T-Mobile CEO: “Sprint Couldn’t Give Away Service…Their Network Is Completely Dead”

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John Legere, CEO of T-Mobile, spoke with Bloomberg Television’s Stephanie Ruhle today about the company’s latest “uncarrier” move, business strategy and recent growth.

On Sprint making a big push into business and competition with T-Mobile, Legere said: “Sprint could give away service in the business or the consumer side because their network is completely dead and everybody knows it. What Sprint announced recently was an age-old bundle service per seat where you try to aggregate everything that happens in the office place. We’re not fooling around with that. This is wireless services and we are focusing straight in there, and I have very little concern about Sprint.”

On the company’s growth, Legere said: “We are growing extremely quickly, but we are about to do to the business sector what we have done to the consumer environment…We gained 4.5 million customers in 2013, 8.7 million customers in 2014, and growing.”

Legere: T-Mobile Is Growing Extremely Quickly

ALIX STEEL: Well T-Mobile CEO, John Legere, is in New York today to announce the company’s latest plan to rewrite the rules of wireless. “Market Makers” anchor Stephanie Ruhle is at the un-carriers event. Steph, take it away.

STEPHANIE RUHLE: Surprise, surprise, Alix, John wants to rewrite the rules. We have never heard you do that before.

T-Mobile CEO John Legere: I just want to say that you are definitely not the coolest person in your family.

RUHLE: I’m definitely not. Just so you know, Alix Steel, I brought my son here with me today because John was in my house. I knew it was going to be a party, but what is this party for? Why are we here? I came for the food.

T-Mobile CEO John Legere: Listen, we did un-carrier 9.0, so we have been nine un-carrier moves since two years ago right now. And as you know, the un-carrier moves have been part of the way this company has gone from 33 million customers to 55 million. So we are growing extremely quickly, but we are about to do to the business sector what we have done to the consumer environment.

RUHLE: How? When you think un-carrier that doesn’t seem like a business partner.

T-Mobile CEO John Legere: Un-carrier, the un-carrier revolution was about finding pain points and solving them to make structural changes in the industry. And amongst those of course were no contracts, anytime upgrade, international data roaming, but un-carrier one was simple, transparent pricing. And what — what is still happening in the business environment, scarily, this gigantic $83 billion of business wireless services controlled by the four major carriers, 87 percent AT&T and Verizon, sadly, about $9 billion control, or nine percent controlled by Sprint, okay?

And it is like used car land. It is haggling, and no rate card, back office processing. So what we announced, real simple pricing, and I am telling you Harry and I could sit down now. It is very easy, up to 20 lines is $16 a line, 100 lines, $15 a line, 1,000, $15 a line, over 1,000 $10 a line.

RUHLE: But look what you’re trying to crack into. You said it. AT&T and Verizon have over 80 percent of market share. How much do you think you could steel in the next two years?

T-Mobile CEO John Legere: Well how much can they lose in the next two years?

RUHLE: Really.

T-Mobile CEO John Legere: Here’s what I want you to look at. Go look at the CFO of AT&T. Shockingly, his name is Stephens too, I think. So I don’t know. You have to be a Stephens to get in there. But he was — I think they were warning, so life — life must be a little tough. And what he said is that, hey listen, by the time we get done with all of our moves, 20 percent of our revenue will be in that space you all talk about so much, consumer wireless. The rest will be in 40 percent will be business.

And so what he was trying to say is, and we are kind of comfortable with this part because we don’t fight. We’re coming all in. We’re going all in. Pricing I talked about, data, easy to purchase, flexible data pooling, very simple. Every line comes with one gig of data. And then you will like this one, business family discounts. I won’t say it in front of Harry, but that is BFD.

RUHLE: BFD.

T-Mobile CEO John Legere: And what that is is it’s getting rid of an age-old trickery where when you come in as part of a family and you get a business discount we are now going allow that first line to be handled by the person that was in the business side, i.e. 50 percent discount.

RUHLE: Sprint is also now making a big push into business. Why is your plan so much better than theirs?

T-Mobile CEO John Legere: They’re making a big push?

RUHLE: Yes.

T-Mobile CEO John Legere: Sprint could give away service in the business or the consumer side because their network is completely dead and everybody knows it. What Sprint announced recently was an age-old bundle service per seat where you try to aggregate everything that happens in the office place. We’re not fooling around with that. This is wireless services and we are focusing straight in there, and I have very little concern about Sprint.

RUHLE: John, everybody knows you love to hate on the competition publicly.

T-Mobile CEO John Legere: They’re easy.

RUHLE: Is that because there aren’t new subscribers to get, the pie isn’t getting any bigger? So the only way for you to gain traction is to steal from these other guys?

T-Mobile CEO John Legere: Well we love a — we love a volatile environment because we are a net share gainer, right? And in 2014 we gained, ready, this is our point, 100 percent of the postpaid phone ads in the industry, 100 percent, all, 8.3 million new customers. We announced two other things today that will help this process. So we announced something called carrier free. You know how we’ve — we paid 1.8 million early termination fees when people want to switch contracts. Today we announced that we’re also going to pay off phone device contracts.

RUHLE: How can you afford to do this? I mean your margins are not as good as AT&T and Verizon. You are offering unbelievable deals. Where — and where is the bottom line for you here?

T-Mobile CEO John Legere: The bottom line is that we are the fastest-growing company. We have the fastest-growing profitability in the industry. EBITDA margins in Q4 were 30 percent and — and moving up, so my — two and half a years ago I announced a three to five-year plan for growth and profitability, and we are right on it.

So the issue is not really us. We are growing and becoming very profitable. It is those, the duopolists with the big, fat, overstated pricing that happened to get real. And I will tell you tomorrow people are going to appear in AT&T and Verizon’s office with a sheet of paper that says, hey, here’s what T-Mobile — and I love that. I love — hey, I have one more thing.

RUHLE: Give it.

T-Mobile CEO John Legere: The last thing I announced today is you know — you know I hate contracts.

RUHLE: I do.

T-Mobile CEO John Legere: I eliminated them in the industry. I’ve brought them back.

RUHLE: Why?

T-Mobile CEO John Legere: Today I announced the un-contract. I am signing a contract with every customer, committing to them that anybody with a fixed rate plan, as long as you’re a customer I will not lower your amount of data or raise your price, and here’s the best part. Every promotion that exists just became permanent. So five million customers that bought four for 100, $400 plan, permanent.

RUHLE: John, this seems great for me. I worry that it’s not great for you. Can you sustain (inaudible)?

T-Mobile CEO John Legere: It’s not only good for you. It’s good for Harry.

RUHLE: He is not getting a phone.

T-Mobile CEO John Legere: He is getting a phone.

RUHLE: Eight-year-olds aren’t getting phones. Where are you going to get these two million new subscribers a year that you want?

T-Mobile CEO John Legere: No. You need to do math. Two, you’re thinking about — see this is AT&T who just announced that they are going to add 400,000 postpaid subscribers in Q1, almost more than all from tablets. You did not hear that coming from us. We gained 4.5 million customers in 2013, 8.7 million customers in 2014, and growing.

RUHLE: How have you started the year?

T-Mobile CEO John Legere: Very well, thank you. You did hear me yawning, did you? Listen, I announced something else today that is very important. AT&T and Verizon do not want to talk about postpaid porting ratios. These are postpaid customers. And one of the ways you gain customers is churn is low, you keep your customers, and two is what happens to the postpaid base?

And a porting ratio of 1.0 means you lose as many as you get. I have never had a month without positive porting with every carrier since, are you ready, March of 2013.

RUHLE: Really.

T-Mobile CEO John Legere: So when you talk to Verizon and they say I don’t want to talk about postpaid porting ratios, you want to know why? And guess what happened in Q1 versus Q4?

RUHLE: Tell me.

T-Mobile CEO John Legere: They got better.

RUHLE: All right. We have to leave. I know how you feel about Verizon, AT&T and Sprint. How do you feel about — me too?

(CROSSTALK)

RUHLE: How do you feel about Google, friend or foe?

T-Mobile CEO John Legere: I like Google, oh big friend. We are a friend of anybody that causes disruption, and we’re a great partner for anybody that wants to create (inaudible).

RUHLE: You are not worried they could be a competitor to you? Down the road who knows what they could develop.

T-Mobile CEO John Legere: Could it be a partner?

RUHLE: Do you see Google as a potential partner?

T-Mobile CEO John Legere: Some people see threats and I see partners and friends.

RUHLE: All right. John, congratulations. Thank you so much.

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