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T-Mobile Earnings Beat Projections · Bloomberg Intelligence

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  Speaker 2: It is earnings day here. It's another big earnings days.
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  Speaker 2: In additions to being a fed day. One of the
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  Speaker 2: comes reporting earnings today was Tea Mobile. We got some
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  Speaker 2: really good numbers, stock up eight and a half percent.
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  Speaker 2: On the news, Mike Siaver joins us. He's the CEO
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  Speaker 2: of t Mobile. He joins us here in our Bloomberg
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  Speaker 2: Interactive brokerin studio. Mike, thanks so much for coming here.
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  Speaker 2: Thanks for having me.
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  Speaker 1: Guys.
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  Speaker 2: What does the market like about the results you put
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  Speaker 2: up today?
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  Speaker 3: Well, look, we're just consistently outperforming expectations, and that's what
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  Speaker 3: the market looks for in a business like ours. We're
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  Speaker 3: taking share, we're growing, and then across the board we
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  Speaker 3: beat expectations. We just finished the strongest growth here ever
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  Speaker 3: in our history. And that's saying something because we have
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  Speaker 3: a story to growth history in this company, and a lot
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  Speaker 3: of people wonder is the big growth, you know, run
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  Speaker 3: behind us, and we just demonstrated yet again. No, it's not.
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  Speaker 4: It's hard for me to get really excited about my
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  Speaker 4: mobile service provider. But your customers, it's like they were
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  Speaker 4: in a cult. What's the secret sauce? That's my softball question.
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  Speaker 3: You know, our value, our corporate values start with this
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  Speaker 3: basic idea, love our customers, you know, give them more,
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  Speaker 3: ask less of them, and they notice. That's just a
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  Speaker 3: huge part of our brand. And we have this thing
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  Speaker 3: we do called t Mobile Tuesdays where every week customers
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  Speaker 3: come to our Tea Life app which has fifty million users,
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  Speaker 3: and they engage to find out how are we rewarding
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  Speaker 3: them this week? Do you know what this week's was?
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  Speaker 3: We gave away a shack Burger, like the world's best
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  Speaker 3: burger for free to every single team.
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  Speaker 4: Most reflix too if you signed.
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  Speaker 2: Absolutely so, Mike. This is you're in a competitive business.
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  Speaker 2: I think about the wireless business, the batterers to change
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  Speaker 2: are pretty minimal. Churn is always an issue. Your competitors
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  Speaker 2: are depocketed. They're good competitors. Is it just you guys
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  Speaker 2: switching customers all the time just for deals? Talk to
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  Speaker 2: us about the churn for your company, Your business well.
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  Speaker 3: Churns at historic lows across the industry, not just TEA Mobile.
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  Speaker 3: We just had our best churn year ever. So people
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  Speaker 3: aren't switching a lot when they are switching the net
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  Speaker 3: share takers Team Mobile. So this is a great trend.
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  Speaker 3: You know, I don't need for others to fail in
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  Speaker 3: order for us to succeed in our business. This is
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  Speaker 3: a great neighborhood. We just happen to be the best
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  Speaker 3: house in the neighborhood, and so we're out growing everyone.
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  Speaker 3: But this is a healthy, vibrant sector. Everyone's you know,
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  Speaker 3: growing and making money. I think that's great. Part of
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  Speaker 3: it is people can't get enough of the service that
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  Speaker 3: we all offer at T Mobile. You know, we just
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  Speaker 3: guide it again to a big year of revenue gains
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  Speaker 3: per customer. And that's not because of pricing. It's because
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  Speaker 3: customers are self selecting up our rate card to our
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  Speaker 3: higher priced offers because they see the superior value and
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  Speaker 3: they want what we have to sell. That's a great dynamic,
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  Speaker 3: not just for T Mobile, but for the industry.
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  Speaker 4: The growth strategy is organic or M and A or what.
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  Speaker 3: It's organic principally, I mean we do have a number
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  Speaker 3: of M and A deals in the pipeline that we're
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  Speaker 3: intending to close this year, centered around fiber, centered around
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  Speaker 3: you know, other add ons. We're also in, you know,
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  Speaker 3: acquiring a cellular company, US Cellular. So but by far,
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  Speaker 3: the growth is an organic growth story focused on taking share,
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  Speaker 3: adding revenues, deepening relationships with the existing customers that now
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  Speaker 3: number well past one hundred million.
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  Speaker 4: Of those I don't understand, like outdoor advertising, what does
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  Speaker 4: that have to do with your business?
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  Speaker 3: Yeah, we just announced the acquisition of a company called Vistar,
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  Speaker 3: and you know we are in We're a billion dollar
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  Speaker 3: advertising support company already, so it's a significant business for us.
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  Speaker 3: We call it marketing services for marketers by marketers. T
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  Speaker 3: Mobile is a very famous marketer and marketers want services
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  Speaker 3: from us, so we provide that already. But our tea
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  Speaker 3: Life app part of what it does is it asks
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  Speaker 3: customers buy the millions, whether they would like to opt in,
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  Speaker 3: opt in to make their digital life better and their
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  Speaker 3: advertising more relevant. And then we can use data to
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  Speaker 3: provide marketers with an ability to put advertising in front
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  Speaker 3: of customers that they will actually appreciate. And our dream
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  Speaker 3: with place based marketing outdoor marketing. That's the Vista acquisition
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  Speaker 3: is to do that for the first time ever in
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  Speaker 3: outdoor advertising, so that for the first time outdoor advertising,
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  Speaker 3: place based advertising can become an addressable market.
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  Speaker 2: Yeah, it's interesting. I love the outdoor business. You can't
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  Speaker 2: switch channels on that. I took all those companies public
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  Speaker 2: back in the day. Apple, Mark German Bloomberg News. Apple
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  Speaker 2: has been working with SpaceX and Tea Mobile on starlink.
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  Speaker 2: What is starlink?
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  Speaker 3: Okay, So this is the ability to connect your mobile
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  Speaker 3: phone directly to satellite service. This is a huge breakthrough.
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  Speaker 3: We announced our intention to partner with SpaceX over two
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  Speaker 3: years ago, and now finally it's coming to market with
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  Speaker 3: opening of our beta a couple of weeks ago. We're
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  Speaker 3: bringing on thousands of users and soon way more than that.
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  Speaker 3: We're going to throw the doors open on this thing.
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  Speaker 3: If you can see the sky, you're connected. That's point
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  Speaker 3: the iPhone at this That's correct. These are lower th
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  Speaker 3: orbit satellites, so they're easier for your phone to find
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  Speaker 3: and vice versa. But this country, you guys, has five
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  Speaker 3: hundred thousand square miles uncovered by any cellular network and
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  Speaker 3: it's a massive part of our land mass, and we're
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  Speaker 3: about to close that coverage.
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  Speaker 4: Okay, So if I uh on my bucket list is
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  Speaker 4: a trip to the South Pole, I don't need cellular
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  Speaker 4: service down there. I could just use a T Mobile
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  Speaker 4: iPhone Starling.
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  Speaker 3: Well, I'm gonna have to check on how good the
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  Speaker 3: l EO coverage is. But one of the things you
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  Speaker 3: point out and very quickly to follow our terrestrial coverage
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  Speaker 3: across the continental US and big parts of Alaska is
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  Speaker 3: the world's oceans.
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  Speaker 4: That you know.
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  Speaker 3: That's a big piece of this because you know now
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  Speaker 3: you'll not right away, but as soon as we are
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  Speaker 3: able to turn it on, you'll be able to get
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  Speaker 3: your service across the US and as you travel around
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  Speaker 3: the oceans outside the reach of any cellular See.
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  Speaker 4: It's in beta testing right now. It's just confined to messaging.
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  Speaker 3: Hundreds of satellites are in the air where we have
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  Speaker 3: a free beta service going on. We're starting to let
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  Speaker 3: people into it. Right now it's text messaging only, but
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  Speaker 3: fast to follow will be light data services and eventually voice.
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  Speaker 4: So I can get rid of my satellite phone. We
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  Speaker 4: don't need that anymore.
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  Speaker 3: I think the time will come when that's the case,
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  Speaker 3: top line growth four to five percent.
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  Speaker 2: For you guys, that's how I think about the wireless business.
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  Speaker 2: Is that all pricing? If so, how do you think
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  Speaker 2: about the pricing environment out there?
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  Speaker 3: It's sharetaking and self selecting up our rate card, you know,
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  Speaker 3: very little pricing. And so those are the big dynamics.
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  Speaker 3: Postpaid service revenue growth eight percent, more than double the
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  Speaker 3: rate of our peers. And so this is, you know,
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  Speaker 3: a dynamic that makes T mobiles so different in this
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  Speaker 3: space because we're not only growing the top line, but
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  Speaker 3: we're translating it into financial growth on the bottom line.
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  Speaker 3: Twenty five percent year over year growth in cash flows
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  Speaker 3: seventeen billion dollars are highest ever.
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  Speaker 4: Now, how do you raise prices? You sort of touched
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  Speaker 4: on this just briefly before, but how do you raise
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  Speaker 4: prices without scaring away your cult members?
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  Speaker 3: Cult members? Well, one thing is people. You know, we
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  Speaker 3: have a rate card with a variety of options, and
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  Speaker 3: people choose at an increasing rate the prices that are
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  Speaker 3: higher up because they want what we have to sell.
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  Speaker 3: Do you know that sixty percent of our new customers
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  Speaker 3: coming in the front door choose one of our two
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  Speaker 3: most premium plans because those are the ones that are
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  Speaker 3: most packed with value, and they know they're here for
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  Speaker 3: a reason. They want more data, they want the experience
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  Speaker 3: that T Mobile can provide with the world's best five
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  Speaker 3: G network.
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  Speaker 2: Subscriber acquisition costs. How are they trending for you guys
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  Speaker 2: these days?
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  Speaker 3: They're pretty flat and that's good. We're very comfortable with
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  Speaker 3: this business model. It's a high sea LV you know,
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  Speaker 3: value exchange. One of the things about this business it's reliable,
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  Speaker 3: it's predictable. We do what we say, we try to
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  Speaker 3: exceed what we say, and it's growing and that's one
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  Speaker 3: of the things that really distinguishes us in a group
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  Speaker 3: of peers, not just in the US, but around the world.
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  Speaker 4: There is a FED meeting today. Can you tell me
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  Speaker 4: how if it all rates affect your business?
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  Speaker 3: Well, we're a big debt issuer, so obviously it's relevant
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  Speaker 3: in the long haul.
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  Speaker 4: What's the debt right now?
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  Speaker 3: With two point five leverage against debit, so it's you know,
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  Speaker 3: it's very significant, even as in the thirty one, you know,
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  Speaker 3: very significant debt. But it's also a stack that's you know,
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  Speaker 3: investment grade, it's long term, it's you know, spread out,
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  Speaker 3: so it doesn't affect us in an immediate way, but
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  Speaker 3: in the long taul of course, as a debt.
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  Speaker 2: U would you like that leverage ratio to be right
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  Speaker 2: where it is?
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  Speaker 4: Okay?
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  Speaker 2: Market structure in the wireless business three main players, Okay,
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  Speaker 2: is there room for a fourth? And I think about
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  Speaker 2: my old friend Charlie Oregon, I have for the last
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  Speaker 2: fifteen years. I had no idea what he's doing with
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  Speaker 2: a spectrum, and I don't think the market knows either.
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  Speaker 3: Well, he's operating, you know, a major brand and Boost Mobile.
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  Speaker 3: And the other thing is the cable companies, Charter and
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  Speaker 3: Comcasts taken together, who don't overlap, kind of constitute an
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  Speaker 3: additional carrier as as going well, and you know, they
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  Speaker 3: are really growing their mobile service at a significant pace,
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  Speaker 3: not as significant as us. We're the growth leaders, but
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  Speaker 3: it's you know, it shows that this is a vibrant market. Yeah,
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  Speaker 3: with a lot of competition.
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  Speaker 4: In the smaller markets. That's a big deal for you too, right.
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  Speaker 3: Yeah, forty percent of the country everything that's not the
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  Speaker 3: top one hundred markets we call smaller markets in rural areas.
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  Speaker 3: It's a huge source of our growth right now.
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  Speaker 1: And so on.
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  Speaker 2: A REVENU pro user how do you guys stack up
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  Speaker 2: to your peers.
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  Speaker 3: They're both above us, okay, you know, and it shows
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  Speaker 3: that there's room to run for us because you know,
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  Speaker 3: we came from a place that is much more value oriented.
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  Speaker 3: We're never going to give up those value roots. I mean,
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  Speaker 3: the lower prices and better deal is a big part
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  Speaker 3: of who we are. But at the same time, last
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  Speaker 3: year we addressed some very outdated rate plans that just
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  Speaker 3: don't make sense anymore after a decade, and there's more
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  Speaker 3: opportunity like that as well, as long as we're true
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  Speaker 3: to who we are, which is a great value. It's
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  Speaker 3: the biggest.
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  Speaker 2: Challenge you face going forward right now.
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  Speaker 3: Well, it's demonstrating to people that this is not just
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  Speaker 3: a present growth story, that it has legs. And that's
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  Speaker 3: a big piece of what I spend my time on
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  Speaker 3: is making sure that you know out in twenty six,
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  Speaker 3: twenty seven, twenty eight, that this growth keeps right on
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  Speaker 3: rolling in and you see that in our organic strategies
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  Speaker 3: but also some of the inorganic things we've talked about.
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  Speaker 2: All right, Mike, thanks for coming in. Really appreciated Mike Seavert.
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  Speaker 2: He is the CEO of T Mobile.
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  Speaker 4: Again.
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  Speaker 2: The company just reported earnings today beat earnings on the
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  Speaker 2: top line and the ibitha line, which is where Mike
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  Speaker 2: was seeing a lot of these investors look. And right now,
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  Speaker 2: we got to stock up about eight and a half percent,
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  Speaker 2: so a good day for Temo stock trading over the
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  Speaker 2: last twelve years about up forty seven percent, so some
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  Speaker 2: solid results there.
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  Speaker 4: Four the stock.
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  Speaker 2: We appreciate Mike coming in.
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