Operator: Our next question comes from Simon Flannery with Morgan Stanley. You may proceed with your question.
Simon Flannery: Mike, you teed up my question. You said you’ve got lots of room to run on fixed wireless. Some of the competitors critique the product around limitations on capacity, on speed. So perhaps now you’ve got a base of customers. You’ve seen behavior over a couple of years now. We are the learnings? How much market share do you think this product can take? And what’s your ability to continue to expand the footprint to continue to expand the capacity of the network? And then maybe just a quick word on macro. You talked about some concerns you’ve seen, anything on payment patterns or any other cautious behavior yet?
Mike Sievert: Great. Well, first on broadband, it’s kind of stating the obvious. When somebody who is a fiber provider. So as you know that product not as good as our product. It’s kind of like the people at pointing a finger at the world’s best-selling car, Toyota saying, we’re faster. We have the faster car. Yes, but Toyota is the world’s best-selling car. And that’s because — and if you look in the case of T-Mobile, 5G home broadband because it’s perfectly suited to what people want. And although it has less overall potential for capacity than a strain of fiber, which is patently obvious, it’s radically simple at low cost. It’s transparent. It’s portable within tens of millions of households. It has the speed and capacity that allows people to think that they want.
And therefore, the net promoter scores are some of the highest in the industry, 10 points higher than fiber, 30 points higher than cable. And most of our customers are coming directly from cable, not just from rural areas or unconnected places or DSO. And so it kind of demonstrates that we’ve got a product here with the right mix of services to meet people’s needs, lots of room to run. When we launched this product, we talked about 7 million to 8 million homes. And as you can see from our numbers, we’re tracking beautifully to that. And the question now is where do we go from here? And I gave comments before about whether or not we’re looking at ways that could augment that strategy, of course, we are. But that’s because we have a winning product and massively expanding capacity to support it.
One of the things to keep in mind is that economically, this unlike fiber and cable. This product so far is not burdened by amortization of capital and the cost structure, right? So we’re able to take the capital that we deployed through mobile and find places with excess capacity and market broadband there. And those places are rapidly expanding even though we have millions of customers on board now soaking some of it up. We’re moving our eligible homes from 40 million to 50 million. And that means that there’s 50 million homes out of 140 million nationwide, where tomorrow morning, you applied for service, we’d say, yes. And so that is a big footprint. And we think the product is beautifully suited to the times.
Peter Osvaldik: I can speak to the question on the macro environment. From a consumer perspective, No, we’re not seeing it. Of course, this is an area where we’re very cautious. But when we think about just Q3 to Q4, we actually saw a little bit of improvement in voluntary churn. And bad debt was exactly what we laid out in Q2 stable on a percentage of revenue and in fact, actually lower than AT&T or Verizon on those metrics. So, it’s something we’re looking at and making sure we would closely monitor. As we said, this could also be a moment of opportunity for us because as a consumer set to the extent that you’re pressured from a recessionary perspective, from an inflationary perspective, it might make you consider a lot of categories of spend and wireless is being one of those.
And at the time you create the consideration moment, you go look around. And again this is the time where not only 5G leadership, but has translated into overall network leadership, coupled with that value proposition just being a fabulous time and it could be a tailwind for us. Again, looking at and making sure we’re cautious, but nothing we’re seeing right now gives us costs for concern.
Mike Sievert: We’re making sure our companies ready for after you know. I mean, but the fact that we saw bad debt moderate from Q2 with inflation for spike surprise consumers last spring. How Q3 and Q4 were lower than Q2. In voluntary involuntary churn was actually lower in Q4 than Q3. Our bad debt rates are lower than AT&T’s are for us and showing the quality of our customer base, which has always been a question people had, especially after the Sprint merger. And so, we’re signing in the future like everybody else, but we take it as far from a foregone conclusion that very stressful economic times are coming. We’re prepared if they are. We’re financially prepared. And as importantly, we prepared to serve American consumers that in that situation may be questioning whether they ought to be having a great network at a better value.
And we’re ready to stand up and serve them if they start questioning whether or not they should be saving money in this category because we are uniquely positioned with our high-quality value positioning for economic times like what might be coming. And so, we’re ready in other case, but the emphatic answer to the question is no, we are not seeing it.
Simon Flannery: Thanks for the color.
Mike Sievert: Yes. So Jud, should we go in between here, should we go up to — you guys can’t see this, but we always have screens pointing at us with Twitter — Twitter questions, and we’d like to open it up. And I was going to have you call out a couple, but there’s one that’s from at Magenta. So, they win, they have to have a long — but it’s actually a really good question. It kind of goes to something we’ve been talking about, which is what’s T-Mobile doing to maintain its industry-leading growth, giving cable starting to build momentum in the telco space. And we talked about convergence earlier on. And it’s interesting to me that we keep getting this question. We saw cables results coming. I talked about them in Q4. And I would just tell you that it looks to us like cable, who’s been in the run rate now for a long time because you had a recent uptick.
It looks to us like you’re seeing lots of transference in terms of net adds that add to the category, additional adds being printed, et cetera, for customers. New phone numbers being created, people coming over from prepaid as a dynamic. But what’s interesting is you see that recent surge in growth from cable, and this is interesting. At a time when every one of the three wireless incumbents experienced better-than-expected churn. So churn was better than expected, for us, it was falling. AT&T was falling in Q4 as well versus a year ago. And at the moment, when cable has for some, well, it didn’t surprise us, but for some, a surprise uptick in net adds. And that should kind of tell you a little bit about what’s going on. So for me, we look at it as sort of, as you would expect, since this is a contact sport as sort of us against everybody else, right?
And so, if I look at the second half of the year, what’s interesting is T-Mobile was able to deliver 17% more postpaid net additions in the second half of this year versus last year, while the rest of the industry, Verizon, AT&T, Charter and Comcast combined in wireless, delivered 19% less postpaid phone net additions in the second half of this year versus ’21. So in terms of our separation from the market at a time when people ask were doing better and better. Jud, any — one more on Twitter before we go back?
Jud Henry: Not yet. Let’s go back to the line and we’ll keep watching. Great.
Mike Sievert: Operator, next question please?
Operator: Our next question comes from Jonathan Chaplin with New Street Research. You may proceed with your question.
Jonathan Chaplin: Thanks for taking the question. You gave really great context on sort of what the market size is for rural and small markets and the fact that you’ve moved from 30% of that market to 60%. I’m wondering if you can give us a little bit more context around the business market in terms of like how your market shares have progressed over the course of this year, and what you see the size of the overall market being?
Mike Sievert: I mean, one of the things you heard from Callie before is that Q4 was one of the best net add quarters ever in our history. So, we’re really comfortable with where this is — how this is shaping up. And one of the reasons for that is there are long sales cycles in this market. And we’ve been at this 5G story longer than anybody else. CIOs are very interested in more strategic engagements than they were interested in a couple of years ago. And now, we’re in those conversations, but we’re way down the pike in them. So, we’re very comfortable with where we are. We’re competing extraordinarily well. And to your market share question, we’re very much on track for the Analyst Day aspirations that we shared with you.
Jonathan Chaplin: Mike, can you give us the mix of business in fixed wireless broadband?
Mike Sievert: You mean should I disclose that right now as a new fact. I don’t think we did we haven’t. I think what we’ve said is, it continues to be the majority from consumer, but you’re seeing continued uptick in the business side as just Callie mentioned in growth there. So we see a lot of room to run on the business side as well. And obviously, continued room in the consumer space.
Mike Sievert: I did see some notes on that that kind of got it wrong is that maybe business is what’s surging in that area. It’s the business is doing well, but it’s the overwhelming majority for us is the consumer in that space. Yes. Operator, next question please.
Operator: Our next question comes from Brett Feldman with Goldman Sachs. You may proceed with your question.
Brett Feldman: So, you’ve been able to sustain very strong post pay net adds throughout the merger integration despite those results being burdened by elevated churn related to those integration activities at certain points in time. And I know it sounds like it seems like a lot of that is behind you, but I’m curious how you think about the levers to drive churn lower from here. I’m wondering, if there’s actually any residual benefits from the integration we haven’t seen yet. I don’t know how important the remaining billing migration may be to churn. And maybe just at a higher level, what type of churn outlook is embedded in your postpaid phone — your postpaid net add estimates for this year?
Mike Sievert: Yes. First of all, yes, on integration, there’s more room to run. But principally, I think most of the room to run comes from value network, service brand. And look, we’ve been through this journey. We drove the Magenta brand to the best churning brand in this industry. And I certainly won’t be satisfied until T-Mobile blended postpaid is the best churning brand in this industry. And that shows you we’ve got some room to run because while we’re the most improved, which is a great price, we’re not the best yet. And so that’s where we’re going. That’s the goal. And it is, of course, there’s some room to run on integration. But we’re not separating it for you anymore because it’s very hard to chop up at this point.
All the customers are on the destination network. Some of them are on the destination biller. It’s not that determinative anymore as to which biller you have because we try to make that biller sort of very opaque to you and not transparent. You’re called T-Mobile in many cases. So it’s — it’s just hard to chop it up now. But yes, there’s still room to run to get people settled into fantastic rate plans, both on their device as well as on their service and to feel very careful with clear transparent services. But I’d say the bigger opportunity is our worst to first game plan that we know how to execute, which is give people a great gives them un-carrier moves that allow them to voice that deal and express in vote for T-Mobile. Give them the best network bar not, give them a fantastic path to great devices.
Give them a brand that’s famous for caring for them and the best customer service in the industry. That’s why our net promoter scores are the highest in the industry, and I expect that to translate to the lowest churn by the time we’re done.
