T-Mobile US, Inc. (NASDAQ:TMUS) Q4 2022 Earnings Call Transcript

Jud Henry: It does. We can probably take one more question and then we got to hop it up. So operator, one more and then we got a call it a day.

Operator: So our next question comes from Peter Supino with Wolfe Research. You may proceed with your question.

Peter Supino: A question on postpaid phone ARPU. For many years, your ARPU model was flat to down annually and 2022 is a fantastic year for ARPU. Thanks in part to MAX. MAX sell-in still sounds really steady for ’23. And so, thinking about your outlook for flattish. I’m just wondering why we might not expect to see more growth in ARPU and maybe even a similar year to 2022 in ’23.

Mike Sievert: A part of it is because it’s early in the year, and it’s not that clear where the dynamics of competition will be. If you look back to our multiyear Analyst Day targets, we actually thought back then, back to all the puts and takes, and Peter just kind of talked about this, that there would be much more going on, on sort of the service revenue ARPU side, And we didn’t anticipate as much as what wound up happening on the device side. And so we guided accordingly on service revenues and ARPU where we achieved the ’23 service revenues last year and ARPU growth was a big reason for that. But we had unexpected costs on the device side because the factors of competition sort of shifted. So it’s a little early to comment on ARPU.

We do know that if there’s an opportunity for growth versus just generally stable, it would be more in the second half than the first half, and there’s reasons for that. But we really like where this is. The underlying dynamics on Magenta MAX are stronger not moderating. They are stronger than they’ve ever been. But on the other hand, we’re finding success with military, with seniors, with business and other things that could be dilutive to ARPU, but are fantastic on a CLV basis. And that’s why we have to be careful about not getting people to hooked into ARPU. ARPA, we’re guiding for growth because we see lots of opportunity for customers to continue to double down on their relationships with us across the board, including new device types and including home and business broadband.

So hopefully, that gives you a little bit of puts and takes on kind of why it unfolded the way it unfolded.

Jud Henry: Thanks, everybody, for joining us today. Again, I look forward to catching up with you again soon. If you have any other questions, please reach out to the Investor Relations and Media Relations team, and have a great day.

Mike Sievert: Thanks, everybody.

Operator: Ladies and gentlemen, this concludes the T-Mobile fourth quarter earnings call. Thank you for your participation. You may now disconnect and have a pleasant day.