Peter Osvaldik: Yes. And just housekeeping wise, again, we don’t participate in ACP on the postpaid side. We have a little immaterial amount through Metro and the rest, Assurance isn’t reported in our subscriber counts and of course, wholesale customers are not either. So that’s it with respect to ACP. And on bonus depreciation, look, we’re continuing to monitor the developments. And of course, we’re very supportive of a tax regime that stimulates investment into the network into US leadership on this front. With regards to ’24, we’re not anticipating to be a significant cash taxpayer, so it wouldn’t impact the guide for 2024. And we’ll see where it goes. And of course, as it develops, we could update you later in the year for outer years.
Jonathan Chaplin: Awesome. Thanks, guys.
Operator: The next question is from John Hodulik with UBS. Please go ahead.
Mike Sievert: Hi, John.
John Hodulik: Hey, thanks, guys. Hey, good afternoon. Hey, if we could talk a little bit about competition, that would be great, I guess, from, we can take it from both sides. First, from a gross adds standpoint, you guys saw some acceleration in phone gross adds. Quarter-to-quarter. So just what you’re seeing in terms of sort of competitive offers in the market in the fourth quarter and maybe into the first quarter. And then on the other side, churn ticked up for after the first time in a while, I think. So what’s potentially driving that in terms of postpaid phone churn? And do you expect it to that to remain elevated or keep moving in that direction? Or what should we expect there? Thanks.
Mike Sievert: I’ll start on churn and maybe hand it to Mike on competition. Churn was up 9 basis points sequentially. And if you look at the last several years since we completed the merger from Q3 to Q4, the average is 10 basis points sequentially. So it’s right in line, maybe even a little better than past sequential moves. Our business tends to be seasonal, with Q4 being a higher time period of churn. And that being said I was really pleased with getting the 9 basis points given some of the optimizations that were fully implemented in Q4 that I mentioned in response to an earlier question. Look, there’s no question in my mind that we are on a journey towards the best churn in this industry. And that’s because we have the best value and the best network and a history of being able to treat customers with respect.
And so we’ll find that journey making its way. ’24 is going to be an interesting year because as I mentioned earlier, there are optimizations across the board that we may find are in our best interest to take. As long as they don’t put at risk, our superior value proposition as long as there are things that will be well accepted or even appreciated by customers. And so I can’t give you specifics on the guide. I can tell you that with this churn, 9 basis points higher sequentially, we delivered a big beat in postpaid net additions on phones of 934,000, bigger than we guided even during the middle of the quarter. And so we’re very comfortable with the formula. And we’re comfortable with the formula in part because competition has been remarkably consistent.
I’ll let Mike talk about what we’re seeing.
Michael Katz: Yes. This has always been a really competitive environment in the industry and dynamic and competitive. And honestly, that’s the way we like it. For us, when there’s lots of competition and customers are looking around shopping, T-Mobile ends up being the net winner. And you see that both in ’23 with, and in Q4, specifically with T-Mobile having the highest share of net adds. And you saw it consistently throughout the year with the account growth that T-Mobile posted, which was highest by far in the industry. What we saw in Q4, I would describe as generally consistent with what we saw last year. Offers were pretty much the same, very aggressive, but pretty consistent with previous year. I think what’s been different is the way that T-Mobile or what’s evolved, maybe I should say, is the way that T-Mobile competes.
Mike and Peter both talked about this value proposition we have of best value, which historically has always been the thing that T-Mobile has owned. And then more recently developed the best network. And those two things together really creates a unique value proposition that’s unmatched in the industry and is resonating with customers. You saw it again in Q4, and you continue to see us enhance it as we did this year with the launch of the Go5G plans the launch of Phone Freedom, which in a shopping time like Q4 as customers are looking to upgrade, we think, really resonated, and you saw it in the net add performance.
John Hodulik: Okay. Thanks, guys.
Mike Sievert: You bet. Thanks, John.
Jud Henry: Thanks, John. Next question please.
Operator: The next question is from Michael Rollins with Citi. Please go ahead.
Michael Rollins: Thanks. Good afternoon. Just two questions, if I could. First, when you look at the core EBITDA margin profile, are you still targeting to get to a margin at or above 50%? And how do you see the pacing to get there? And then second, was there anything specific that influence the pace of share buyback dollars, I think it was down a little bit year-over-year, down sequentially and maybe put that into the context of your current capital return goals that you highlighted a few months back. Thanks.
Mike Sievert: All right. Let’s start with core EBITDA and core EBIDTA margin. Peter?
Peter Osvaldik: All right. Well, Mike, certainly, our long-run aspiration is to continue to see margin expansion in core EBITDA. But much like you see us focus really, the primary focus here is to continue to be the leader and continue expanding in our ability to deliver free cash flow margin relative to service revenue because that takes out all the noise of relative differentials and how P&Ls are recognized, backhaul, et cetera, and really provides a true color for value creation. And that’s where we’re already in a leadership position and continue to see more expansion opportunity there.
Mike Sievert: Great. And you obviously saw us in Q4 take some investments to make sure that we could have a beat on customers and revenues, and that’s just helping with our confident guide in 2024. So when we see opportunities like that, we take them. We’ve talked with you many times about that in the past. Second question was about share buybacks. What happened in Q4? There was a little bit of a slowdown. What are we seeing now? What do people expect?
Peter Osvaldik: Naturally, Mike, I think what you saw was a little bit of a tapering. We’re not going to talk about day-to-day dynamics, but a little bit of a tapering of the share buyback program. As we were nearing that issuance and that trigger point of the SoftBank share. So we’re past that now. I think we’re confident in our ability to deliver what we’ve signed up for here, which is another incremental up to $16 billion currently authorized in share buybacks and dividends for 2024 and pacing towards that.
