more to T-Mobile customers, while as usual, our [competitors] spent the summer doing the opposite," Legere said. "It's actually kind of depressing to watch them box in customers, as they struggle to react to the Un-Carrier revolution.
"Whether it's Verizon (NYSE: VZ) launching a totally lame discount on long distance to Mexico and Canada as their attempt to react to Mobile Without Borders, or AT&T (NYSE: T) adding back a $15 activation fee for Next, frankly, they almost make my job too easy, and I appreciate that from them.
"Keep it up!"
See what I'm saying about Legere's on-stage persona? He's not above slinging dirt at major industry rivals, and actually seems to take a certain pride in taking every opportunity to do so.
Here, he's outlining how T-Mobile tends to lead the way with mobile innovation while others grudgingly follow suit later on. He's not exactly wrong, either. For example, T-Mobile was the first American network to get rid of handset discounts tied to two-year contracts, but now everyone is doing it.
Let's stay with that specific train of thought for a second.
Following Sprint's lead?
One analyst wondered whether T-Mobile would respond to a recent promotion from Sprint (NYSE:S), where you'd pay $80 a month for a combination of handset and service costs. Legere shrugged off Sprint's All-In Wireless plan as an unwelcome return to the old two-year contract scheme.
"I'm going to simply say to you that the Sprint $80 All-In plan is the return of contract," Legere responded. "So from a standpoint of, when will we offer something like that? I thought I had been very clear: never.
"So the contracts will not return, Sprint All-In is a two-year contract oriented plan, and we will not be moving in that direction."
What is Apple up to?
Another analyst asked whether Apple (NASDAQ: AAPL) would endow its next iPhone models with support for T-Mobile's highest-quality LTE spectrum bands. If that was an attempt to bypass Cupertino's tight-lipped secrecy, Legere didn't take the bait:
"We can't disclose, because we don't know. I mean, Apple is very secretive," Legere said.
"We don't even know if and when they're coming out with a new device, although we already created a plan to help you get it when it does come out. The question of do we expect band 12 support? The answer is yes. I mean, we certainly would expect that, and we'll look forward to hearing that in the near future."
But again, that is nowhere near John Legere spilling the beans on a new iPhone feature. Instead, it's another illustration of just how effective Apple's information-spillage safeguards really are. The actual news in Legere's words here is that he doesn't know what Apple will announce until they have announced it. You might expect the iPhone maker to set the stage for major announcements with behind-the-scenes conclaves, but that doesn't seem to be the case here.
This explains why Apple typically leaves a long gap between the announcement of new devices and the actual availability in stores. Sure, T-Mobile must give the next iPhone a spit-shine and test it in every conceivable configuration. That's what this gap is for.
What about Project Fi?
"The anecdotal feedback that I've gotten from customers that are using it is, 'I thought this was something they're doing with both you and Sprint (NYSE:S), because my phone never moved to the Sprint part,'" Legere said, pausing for the querying analyst's chuckle. "Which is sort of what we expected, and you laugh, but I think that is happening. So a significant portion of the roaming is going to the best network capability -- which is ours.
"This is very profitable for us, so this isn't a gift game. It's a profitable business, we are excited about it."
This bit was about Google Fi, the multi-carrier network recently launched by Google (NASDAQ:GOOG) (NASDAQ:GOOGL). That service will always prefer a high-speed Wi-Fi connection over anything else, but will jump to either T-Mobile or Sprint when users are on the go.
According to Legere's playful quip, Google's devices prefers the better connection when given a choice, and T-Mobile often comes out on top in that comparison. We might hear more about this from Sprint, and Legere certainly has a duty to present his own products and services in a favorable light.
That said, and all joking aside, this conference call is serious business. Thanks to the Regulation FD rulebook, information shared here is considered disclosed to the public, shoulder to shoulder with official SEC filings and other public forums. Hence, Legere would be in regulatory trouble if he stretched the truth too far.
So he couched his statement about Sprint's allegedly inferior network quality in a story about "anecdotal feedback," which should protect him from legal issues. It's an age-old tactic, and an effective one. Is Legere's network quality quip literally true? We don't know, thanks to the wiggle room provided by an ancient literary strategy that distances the speaker from his subject matter. But T-Mobile probably does get calls asking about this perceived connection imbalance, or Legere couldn't have tried even that limited approach. Maybe Sprint gets questions leaning in the opposite direction, too -- and who knows who sees more of them?
The only source of real data on this enigma would be Google, which certainly tracks and reports which network is getting more of Project Fi's mobile traffic. But good luck getting that information out of Mountain View. It would be stupid of Google to publicly play its network partners against one another like that.
T-Mobile versus the world
"I have been clear that the difference between us, and dumb and dumber and the other carriers is, we don't see any of these industry evolutions as a threat," Legere said, still talking about Project Fi.
"We see them as a logical progression of that industry structure continuum that we outlined, and a way to use our reach on the mobile side, to help other players that want to enter the space.
"And I think, I have always thought and said, that in several years we will look back and think it was completely humorous that we believed that the 'wireless industry' was four carriers, and a structure that needs to be protected."
Oh, dear. John Legere is getting spicy.
In this section, he calls AT&T and Verizon "dumb and dumber," respectively. Then he explains why T-Mobile is moving so much faster than its larger rivals. In Legere's view, it's all about accepting that change is an unavoidable fact in the business world, and you're better off embracing it than trying to suppress it.
As examples of this open attitude to progress, T-Mobile noted that Google is sure to make a serious entrance into the mobile market sooner or later. When that happens, he'd rather work with this new powerhouse than putting up a futile fight to stave it off. Other tech giants are lined up for similar game-changing mobile plays. Legere would love to partner up with all of them.
If you can't beat 'em, you gotta join 'em.
The continuum Legere mentioned in this quote, by the way, is the increasingly blurred division between networking and content. Companies on the network side are moving deeper into the content creation and broadcasting business, and businesses on the content side are leaning in the opposite direction.
Legere noted that T-Mobile has pretty much mastered the networking part of this ever-changing equation, and he's certainly interested in taking a deep look at the content creation bit as well. Making a huge move in that direction honestly wouldn't surprise anybody right now.