T-Mobile US, Inc. (TMUS) J.P. Morgan Global Technology, Media and Communications Conference (Transcript)
T-Mobile US, Inc. (NASDAQ:TMUS) J.P. Morgan Global Technology, Media and Communications Results Conference May 21, 2024 1:05 PM ET
Company Participants
Mike Sievert – President and Chief Executive Officer
Conference Call Participants
Sebastiano Petti – J.P. Morgan
Sebastiano Petti
Good afternoon, everybody. I’m Sebastiano Petti, and I cover the telecom cable and satellite space for JPMorgan. I want to welcome T-Mobile President and CEO since 2020, Mike Sievert. Mike, thanks for joining us today.
Mike Sievert
Yes. Congrats on the new gig, man. How’s it going so far?
Sebastiano Petti
So far, so good. I’ll let you know on by the end of the week. Mike, it’s been a little over four years since you closed the Sprint acquisition. The company has seen strong subscriber and financial growth over that time and increased your synergy target from the deal. Perhaps you can spend some time helping us to think about how you’re positioning T-Mobile for success over the next several years. What are some of the near-term priorities?
Mike Sievert
It’s amazing to be reminded it’s been over four years now. It seems like we’ve put, so much time and energy into this because it was four years since the merger, but of course, three years planning it before that. What a wild run it’s been. We’ve wound up going from dead last in the 4G LTE era to first and best in the 5G era. I think what we’ve accomplished is building the world’s best 5G network and that’s fueling our results. It’s a really interesting moment in time for you to ask that question because we’re largely complete with that chapter now.
A short summary of what I’m focused on in the very near-term is continuing to take share and growing cash flows. And what’s great about this is that, for the first time ever and people, who are investors and us have heard me talk about this before, but it was a dream before and now it’s reality. For the first time ever, one company in our space is simultaneously able to offer the best value and the best network. We promised that, when we closed the merger, and so we started talking about it back then.
But now four years on, after spending tens of billions of synergy-backed funding building the world’s best 5G network, we’ve done that. What that means is, we have the ability now, and we’ve been demonstrating it quarter-after-quarter, not just talking about it, to take share in this marketplace. We are focused on continuing that and translating it into cash flows. You look at the last quarter, we outgrew our industry benchmark competitors on service revenues 2:1 against the average of the other two. Postpaid wireless service revenues of 6.5% growth were by far the highest in the industry. EBITDA, 8% growth, more than double the combined average of the other two, and cash flows grew in Q1 nearly 40%.
This is because, traditionally, during our prior era, we had built an urban business that was focused on the top 100 markets and ran that based on being the best value and being the an carrier to market-leading market shares in most of those markets, the biggest ones. We’ve fell way behind on places like enterprise, small and medium business, government, smaller markets in rural areas. These are areas where we’ve been since the merger, really growing. That strategy is far from complete. That’s a whole area.
And then, the second thing is making sure that we take advantage all these massive investments we’ve made to grow our business in new ways. You see that in our core, but you also see us picking great adjacencies like 5G high-speed Internet where we’ve been running the table for two years running now.
Question-and-Answer Session
Q – Sebastiano Petti
Yes. A lot to come back to there. But starting with the core business and just thinking about the health of the wireless industry. While growth has been normalizing, the postpaid ecosystem remains strong. Within that, you have a long runway of some of the growth opportunities you talked about with small markets, rural business, but then just your overall value proposition. Maybe you can help us to think about where you are on each of those underpenetrated segment opportunities. And then, you talked about the top 100. What does share look like there recently versus perhaps where you had been?
Mike Sievert
Let’s just start there. What’s interesting is, a lot of people when they heard our strategy four years ago, we said we were going to focus on underpenetrated segments. They thought, all right. They’re going into defense mode in the top 100. That was never our plan. It’s not what’s happening. We’re growing share in the top 100 as the market leader. Of course, we are. We have the best value. We have the best network now. We have a lot of work to do to convince Americans of that. Brands are stubborn and we’re able to deliver the best customer experiences. Those strategies are things that we’re carefully investing in. And so, Q1, we grew share. In 2023, across the year, we grew share in the top 100 markets in consumer.
There’s a reason for that. Most people in those top 100 markets, we got to market leadership or near market leadership, with most people believing that, they had to make a trade off on network to come to T-Mobile. They like T-Mobile so much that they were like, I don’t know, we’ll see if the network works out, but I’ll switch. We became the leader with that mindset. Tens of millions of other people never gave us a good look during that era. Those remain our prospects in the top 100 markets. Now, they’re starting to take a look. They’ve heard about businesses choosing us. Maybe their neighbors chose us, and it continues.
And so, we’re continuing to grow. Smaller markets and rural areas, this isn’t the tiniest towns. This is 40% of the country that we call smaller markets in rural areas, where at the end of last year, we had a 17.5% market share. in Q1, and across the span of ’23, our win share was about double that. Our present win share of switchers is double our market share. That’s exactly what you want to see with a company that has a stated goal to continue to grow ambitiously in that area. A few years ago, I said, we’d get to 20% market share by 2025. That looks intact. But, of course, that’s just 2025. I mean, I don’t think there’s any evidence that suggests we should expect that to slow down, given the strength of what we offer. We are bringing real choice to these markets for the first time and the public really appreciates it, and our win share is fantastic there. So, lots of reason to believe in that.
Enterprise. Enterprise, Q1 was our highest net add quarter ever, our lowest churn quarter ever. We’re really moving from SIEMs to solutions. We are in strategic discussions with corner offices about what 5G can do to transform the connectivity of organizations. Only T-Mobile has a nationwide standalone 5G network across mid-band and low-band that’s able to do advanced 5G capabilities like dedicated spectrum network slicing. People have been talking about private networks for many years. We weren’t actually talking about all that. I put out a plan in ’21 that didn’t promise anybody anything from that, because I wasn’t into press releases.
We just put our heads down and went and did it. Now, we’re winning these deals because we’re the only ones that are in a position to actually do it. What’s interesting is, we’re not just winning those deals. We are winning market share on smartphones in those organizations as well. It’s turning out to be a great way to introduce our core business to those organizations, whether it’s government organizations like the Coast Guard and Department of Defense, whether it’s large enterprises, major airlines. Delta Airlines last quarter chose us as an example. We’re doing special projects with these major organizations, but we’re also winning the smartphone business.
We demonstrated what we can do at the Las Vegas Grand Prix and then again last week at the PGA Championship, where we build dedicated 5G networks on network slices in order to provide guaranteed throughput access. High-definition broadcast at the PGA was done on our 5G network slice. The core commercial operations of the Las Vegas Grand Prix, the biggest thing that’s ever happened in Las Vegas were on our 5G slice so that people could run those core operations of the race with a million people in proximity and guaranteed of their service and access to be able to provide those fans with the experiences that they wanted.
Only T-Mobile can do these kinds of things right now. And then finally, smaller businesses, it’s always been a strength of ours. Right now, our switching share is some of the highest it’s ever been. You can measure lots of ways porting and other facts. It’s really coming together very nicely, and there’s lots of room to run. I don’t want anybody to get — I’m not bored of this strategy. It’s working really well. And so, you maybe hear me saying the same thing. I think for our company to, in the near term, reliably and consistently and methodically take share, but to do so at a rate and pace and with smart investing so that, that share taking translates into outsized cash flow growth, which is the phase we’re in as a business.
Sebastiano Petti
And what are you seeing thus far in the second quarter? How would you characterize, obviously, the switcher pool is down, upgrades are down? Is that persisting thus far into the second quarter? Anything different from what you saw in April?
Mike Sievert
Let’s look at 1Q first. Our 532,000 postpaid phone net additions represented a higher share of total net adds than our year ago first quarter. And so, what I told investors last year, and it sounded a little flip when I said it, was, doesn’t matter whether the market is rapidly growing or not because most of our business comes from share taking. Look, if the market is rapidly growing and postpaid net additions, we’ll partake in that. If it’s growing more slowly, we won’t be harmed by that. You saw that on display in Q1, because it did moderate like many predicted it would and it didn’t affect our performance one bit. And so, we like the way everything is unfolding. I can’t give you much on Q2, other than to say that, we guided very recently during this quarter for the rest of the year. We increased our net addition guidance, seeing everything that’s unfolding, because we like the way our strategy is working.
Sebastiano Petti
Obviously, the ACP program has been quite topical this week. It was contemplated in your guide that was reiterated and raised. Anything that you can share in terms of what T-Mobile has been seeing in Metro or some of the wholesale sale relationships?
Mike Sievert
I just think it’s going to be a much bigger deal for cable than for wireless. Wireless, look, when ACP — our operating assumption is that it goes away. There’s some talk about it, a Hail Mary, but our operating assumption is that, it goes away. I do not believe that will result in people disconnecting their mobile service. That discount is not the thing that determines whether they are in the category. This is an essential service. Lots of people may be up for grabs though and especially at our competitors. If they’re up for grabs, then the company with the strongest and best brands for the value segment is positioned to be able to stand up and serve them and potentially mutually benefit from that. That’s how we’re approaching it, as a potential opportunity.
Look, we’ll go after that. Now in our Assurance brand, which is not reported in our subscriber numbers, 80% of our — 80%, 85% maybe even of our Assurance customers also qualify for Lifeline. We have to remember that ACP isn’t the only subsidy program in the country and so there’s lots of overlap. Now I’m not trying to convince you that, there’s no risk to our business here. It’s some of our wholesale partners, if it goes away, might get punched in the mouth and they’ll have to recover. Metro is around the edges. We have almost no Metro customers on this. But there could be an impact, but all the impacts that we see are in the range of the guidance that we gave. Like I said, we think it’s some aspects of it are a potential opportunity.
Sebastiano Petti
Great. Transitioning, you recently announced plans to take some further rate plan optimization actions. Driving an upgrade to your ARPU and ARPA expectations for the year. Clearly, you see an opportunity to raise prices in this environment while maintaining your value proposition of the best network at the lowest price. Help us to think through the maybe land-and-expand strategy over the next several years and broadly against the context of rate opportunities.
Mike Sievert
Anything that we might do in the space would be designed to make sure that T-Mobile is and remains the greatest value in this industry. That’s just so core to who we are, and I have no interest in changing any of that. It’s been roughly a decade since we’ve addressed any core pricing. Costs rise over a period of time, I think even our customers understand that. We’re going to be thoughtful and make sure that we jealously guard the fame that our brand has as the lowest prices, best value in this marketplace. What that looks like changes a little bit over time. But we’re going to be very thoughtful about it.
Sebastiano Petti
Okay. That remains the focus.
Mike Sievert
Yes.
Sebastiano Petti
Absolutely. Thinking about long-term margin opportunity, the Sprint synergy tailwind is now behind you. But, we believe that T-Mobile has additional levers to pull in terms of operating leverage, efficiencies overall in the coming years. Maybe help us think about some more maybe transformational cost opportunities that you see on the horizon over the next several years.
Mike Sievert
We’re hard at work on that. There’s a lot of opportunity. This is a industry that does a lot of things in traditional analog ways. Obviously, we have to tackle that. A couple of things. One is, as you think about margin for us, know that we’re focused on cash flow margins. That’s not to say, we don’t see EBITDA margin opportunity. But we think you have got to look at the big picture. Across this industry has got pretty different P&Ls and different geography as to where they spend their money. Cash is king. And so, we have the highest cash flow margins in this industry compared to our two benchmark competitors and we expect it to stay that way. And so, there’s a number of reasons for that, including that we have a much more capital efficient model, for a number of reasons.
Our cash flow margins are north of 20%. We think even after we become a significant cash taxpayer, we’ll remain the cash flow margin leader in this space. We see lots of opportunity there. To your premise of your question, there’s opportunities as it relates to digitalization, AI, data et cetera. I don’t want to front run myself here, but I do expect that, we will lay out our thinking on that as the year unfolds, maybe principally centered around the fall time.
Sebastiano Petti
Great Segway there. I mean, any update on timing of the potential capital markets that your Analyst Day for the team?
Mike Sievert
Yes. Thinking early fall. We got to work all the calendars and stuff. But the last one we did was in the spring of ’21. We came out about a year after our merger, and we might have done a little sooner if it hadn’t been the pandemic. We wanted to lay out in much more detail all of our post-merger plans. I have to say, I’m really proud of the team, because if you go back to that 2021 plan, we laid out and lots of people were laying out their plans back then, we look through what we promised the world we would do. I’ll tell you, the world’s really different than we expected back then. We couldn’t have predicted how everything would unfold, but we built a resilient business plan that’s delivering point by point by point against all the promises that we made, including a lot of promises nobody believed us when we said we would do these things back then.
We expect to be able our pay out a similar set of ambitions in a similar amount of detail for the next few years. I think this is a really pivotal time for us because, as you said, the merger is behind us now. We have these amazing capabilities. We have been heads down. We don’t issue press releases and try to create a hype cycle. We have been heads down creating a business plan for the next four or five years that is powerful and compelling and putting the pieces in place so that we can stare at that crowd or that camera next time and make a set of forecasts that will be both exciting and achievable, just like we did in 2021.
Sebastiano Petti
Great. T-Mobile is well on its way to serving 7 million to 8 million fixed wireless customers by the end of the year by end of ’25. But over the last several quarters, you have raised price, slowed a little bit the net pace of net new subscribers. But has there been any change in your fixed wireless strategy since you launched it in late 2020? Or is this essentially how you had expected it to evolve?
Mike Sievert
No change whatsoever. Back to my previous point, the only thing that’s changed is that, people believe us now. If you would go back just roll back the tape to ’21, what is unfolding is exactly what I told you would happen. I told you 7 million to 8 million customers by 2025, laid out kind of roughly how we thought about achieving that, why we would have the capacity to do it, why customers would choose us and they’re doing it. And then, in the early cycles of this, in order to really showcase the power of 5G for customers, we laid on an additional promotion. I rolled out originally these price points, but we also put on an additional promotion for a few quarters. And then, we’ve since sunset those, and we’ve gone back to the core design point pricing. That’s just like you would expect us to do at this point in our evolution. We are very much on track to achieve the ambitions that we laid out.
The 405,000 net additions we did in Q1, actually represented a higher percentage, about four points higher of the total net additions from the top five players in the industry compared to last year. While you say it moderated a little bit because of our return to normative pricing, in fact, our share of the industry’s net adds at roughly 57% in Q1 was higher than the year-ago period.
Sebastiano Petti
I think you’ve talked about in the past ways of examining how to extend the FWA subscriber base beyond that 7 million to 8 million. I mean, how are you thinking about the fallow capacity model? Is that still sustainable to get beyond that? Or is it something…
Mike Sievert
Just to remind everybody what the fallow capacity model is. I mean, our highest return on network, how I think about it, return on network, return on invested capital remains the mobile business. That’s where we prioritize things and what we do is, sector-by-sector at a very granular level, we predict out ongoing share taking in mobile. We also look at ongoing increases in usage per smartphone. We identify sectors where no normal amount of share taking and per-smartphone growth will take up all of our capacity. Only at those addresses, do we approve applicants for home broadband. Taking a fraction of those applicants is what gave us our 7 million to 8 million target by 2025.
That remains the strategy. What that does is, means it’s a very capital light strategy, which means it’s very accretive to our business because the capital is already in the ground to make us a competitive wireless company. You have to have coverage everywhere to be competitive and we own the spectrum. You might as well deploy it. It’s a very low cost to do so. Now you’ve got this high-capacity network in some places where no normal amount of mobile usage will soak up.
Now what I’m working on with the team is, what can we apply from a technology standpoint, a capability standpoint as it evolves to continue on that strategy that’s very high return, excess capacity strategy, but potentially extend the TAM. We have not drawn any conclusions about whether that’s a viable approach for us. But we are working hard on it. I would expect to draw some kind of conclusion this year as to before we get you too close to that 2025, as to whether or not there’s more runway left past that 7 million to 8 million.
Sebastiano Petti
That’s great. All right. You recently announced the JV with EQT for Lumos. Adding to some other JVs and initiatives you have there — have in place for fiber, help us to think through why this capital-light model makes sense for T-Mobile? And in that regard, some of the synergies perhaps with the FWA strategy?
Sebastiano Petti
A couple of things to keep in mind, and start with the synergies. We are already a scaled, nationwide broadband marketer. And so, we’re marketing, we’re selling, we’re caring, we’re servicing millions of customers nationwide on broadband. What that means is, our ability to add footprint with fiber is a pretty incremental opportunity. Our teams are already there. They know how to sell broadband. We have figured out now how to care for broadband customers in a very high-quality, high net promoter score way.
And so, this isn’t complicated for us. It’s just a great opportunity. Why are we interested in it? Because we think we can make a return. In fact, we think we can make a better return than a purely disinterested financial investor could. Some smart money is going after pure fiber because it’s a good business. We think we can do better. Why? Because we’ve spent billions of dollars building a brand, a team, distribution, incredible data capabilities, a 5G network, a national go-to-market capability in this broadband industry.
And so, the incremental investment we would have to make to extract the returns a lot lower than a purely financial investor. We like this model a lot because we get lots of leverage on our dollars. We are only half the equity and because it’s off balance sheet, it can be levered appropriately the way other fiber assets get levered, without affecting our leverage as a company.
Another party is matching the equity and then, we’ll put appropriate leverage against it. By the time our capital calls are done for close to $1.5 billion, we’ll get 3.5 million homes passed and T-Mobile will be the marketing entity for all of those homes. It’s a great win for our partners, but we think it’s going to be a great win for us as well.
Sebastiano Petti
Although you’ve reiterated your shareholder return ambitions and those remain on track and have said that, there’s no big on balance sheet acquisitions, I think, is how you put it. But we still do get the question on what is the end goal in fiber. How should investors think about that?
Mike Sievert
For us to, like this deal with Lumos, if there are opportunities for us to create a fantastic return for our shareholders, we’re interested. That being said, I want to reiterate something I’ve said in the past, which is, we love our current model. We love being the nation’s leading mostly wireless pure play company. We think wireless is a great place to be and we also love this stage of the company, where we are returning significant capital to our shareholders who have gotten us to this place. And so, the things we’re looking at are ways to augment our strategy, give it more acceleration, take advantage of investments we’ve already made and make a great return. Just like in our core business, we do those things on your behalf. It’s at that scale.
I want to make sure, if you like our model, just know we like our model. We have no real interest in some big thing on balance sheet that would change it, nor do we have a big interest right now in big things that we would take up our capital allocation that are different from what we’ve communicated to you. That being said, we wake up every morning looking for opportunities on your behalf. We take this a year at a time and we’re very much on track for this year’s capital return strategy. We’re very much on track for the ambitions that we’ve talked about of completing this first $60 billion in shareholder return by next year or trickling into 2026. That’s been consistent now for a long time.
Sebastiano Petti
How should we think about the level of shareholder returns and how the Board perhaps determines the right pace? And I think that’s probably something we’ll probably get an update on in their early part.
Mike Sievert
It is going to sound like a platitudinal answer, but it is really how we do it. We’re looking at what’s the first and best use of our capital? What are the opportunities in front of us. We’re looking at the cash flows of the business plan and the leverage targets that we’ve laid out have been consistent over time. and taking it 1 year at a time in terms of actual authorizations. But this is a machine that looks to me like is pacing to deliver massive cash flows for many years to come. And that makes me feel great about the strategy of having a capital return approach that will continue past 2026.
So, I don’t want people to think like we came out with a $60 billion program. And assuming the Board authorizes the last chunk of it, we do that and then go home. And we wanted to provide some reassurance of that by beginning a dividend. So, the $60 billion includes the dividends that we’re now doing. But look, this is a cash flow machine. And it’s really — the business is really performing great. And we think that opens up lots of opportunities in the out years for continued strategies around shareholder returns.
Sebastiano Petti
And one, I guess, use of capital is M&A. You recently closed the Mint Ultra deal. There are potential assets for sale across the industry. I think your name is recently mentioned in 1 regard, and perhaps some distressed situations that could be coming up down the road. How do you and the team evaluate opportunities in — do you — particularly as it pertains to consolidation in wireless? I mean do you think we could see a meaningful change in industry structure down the road?
Mike Sievert
Well, first of all, I am so pleased to have gotten Mint and Ultra done. That was a long haul. The team is doing an amazing job. And the founder and CEO of Min and Ultra is here in the room, David Glickman. So welcome, David. And so, this thing took a few — 4 months or 5 months longer than we thought it would. And meanwhile, the team at Mint and Ultra have outperformed their business plan throughout the entire pendency of this deal. So, we come together as one team around a very strong set of brands that significantly enhance T-Mobile’s capabilities. And that’s the kind of thing that you should expect from us.
And so, this was complementary to what we do, didn’t change who we are. It’s going to be accretive both near term and long term. And those kinds of things are things we’re interested in and we’ll take a look at. The Board and the management team are in total lockstep that if there’s something that we think comports with what we’re great at and the investments that we have made, then on your behalf, we should take a hard look at them if they become available. And that’s across the category of spectrum opportunities, business opportunities. And — but it has to be close enough to our knitting that we can look at you and tell you that we’re the team to get you a superior return from that asset.
Sebastiano Petti
So, shifting to network for a minute. So, T-Mobile’s CapEx envelope has come down in recent years for more elevated levels post Sprint, but you still have a long runway capacity-wise in the network. How do you maintain your network advantage versus peers? And what is the — can you help us think about the time line and some additional spectrum deployment that you have?
Mike Sievert
Well, we’re just in a fantastic spot on this right now. If — our lead has actually grown a little bit in the last couple of quarters. If you look at — and this is despite our competitors rolling out, especially Verizon rolling out an awful lot of that extremely expensive C-band spectrum that they bought. And what’s happened is our average nationwide user, even now, pro forma to that rollout at our competitor is twice as fast. And that’s actually a little better than a few quarters ago. And so — and there’s a reason for that.
T-Mobile doesn’t just have a faster 5G network, it has a more available one, a lot more available one. And in fact, it’s the world’s most available 5G network. 85% of our network is on multiple layers across 2 tranches of mid-band and low-band. And all those things work with advanced carrier aggregation in many places to be able to give you fantastic experiences. Our grid is sized for our spectrum. This is an under talked about thing in our industry. So, we have a network grid of macro towers that is spaced for our 2.5 gigahertz spectrum. And where we purchased C-band are only in places, by and large, where our grid is spaced for C-band.
And what you see is people on other networks may fall off 5G way more often because of the grid. And our 5G is the most available in the country. So, you look across — so if you look at a denominator, our competitors can pick a denominator and say, “Wow, we’ve caught up.” But you have to sort of look at the average customers nationwide experience, and you see that, in fact, like I promised you, we’ve extended our lead. We’re also — because of being a pure-play 5G stand-alone network with multiple layers of spectrum deployed, we are able to go faster on deploying advanced 5G technologies.
Our competitors still, by and large, rely on 4G cores, so 5G radios going back to a 4G network core, not T-Mobile to the same extent. And so, our 5G stand-alone capabilities are the furthest along, and that means we can take advantage of advanced 5G capabilities like massive MIMO, like 4-way carrier aggregation, like network slicing, as I talked about earlier and so many other things. And so that also adds to our advantage.
We haven’t really begun in any material way to deploy our C-band. We haven’t really done much refarming of our massive capabilities against LTE customers. Now we’re — 75% of our customers have 5G phones. So that’s an opportunity in the rest of ’24 and ’25 to begin the process of moving more of that spectrum over to the 5G sites. We have lots of room to run. And so, I think we’re really well positioned.
We’re very thankful also for the government granting us our Auction 108 licenses, which completes our 2.5 gigahertz footprint. That made a big difference and was part of why you’ve seen a pickup in our performance over the last quarter as well.
Sebastiano Petti
And is the FCC’s lack of authority as it pertains to auctioning spectrum, is that something that — how do you think about that? Is that a long-term threat to the ecosystem?
Mike Sievert
Well, we think it ought to be returned. We’re absolutely supportive of the FCC and of those people in Congress that want to restore authority to the FCC. Our nation’s competitiveness depends upon our networks being the best in the world. And we can’t afford to sit and watch while other countries around the world deploy spectrum in a smarter way. So, it’s very important that, that authority gets restored at some point. As it sits right now, our portfolio has everything we need to perform and execute against the promises that we’ve made you in the near term.
Sebastiano Petti
And so lastly, I think thinking about convergence, some debate in the ecosystem around the merits of the strategy. Some of your peers have leaned in on that more than others. You have said that — or T-Mobile has said you don’t expect the U.S. to follow European levels of convergence, and maybe not necessarily something right now the company needs to be focusing on. Why is that the case? Is that just market structure? And how do you — how are you and the team thinking about that medium or longer-term kind of conversion?
Mike Sievert
We think about it opportunistically. This is a mobile-first country. People — the mobile is the much more considered sale. All the data points to that. People will pick their mobile provider based on what service provider has the best combination of customer experience, network and value for them. And there’s a reason why it’s unfolded so differently in Europe. First of all, this country is vast and hard to cover. What that means is the networks are differentiated. People think carefully about whether the network they’re choosing is right for them, that’s different from Europe.
Second, the converged bundle isn’t a big deal here. Even people who buy from the same provider don’t say it was that important of a point in their decision, and there’s a reason for that, too. There’s already a bundle here. Almost all postpaid customers are already in a bundle between their wireless plan and their phone plan. So, in the U.S., wireless comes with your phone. That’s a bundle and it creates switching friction. That’s different from how Europe rolled out and remains today, which is stick a SIM in it, any SIM, they’re all about the same, not the case here.
And then finally, it’s a different market from the standpoint of all kinds of dynamics, including regulatory dynamics. And so, it’s — wireless is the primary purchase decision that Americans make in their connectivity, and it will remain so.
Sebastiano Petti
Mike, thank you very much for joining us. And thanks, everybody. Have a good day.
Mike Sievert
Thank you, guys. Great to see you.