Michael Rollins: Thanks.
Peter Osvaldik: You bet. Thanks, Mike.
Operator: The next question is from Eric Luebchow with Wells Fargo. Please go ahead.
Eric Luebchow: Appreciate it. Thanks for taking the question. Maybe I just wanted to touch on the cost side of the business. I know you mentioned you’re at your target merger synergy run rate and you had the head count reduction earlier this year. What other initiatives are on the table to kind of help you keep moving leverage up in the business, either on the technology side in distribution of small markets or anything else that you could comment on? Thank you.
Mike Sievert: Yes, I’ll just start by kind of reminding everybody that, as Peter already pointed out, the ’24 guide at the midpoint is higher than our earlier Capital Markets Day guide, and it’s 9% year-over-year, which is three times the expectation of our peers. And so it’s really terrific to see this business scaling and without the incremental year-over-year benefit of big expansions and synergies, that’s mostly behind us almost entirely. And so that’s really great to see. It obviously comes from ongoing progression of valuable customers, some of the best customers with the best payment records in the industry as well as efficiencies that we can see in how we run the business.
Peter Osvaldik: Yes. And on to that, as we said, a big part of this is also the service revenue growth leadership that we anticipate, that we expect to increase in 2024 on a growth basis relative to ’23. And then there’s, it’s across the business. I mean we’ve made tremendous investments as we are expanding the network as we are expanding distribution. We’re reaping some of that. But make no mistake, this is a very scrappy team that’s looking at not only just currently where can you continue to drive efficiencies. But how do you take advantage the network modernization of technology modernization of all the buzzwords that you hear these days around AI and other things, but how do you do it in an uncarrier fashion with the customer at the center of it while driving efficiencies out of the business. So we see a lot of room to run here over a multiyear arc on this front.
Eric Luebchow: Great. Thank you.
Operator: The next question is from Bryan Kraft with Deutsche Bank. Please go ahead.
Bryan Kraft: Hi. Good afternoon. I had two, if I could. First, can you talk a little bit about your expectations for upgrade rates as they relate to this year’s free cash flow guidance? Do you think these low upgrade rates we’re seeing across the industry are going to begin to tick up anytime soon? And are you doing anything proactively in retention that might drive it up? And then separately, Mike, you mentioned that you’re in testing with SpaceX on their device, direct-to-device solution. When you do get to the commercial deployment of the service. Just curious as to what your expectations are for the products capabilities for customers how it fits into the product set? And also, if you have any sense for how much of your base this feature or this capability is actually important too? Thank you.
Mike Sievert: Terrific. Great. Well, let’s start with upgrade rates. We don’t see big catalysts for change here. Around the edges, there may be some, and we can talk about those. For example, we have a brand-new rate plan called Go5G Next, which offers upgrade benefits, could change it on the margin and other things. But generally speaking, people are keeping their phones longer. And they’re doing that because the phones are very expensive, and they’re very capable. For our customers, 75% of them have 5G phones that are able to take advantage of the vast majority of our advanced network capabilities that we already have implemented. And so those kinds of things are a great position to be in, and I don’t think there’s a big catalyst for change in 2024.
As it relates to SpaceX, yes, we’re really excited about it. And way back when we announced it, we talked about the capabilities, starting with text messaging, peer-to-peer text messaging, the ability to reach people if you can see the sky. We expected to cover the Continental US big parts of Alaska, big parts of the world’s oceans and be able to allow you to stay in connection with your loved ones. That will progress into picture messaging and eventually talk and other capabilities. And the beta we expect if things go well, we should have these capabilities in customer hands this year. As it relates to who it appeals to, look, anybody that finds themselves on occasion in one of the 500,000 square miles in this country, not covered by any of the networks.
And that’s most of us. And so there’s something about the peace of mind of knowing that if you can see the sky, generally speaking, you’re connected. And that’s our dream. That’s the aspiration that we set out when we announced this partnership, and it’s great to have the first satellites in the sky.
Bryan Kraft: Thank you.
Mike Sievert: You bet.
Operator: The next question is from Kannan Venkateshwar with Barclays. Please go ahead.
Kannan Venkateshwar: Thank you. Two, if I could. First is on Fixed Wireless. Earlier in the year, I guess, in ’23, I think we all thought that the second derivative might slow down a little bit and in terms of growth rates, it might be closer to 500,000. But when we look at the second half of the year, it feels like there is still some second derivative growth left. And so it would be great to understand if this is demand driven or to some extent, as you open up spectrum and as your distribution channels become more efficient, this is more supply driven. So it would be good to understand the mix of what’s driving that growth? And then secondly, on the ACP side, sorry, one more housekeeping question. I mean as you explained, I mean, it’s not a big impact, and it’s mostly on the wholesale side.
