Mike Sievert: So that gives you a sense of how rapidly this is changing in terms of how we’re deploying capacity. It sits in the high 150s now. It’s on its way to 200 around the end of the year against Ultra Capacity 5G. And that’s before broad deployments of C-band, 3.45, most of the Auction 108 proceeds, which we don’t have yet, and ongoing refarming from LTE. So lots of room to run.
Jonathan Chaplin: So Mike, that 50 million is about the same as it was last quarter. So the acceleration in net adds must have come either from gaining share of decisions within the 50 million or from the reduction of churn that you mentioned earlier.
Mike Sievert: Yes. And net adds have been relatively consistent. I mean, I know it was in the high 500s this time. Every quarter will be a little different. But I would say net adds have been pretty consistent.
Jonathan Chaplin: Awesome. Thank you.
Mike Sievert: You bet. Thanks, Jonathan.
Jud Henry: All right. Let’s go to social. We’ve got a question from [Bill Ho] (ph). Given the 3Q iPhone launch and 3Q take rate, how does Q4 look for existing subscriber upgrades on devices and plans?
Mike Sievert: Okay. Well, let’s start with Jon and maybe talk about what we’re seeing out there in the consumer space with upgrades and what’s driving that.
Jon Freier: Yes, you bet. So like we said in Q3, we had a great overall quarter when you look at what’s happening with the iPhone. First of all, this iPhone 15 is a fantastic device. And it drove a lot of switching in the marketplace as you saw relative to our results. And not just iPhone 15 on a differentiated 5G network that I talked about just a few moments ago, but a different iPhone 15 because of some capabilities that really work on our network versus others. When you think about 4-carrier aggregation, when you think about voice over new radio, 20% download speeds that are faster versus an iPhone that doesn’t have that. That’s all great. Customers love it, et cetera. And it drove a lot of switching activity. Now relative to our existing customer base, what you’re finding is you’re finding us landing upgrade offers with people who need it, and not necessarily with people who don’t need it.
Because remember, our overall base is about 70% with the 5G handset that’s out there today. And when you think about customers that are having a great lived experience today on an incredible 5G network, they look at upgrades as an opportunity to, am I really going to improve my experience. For a lot of customers, that’s not really happening relative to the network that they have out there and relative to our overall positioning with our 5G devices. Remember, we had a lot of upgrades back in 2021 and 2022 in the Sprint base. We got a lot of that upgrade base happening at that time. So like we said, when you look at the overall iPhone 15 launch, I feel fantastic about that. When you look at upgrades, it’s a little lower. You’ve seen the upgrade rate at 2.7%.
It’s a little lower. But also with against the backdrop of the lowest Q2 churn we’ve ever had followed up with the lowest Q3 postpaid phone churn that we’ve ever had and I like how those dynamics are playing out.
Peter Osvaldik: Yes, and I would just add, Bill, to that question. I think I had expect the same dynamic to play out in Q4. That same meeting consumer demand exactly as it is. That same dynamic of because of the 5G device penetration and how the lived experience on those network actually exists for those customers. I feel equipment revenue, which as you know, isn’t the value-creating element of the company, that’s service revenue, that will continue to have industry-leading growth. On the equipment revenue side, I’d expect it to be in the same kind of low $3 billion range for Q4 as a result of that dynamic.
Mike Sievert: It’s been a nice tailwind for us to see these upgrade rates so low and yet our churn so low at the same time. And it really speaks to the everyday experience that T-Mobile customers are having on the most advanced 5G network. And they just don’t feel as compelled to take action because they have a 5G device, and it’s working remarkably well. And that trend could continue because, as Jon said it kind of fast, but the newest iPhones take advantage of four-way carrier aggregation on T-Mobile because our network is so far ahead with standalone 5G and core 5G capabilities that are much more advanced. Now the devices are starting to take advantage of those things, which means they’re very future-proofed. And so, it’s great to be at T-Mobile because these advanced phone features take advantage of advanced network features and may mean that you don’t need a new one again as quickly as you might otherwise.
For some people, that’s what they want. They just want a new one every year. I’m one of those people and T-Mobile reaches that audience as well with our breakthrough plans like Go 5G, Next. So we feel like we’re speaking to the right audiences with the right offers here.
Jud Henry: Okay. Great. Operator, let’s go back to the phones.
Operator: Certainly. Our next question is from the line of David Barden with Bank of America. Please go ahead.
David Barden: Hey, guys. Thank you so much for taking the questions. I guess, two threads, if I could. Mike, I just wanted to follow up on your comments. I mean, in the past, you’ve historically said that the higher switching environments were environments where T-Mobile thrive, because you were bringing your value proposition to the market more frequently. But now that upgrade rates and churn is falling across all the telco players, does this mean that you’re getting just super normal switcher share from the telcos? Or is some of this now coming to you from cable as that base kind of ages in their experience in the cable industry and the promotions come off? And then I guess the second question if I could here, you kind of talked about how these headcount reductions in the summer were part of some of this larger plan for transformation of the business.
Is there more to come on the transformation and maybe for lack of a better word, synergy realization as we look into the 2024-2025 period? Or are we there now? Thanks.
Mike Sievert: Yes. Thanks, David. Well, let me comment first on the competitive dynamic. You’re right. I mean, we love a dynamic where there are more jump balls, more people who are category and tenders. And let me clarify, though, that devices and upgrade rates are only one input to that. So devices can be a great catalyst for switching carriers, but they’re by far not the only one. And so, our job through our offers is to create those moments where people stop and say, hey, maybe I’d be better off. Maybe it’s better over there at T-Mobile. And that’s something we’ve consistently done in our Un-carrier moves have always been a technique we’ve used. This latest one this year, Phone Freedom and all the related offers around it is really resonating with people.
