Good afternoon. Please note that today's call is being recorded. The operator will provide instructions as needed. I will now turn the conference over to Mr. Jud Henry, Senior Vice President and Head of Investor Relations for T-Mobile US. Please go ahead, sir.

All right. Welcome to the T-Mobile Fourth Quarter and Full Year 2021 Earnings Call. Joining me on the call today is Mike Sievert, our President and CEO; Peter Osvaldik, our CFO; as well as other members of the senior leadership team. During this call, we'll make forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements may cause actual results to differ materially from those expressed or implied, and those risks and uncertainties are detailed in our SEC filings, which I encourage you to review. Our earnings release, investor fact book and other documents related to our Q4 and full year results, as well as reconciliations between our GAAP and non-GAAP metrics, are all available on the Quarterly Results section of the Investor Relations website. With that, I'll now turn the call over to Mike.

Okay. Thanks, Jud. Well, my team and I are excited to be here today to discuss another remarkable year at T-Mobile. We shared with you a year ago that 2021 would be a foundational year for us as a merged company, a year in which we set bold goals for ourselves in terms of customer growth, profitability, network leadership and merger integration. Well, we not only exceeded our own targets, but also Wall Street's expectations. We are experiencing the greatest growth momentum in our history, setting record customer growth and service revenue growth, all because of the important investments we've made and will continue to make in our network leadership and in underpenetrated markets. This momentum sets us up for a very strong 2022 with plans to deliver another year of industry-leading postpaid growth, 10% in core adjusted EBITDA and over 30% growth in free cash flow at the midpoint of our guidance. We have big aspirations for this year, as Peter will explain more about in a minute. Our historic network build is a driving force behind our growth opportunity and it's central to unlocking our merger synergies. For the second year in a row, we set an audacious goal for Neville and the technology team, and they crushed it yet again. We set our sights on getting Ultra Capacity 5G to 200 million people and the team blew right past that goal, reaching 210 million in 2021. This is no small feat when you consider that it takes roughly three times the number of cell site upgrades to get from 100 million to 200 million. And that gives you a sense of the challenge that AT&T and Verizon have ahead of them. Once they woke up to our 5G lead and differentiation, they finally began lighting up mid-band 5G POPs, but still only tens of millions compared to our hundreds of millions. According to their own build plans, it will take them multiple years to reach 200 million people, and they still won't be anywhere near the depth of mid-band spectrum that we're putting to work across our larger footprint. This demonstrates the remarkable deployment machine that we have spent years building and how hard it is to replicate. And don't forget our extended-range 5G reached 94% of all Americans at the end of 2021 with speeds double that of typical LTE. This reinforces the importance of not just having the best spectrum portfolio, but how quickly T-Mobile puts spectrum to work for the benefit of consumers and businesses. We continue to add to our mid-band portfolio with our recent purchase in Auction 110. Once again, our prudent and opportunistic approach meant that we concentrated on supplementing our mid-band spectrum holdings in major urban and suburban areas, mostly aligned with our C-band purchases and, importantly, in places where these frequencies are well suited to the density of our network grid. That means we'll be able to deliver meaningful customer benefit with very little network capital and OpEx using existing towers, thanks to our completed agreements with American Tower and Crown Castle, and we're not slowing down. We continue to extend our years-long 5G lead on the competition, and independent network experts continue to recognize this. More than 20 reports from third-party testing firms in the last year confirmed T-Mobile is tops in 5G speed and coverage. In Ookla's latest testing, T-Mobile delivered a clean suite of every category and we're not just talking about individual 5G category wins like speed and availability. This is important. T-Mobile also won for overall network performance, meaning customers have a winning experience on the T-Mobile network, period. Opensignal's new report published last week states that T-Mobile customers enjoy the fastest 5G speeds and can connect to 5G more often and in more places than anyone else. And the gap has only gotten wider as we keep increasing our speeds and reach. Meanwhile, AT&T somehow managed to see their 5G speeds get slower year-over-year with an LTE-like 49 megabits per second. Okay. Let's talk about our industry-leading growth. Last year, we posted the best growth in our company's history. Across the entire span of our years-long Un-carrier journey, our best postpaid net add growth ever was in 2021. Our Magenta brand momentum is just incredible. We added 1.2 million postpaid account net adds, doubling 2020's adds, the highest reported in the industry yet again. This measure of total billing relationships is the best barometer of winning the switching decisions in the industry, something we're famous for as the Un-carrier. And our highest-ever postpaid net adds were 5.5 million, leading the industry for the seventh consecutive year and exceeding the guidance that we raised again just last quarter. And our 2.9 million postpaid phone net adds were up 32% from last year, even during our accelerated Sprint customer integration. Thanks to the strength of our Magenta brand, we're delivering at best-ever levels. Our Magenta postpaid phone churn in 2021 was the lowest in the industry for the second year in a row. We exited the year with great momentum as well. In Q4, we not only had the highest phone gross adds in the industry, but also the highest in our history. This last quarter, an interesting fact, our Magenta postpaid porting ratio was above 1.5x in Q4, and we're seeing those ratios trend even higher against AT&T and Verizon so far in Q1, while seeing our overall phone churn so far in Q1 move down seasonally just as expected. And to put this underlying momentum into perspective, if the Sprint churn was the same as the Magenta churn, postpaid phone net adds in Q4 would have been closer to 1.4 million and would represent the highest quarterly postpaid phone net adds in our history. And I couldn't be more excited about high-speed Internet, where T-Mobile was the fastest-growing broadband provider in the industry in Q4. Let me say that again. In Q4, T-Mobile, and not Comcast, not Charter or AT&T or Verizon, posted the most broadband net adds in the industry, and we're just getting started. Mobile customers are taking our Magenta MAX plan in record numbers with over 55% of new customers choosing our best plan. This wasn't part of our playbook before and is now a tailwind as our continuously improving network perception and competitive device offers are enticing customers right to the top of our rate card. And there's still a huge potential upside here as fewer than 15% of our postpaid phone customers are on Magenta MAX or equivalent plans. This affects ARPU and ARPA. When we shared our plan with you at Analyst Day last year, we assumed postpaid phone ARPU would decline 1% every year through 2023, consistent with our historical trends, and any benefit from Magenta MAX would be upside to the plan. Well, you're already seeing that upside as we just delivered flat ARPU, actually up $0.01 in 2021. And not to steal Peter's thunder, but on the strength of this trend, we now see postpaid phone ARPU being flat to slightly up in 2022 for the first time ever. In addition, we've seen our prime mix of credit applicants increase year-over-year every quarter in 2021, showing that our network and brand is consistently attracting some of the industry's best customers. We're off to a great start, bringing the same winning formula to smaller markets and rural areas. This is 40% of the country where we haven't meaningfully played before. We're growing our presence here as we expand the reach of our distribution and network. In just one year, our share has grown from approximately 13% to roughly 15%. Our share of port-ins in smaller markets and rural areas has increased multiple percentage points year-over-year, and these markets accounted for more than a third of our new accounts. This is one place our network leadership is beginning to shine. We're already the only 5G game in town for many of these communities. Our extended-range 5G provides speeds more than double the average LTE and reaches nearly five times more geographic coverage than Verizon's 5G. And we're rapidly rolling out our Ultra Capacity 5G to more of these communities at an unprecedented clip, expanding our mid-band 5G coverage to five times the land area that we cover today. By the end of 2023, as we move from 210 million people covered to over 300 million exiting 2023, we'll have dramatically expanded our reach. Meanwhile, AT&T and Verizon have finally started rolling out mid-band 5G and hope to soon be where we were almost two years ago. I'll say it again: we're two years ahead of AT&T and Verizon in 5G and two years from now will still be two years ahead. T-Mobile for Business had another great year as enterprise and government customers continue to do hands-on testing, and when they do, they see the strength of our network. This differentiation on the network experience is delivering win share well above our market share. Just to put that in perspective, we're already, today, at a win share in enterprise and government that would get us to our targeted 20% market share by 2025 if we just hold our win share at current levels. And we've still got room to run. We're in many ways just beginning the expansion of our solutions and capabilities. Last week, others said they were still in proof-of-concept for advanced 5G network solutions like mobile edge compute and private networks that they hope to commercialize at some point in the future. At T-Mobile, we already have commercial, revenue-generating agreements for advanced 5G solutions with multiple large corporations, including the federal government and a very large logistics company. I'm excited about building on our momentum with businesses in 2022 with our ever-expanding 5G network lead. And let me just go back and touch a little bit more on high-speed Internet. At the beginning of 2021, we were actually still in pilot. While we closed out the year with 646,000 customers, far exceeding our 500,000 target, it's abundantly clear that customers are loving the network performance and the simplicity of this 5G-based product. And with roughly 40% of high-speed Internet customers being new to T-Mobile, it creates another front door to fuel our mobile growth. We're excited about the revenue and margin contribution potential of this business as we ramp up further this year and next as our planned network capacity really hits its pace. T-Mobile 5G Home Internet is ready for its prime-time moment. And I think a lot of people are going to be surprised by how mainstream this product really is with our unique 5G network capacity to back it up. Okay, let's touch on our progress on our accelerated merger integration. While our Magenta business is firing on all cylinders, we're also successfully powering through the transition of the higher-churning Sprint customers faster than planned. At our Analyst Day last year, we laid out our post-merger plan to accelerate our integration, bringing many of our biggest milestones forward by a year or more. The Sprint customer network migration is an essential part of this integration. At the end of 2021, 64% of Sprint customers have been migrated onto the T-Mobile network, well ahead of the 60% target that we laid out back at Analyst Day. This is impressive in one year when you consider that less than 10% were migrated at the end of 2020. As we've previously said, we expect the billing migration to be relatively seamless to the customer as we begin to ramp up this final part of the integration over the course of 2022 and into the first half of 2023. As we enter the home stretch in 2022 for many of our Sprint customer integration initiatives, we believe that Q4 of 2021 was the high watermark for churn, in terms of our overall postpaid phone churn during the integration. Having seen the integration results so far, we're now confident that churn will improve because we've seen the performance of a now material cohort of migrations. As customers migrate to fully compatible devices anchored on the T-Mobile network and have a new Equipment Installment Plan instead of leasing, they show churn rates similar to our Magenta customers. A sizable minority of Sprint customers have now hit these milestones. Completing these upgrades and migrations won't happen overnight, but the bottom line is simple. While others are temporarily padding their net adds from elevated Sprint churn today, we're working to make that very short lived, which will create a growth tailwind for us, as you saw from our underlying Magenta performance, while simultaneously creating a corresponding headwind for them. And we like those kinds of trends. Okay. Finally, before I wrap up, I do want to touch on our accomplishments as a leading corporate citizen in our industry. We not only set and exceeded our bold business and financial goals in 2021, we also stayed true to our commitments to use our new network, scale and resources for good, building a more connected, equitable and sustainable future for all of our stakeholders. T-Mobile was the first telecom to commit to sourcing 100% of our total electricity usage with renewable energy. And we're proud to announce this week that we're the first to achieve that goal, just another example of where we're leading the industry. We also further extended our leadership position in helping to bridge the digital divide. We're removing economic and geographic barriers in multiple ways. Our centerpiece is Project 10Million, which has already connected 3.2 million students with free or subsidized service. And we're expanding our high-speed Internet availability to millions of rural households, providing an important new connectivity option right where it's needed most. We also participate in the government's Affordable Connectivity Program through Metro by T-Mobile and Assurance Wireless, providing lower-cost subsidized connectivity for many at a time when it's needed most. Okay. So let me sum it up. 2021 was our best year ever, and that's just because 2022 hasn't happened yet. Our positioning to simultaneously offer the best network and the best value is working while we also rushed to successfully expand into big underpenetrated segments. We saw strong ongoing growth ahead. We see it ahead in 2022 with a strategy that is really resonating with customers. Our network excellence has unlocked unprecedented growth for our Magenta brand, allowing us to move upmarket in urban and suburban areas with prime consumers and with enterprises and government. And at the same time, we've expanded our reach into smaller markets and rural areas and new product categories like high-speed Internet. We delivered big milestones in each of these areas in 2021 that really demonstrate our growth thesis with results. That customer growth helped to deliver industry-leading service revenue growth, and combined with our accelerated execution on our merger synergies, has enabled us to nearly double our free cash flow year-over-year in 2021. Only T-Mobile has this unique recipe with permission to win and room to run across multiple paths to unlock the massive shareholder value potential of this business. I'm incredibly excited to carry our momentum into 2022. This is a huge year, and there's no team I'd rather tackle it with. So, Peter, over to you.

All right. Thanks, Mike. As you can see, our strong results in 2021 highlighted our unique ability to leverage our 5G network to execute our exciting growth initiatives and accelerate the merger integration. Let's start by talking about growth. We achieved our highest postpaid accounts and customer growth ever in 2021, which resulted in the best service revenue growth in company history and in the industry. We delivered strong ARPA and ARPU trends throughout 2021 with postpaid ARPA up nearly 2% from a year ago, consistent with the accounts and ARPA growth strategy we have shared with you. This postpaid ARPA growth is driven by both customer growth across postpaid phones, including the success of our Magenta MAX offering, and value-accretive postpaid other connections. We realized approximately $3.8 billion in synergies in 2021, nearly tripling year-over-year, with around $2.8 billion in P&L savings, which funded our growth initiatives and network build, and roughly $1 billion in avoided costs. Through our higher service revenues and merger synergies, we reached record-high core adjusted EBITDA of $23.6 billion, exceeding the high end of our recently raised guidance. Our growth in synergies has also unlocked rapid free cash flow expansion, which nearly doubled year-over-year to $5.6 billion in 2021, and it's just the beginning of our unique journey to deliver significant shareholder value. So, let's talk about how our great execution and investments in 2021 set us up for another strong year of growth in 2022. We expect total postpaid net additions to be between 5 million and 5.5 million, reflecting continued focus on profitable growth with our Magenta brand as we continue the accelerated Sprint customer migration. This assumes roughly half of postpaid net adds coming from phones and continued growth in high-speed Internet. This net adds guidance does not include an expected small subset of customers who will not migrate upon the sunset of the Sprint network, which will be treated as a base adjustment at the end of Q1 for CDMA and the end of Q2 for LTE. The anticipated small impact of these adjustments is fully incorporated into our core adjusted EBITDA and free cash flow guidance. So, we expect core adjusted EBITDA to be between $25.6 billion and $26.1 billion, up approximately 10% at the midpoint based on continued growth in service revenues and merger synergies. And this excludes leasing revenues, which we expect to be between $1.1 billion to $1.4 billion as we continue to transition Sprint customers off device leasing. Our merger synergies are expected to further ramp to $5 billion to $5.3 billion in 2022, primarily as we unlock more network savings, particularly as we get into the second half of the year. Merger-related costs not included in adjusted or core adjusted EBITDA are expected to be between $4.5 billion and $5 billion before taxes, primarily representing network activities. These costs will peak this year as we laid out at Analyst Day, and we expect roughly one-third of the total to occur in Q1 and another third in Q2 and then taper off in the second half of the year as merger-related costs precede synergy realization. Net cash provided by operating activities, including payments for merger-related costs, is expected to be in the range of $15.5 billion to $16.1 billion, up more than 10% year-over-year. We expect cash CapEx to be between $13 billion and $13.5 billion as we continue the robust pace of our 5G deployment and network integration while also accelerating additional components of our build plan in order to capitalize on growth opportunities and enhance the customer experience. It is important to reiterate that our overall network capital budget remains unchanged. This acceleration further strengthens our competitive advantage by continuing the unprecedented pace of deployment, which unlocks the differentiated growth and significant cash flow generation potential of this business. Together, this results in expected free cash flow, including payments for merger-related costs, to be in the range of $7.1 billion to $7.6 billion. This is up more than 30% over last year, even with the higher levels of investment and does not assume any material net cash inflows from securitization. We expect our full year effective tax rate to be between 24% and 26% as 2021 included significant one-time benefits. And finally, we expect full year postpaid ARPA to be up again in 2022 as we execute on our strategy to continuously deepen our account relationships. As Mike mentioned, we expect postpaid phone ARPU to be flat to slightly up year-over-year in 2022, driven by continued customer adoption of Magenta MAX. Altogether, we expect 2022 to be a year of profitable growth and free cash flow expansion as we continue to invest in our network and the business. Our unique opportunity to unlock significant expansion in free cash flow is what we find so exciting and we look forward to building on our momentum this year. And with that, I will now turn the call over to Jud Henry for Q&A. Jud?

All right. Thanks, Peter. Let's get to your questions. We'll start with the questions on the phone. Operator, first question, please.

Thank you. We will go to our first question at this time from Phil Cusick of J.P. Morgan. Please go ahead.

Detail on the base adjustment at the end of the transition. Also, thanks for the direction on postpaid phones being half of adds. Can you give us more detail on how you think of this base adjustment at the end of the transition? Do you expect that these are sort of non-responsive customers that you'll treat as an adjustment rather than people who actually leave? And how else do you think about fixed wireless broadband for 2022 within that guide? Thank you.

Hey, Phil, we lost you at the beginning. Can you start over?

Sorry. Let me start over. So, thanks for the direction on postpaid phones being half of adds. Can you give us more detail on how you think of the base adjustment at the end of the transition? Do you expect that these are non-responsive customers that you'll treat as an adjustment rather than people who actually leave? And how else do you think about fixed wireless broadband for 2022 within that guide? Thank you.

Yes, absolutely. Thanks, Phil. So yes, we’re excited to continue on this journey and get the CDMA network shutdown and transition complete to really unlock things for customers, particularly with 5G. In terms of what we expect there, we anticipate probably on the order of a couple hundred thousand phone subscribers. What those represent is primarily non-usage subscribers that we've seen tail off. So it's not customers actively leaving in large numbers; it's largely non-usage customers. Of course, we'll probably see some other devices as well. You have some end-of-life devices that really aren't practical to be replaced. But again, we're excited about the progress we're making towards decommissioning these networks and both unlocking the synergies that come from that and putting all of that spectrum to use in the 5G space. All of that is incorporated in the guidance we gave you. With respect to fixed wireless, we really see 2022 being a bigger year than 2021. That's how we thought about it in the context of the guide that we gave you, but we did not give specific figures within the guide.

And maybe Dow, you can give a little color on how things are going with mobile Internet and what we're seeing and why 2022 will be a bigger year.

Yes. As we said earlier, this last year was our official launch — we ended the year with just under 650,000 customers. So it was a great growth year for us. The thing that's really exciting about this business is customer satisfaction continues to actually improve. We're already three times higher than cable on satisfaction and we're seeing it improve. So, customers are liking it and we have momentum. Another exciting piece is that 40% of the customers we're bringing on are new to T-Mobile, which is a fantastic opportunity for us to cross-sell our wireless services. Our economics, as we stated back at Analyst Day, continue to be very strong and attractive: postpaid-like ARPU, much lower acquisition costs. So economically, this is a compelling business. We're seeing all the things we expected continue to trend as expected and in some cases even more favorably. The penetration we're seeing across different market types continues to be very positive. The majority of our customers are coming from suburban and urban areas, and we do very well in rural areas where people are often looking for even one choice of high-speed Internet. The value proposition — the simplicity, the price, the quality of the product, and strong customer service — is resonating with customers whether they come from cable, fiber, or are looking for a different Internet provider. All of these things give us strong momentum; in Q4 we were the number one in industry net adds, and we expect to continue to lean into that going into 2022.

Last word on home Internet, Phil. I would say some people are going to be surprised — I mentioned this earlier — by how mainstream this product really is. You saw it in our growth numbers in Q4 where we beat the industry, but more importantly you see it in our usage profiles. Average users are using 300 to 400 gigabytes a month. We have a mid-single-digit percentage using more than a terabyte. People might say that's not as high as cable averages, but if you look at the broad distribution of cable users, their medians are right in that 300 to 400 gigabyte range and their averages are higher because a minority use multiple terabytes. We can support some heavy users, too, as we're demonstrating today, but we don't have to target those extreme users. Eighty to 90% of customers are in the sweet spot where our product performs well. That's a large TAM for us. This is a mainstream product because our 5G is backed by significant capacity from our rollout and spectrum portfolio. Nobody else is anywhere close for quite some time. Yes, please, Phil.

Mike, just a follow-up on one thing. You said the couple hundred thousand customers are mostly non-usage. Is it fair to assume the revenue associated with those is substantially less than average for those customers?

Yes. We don't have it exactly sized yet, but it's low-usage or no-usage and lower revenue. These are often customers who were offered a phone multiple times and haven't responded, and many have lower revenue profiles and little or no usage. We don't have a perfect size yet, but Peter is trying to get at that it's not material to our total subscriber base nor our revenues. When we begin the orderly transition which looks like it's on track for March 31, we'll do a residual base adjustment, but it won't materially impact our financials. Whatever impact we expect is fully embedded in the guidance we shared today.

Thanks very much, guys.

Thank you. We'll move next to our question from Brett Feldman of Goldman Sachs. Please go ahead.

Thanks for taking the question and great to hear the confidence you have in the cash flow profile of the company. Going back, that's one of the principal reasons why you had expressed confidence that you would be getting to a point where you could seek approval from the Board to pursue a fairly meaningful buyback program. Could you maybe revisit for us what are some of the conditions you would hope that the business would be in, in order to be in a position to go seek that approval? And to what extent would that be operational milestones like completing certain elements of the integration, such as the network integration, versus maybe being in line with certain financial objectives, such as where you’re looking to get leverage? Thank you.

Of course. I'll take you back to Analyst Day because essentially nothing's changed. We're a year smarter, but all that year has done is demonstrate that the thesis we shared with you last year is intact, if not better. What we said then is it's predicated on the massive cash flow potential of this business, particularly in 2023, 2024 and 2025 and beyond. We set an aspiration of about a $60 billion program during those years, with the possibility of starting sooner, and all of that remains intact because the thesis is intact. You saw that we authorized a significant capital build for this year because we're running well ahead of schedule on integration. We want to get this integration behind us. That means next year’s capital profile will be lower; we'll see a significant step down in capital next year versus this year. We don't have any formal updates for you, but the entire thesis that that magnitude of buyback makes sense and is a strong way to return value in those time frames, including the possibility of starting earlier, is intact. I can't parse it further in terms of our deliberations beyond that, sorry.

As a follow-up for Pete, you had previously expressed the goal of getting to investment grade. I don't think that was a prerequisite for pursuing buybacks, but obviously the rate environment has changed. Are you thinking around your balance sheet priorities have evolved at all? Thank you.

No. They haven't. It's straightforward: according to our outlooks, we will achieve investment grade in the time frame we described. According to our outlooks we have the wherewithal to do these buybacks. They are not in tension with each other, and there are no preset predicates for when we might pursue them. I don't have a formal update for you.

We'll move to our next question from Craig Moffett of MoffettNathanson. Please go ahead.

Hi, thanks. Let's stay with fixed wireless broadband. Having now seen the rapid growth that cable operators posted in their wireless businesses, can you talk about how you think about coexisting with cable? I imagine they don't take a lot of subscribers directly from you, but they now occupy a similar kind of value/price that you occupy. How much do you think that affects your growth trajectory?

Well, Craig, we also posted the biggest postpaid numbers in the entire industry in Q4 and the highest postpaid net adds in our history in full year 2021, all during which we're seeing increased activity from cable. Cable had a strong quarter, but it wasn't an outsized quarter; they were roughly 10.4% of gross adds and have been consistent around 10%. We see them as consistent performers and we are thriving in that environment. Our value proposition is distinct and it's resonating — particularly the Magenta value proposition we bring to market. Remember what I said earlier: if Magenta churn matched Sprint churn, this quarter would have shown 1.4 million postpaid phone net adds, the highest in our history. That's meant to illustrate the underlying trends of our business. We are coexisting with cable and we're not concerned about some step-change catalyst from them.

We'll go next to Michael Rollins of Citi. Please go ahead.

Thanks. I wanted to touch upon the flow of performance over the course of 2022. You mentioned earlier that integration investments would be one-third in Q1, one-third in Q2, and then the remainder in the back half. I'm curious how we should think about the pace of churn — normal course churn or Sprint-related churn — over the course of the year as you continue the integration, how to think about the synergy realization and whether EBITDA growth is back-end loaded for the timing of those savings and then as it relates to free cash flow.

Sure. Let me make a comment on churn, then hand it to Peter who can share color on timing. On churn, we are seeing a seasonal step down as expected, and we're also seeing improvement in our relative performance with Magenta porting better so far in Q1 than in Q4, where it was already very strong. We believe Q4 was the high watermark quarter for churn during this multiyear integration. Why can we say that? Previously we saw a small group of customers who completed migration and appeared to have churn like Magenta customers; now we have a significant cohort that has migrated and they also show churn similar to Magenta. It's a minority today, but it's a material cohort: millions that have moved across with compatible devices, one or more phones on T-Mobile payment plans instead of leases, and domiciled on the T-Mobile network. When those pieces are in place, churn looks just like Magenta. So it's now easier to predict that churn will improve as we complete migrations across accounts. Peter, on the timing around financials and synergies, what color can you provide?

Yes, absolutely. I'll try to give more than a non-answer. On merger-related costs, from the guide we provided, we anticipate about a third of that in Q1 and about a third in Q2. As you start decommissioning cell sites, you'll see the majority of these costs associated with that activity. Despite the acceleration of our synergy realization and beating the 2021 target, we're still projecting the same total amount of merger-related costs originally outlined, which were $15 billion. Instead of the prior split of $11.5 billion OpEx and $3.5 billion CapEx, what we expect now is about $12 billion OpEx and $3 billion CapEx because acceleration meant some items that we thought would be capitalized flipped to OpEx given the shorter time frame. As you start decommissioning cell sites in particular, you'll start seeing the network synergies build in the second half of the year. Those network synergies are the things that will drive core EBITDA improvement. Of course, there are seasonality factors and holiday gross add flows that will affect the timing, but that's the color around merger-related cost and synergy development for the year.

We'll take two questions from Twitter and then return to the phones. Neville, a question from Bill Ho asks: With Auction 110 spectrum expanding our mid-band TDD, what are the issues beyond clearing to put this new spectrum into service? Also, regarding Ultra Capacity 5G reaching 260 million POPs by the end of this year and 300 million by the end of next year, is that organic or does it include roaming partners? Please respond.

Great. Thanks, Mike, and thanks for the question, Bill. We're very pleased with the outcome in Auction 110 — a great addition to our mid-band spectrum position. Regarding issues to put this new spectrum into service: first, it's a new band, so there are coordination and timing considerations. It does have some complexity with coordination with the Department of Defense to navigate, so that takes some time. Radio infrastructure in this band is new and needs to be brought on, and supply chain can influence timing. Third, handsets and devices need to support the band. We see major OEM device availability in this band toward the end of this year or early next, so for T-Mobile our plan is to start deployment of Auction 110 spectrum in 2023 in conjunction with the C-band spectrum we purchased last year. For us, that will be a single-radio solution, unlike some approaches that require two radios integrated together. We plan to deploy spectrum at the right time as we move into 2023. We also purchased spectrum in key areas of the country where it's most suited for deployment and capacity use. On the targets of 260 million POPs by the end of 2022 and 300 million by the end of 2023, I'm very excited — that's an impressive footprint and will extend our lead. This build is effectively an organic T-Mobile build; roaming partners will be very few and far between. In fact, we expect others may ask to roam on our network given the footprint and capacity we'll have. So the build is primarily our own.

Okay. Back to the phones in a minute. But first, Roger Entner asked via Twitter and Mike Katz asked about progress in the business segment, both for phone and for fixed wireless. Could you give a little color on the quarter and what you see ahead in 2022?

Yes, thanks for the question, Roger. I'm very proud of the progress we made in business last year. As Mike mentioned at the beginning of the call, we left 2021 with growth metrics and a win rate in enterprise that would get us to the 20% market share target by 2025 if we hold our current win share. We left the year with a lot of momentum; Q4 was our best quarter in enterprise, better than Q3. We're seeing the size of wins increase — not just new customers but deeper relationships, exemplified by Alaska Airlines selecting us as a primary wireless provider. We're getting wins in both phone and postpaid other connections, and in enterprise and government, the customer lifetime values on other connectivity are greater than phone in many cases, so it's very profitable. On fixed wireless, part of our growth in 2021 included business customers, and I see small business as a major growth vector in 2022 — many small businesses today have very limited choices and often pay high prices. We think there's a big opportunity in small business as well as in larger enterprise cases where we can provide primary or redundant service. Dow and I work closely on this and I see it as a major growth opportunity for 2022.

Terrific. Thanks, Mike. Operator, next question please.

Thank you. We'll go next to Jonathan Chaplin of New Street. Please go ahead.

Thanks. Two quick ones. One for Peter: can you give context for what you're assuming in your net add guidance for the industry? Is it another year of 9 million adds to the industry? Are we heading back toward a pre-pandemic trend of maybe 5.5 to 6 million? And for Mike, sticking with fixed wireless broadband, I'd love your thoughts on the pricing environment in broadband and a sense for other markets where you're up against Verizon’s fixed wireless broadband product. How does your message around 5G resonate against their $30 pricing?

Jonathan, the important point is that at some point the industry will likely normalize more toward pre-pandemic levels, but it might come in ebbs and flows. The most important thing is who has a clearly articulated strategy backed up with proof points on how to generate growth. That's why we're excited about our guidance: we have underpenetrated opportunities in smaller markets and rural areas, enterprise and government, and high-speed Internet, and we're building a differentiated network that will stay ahead. That's going to fuel the opportunity to bring the best product and value. Despite what the industry overall does, we feel very confident in the guide we provided because of our product differentiation, traction and growth opportunities in underrepresented areas.

On fixed wireless versus Verizon’s offering, we're operating at a different scale. In Q4 we delivered more net adds than Verizon has delivered in the entire time they've been pursuing fixed wireless in the U.S. They started with mid-band and began with limited geographic coverage concentrated in urban areas. We started planning our mid-band strategy in 2018 and have been rolling it out for about two years, so our time-to-market advantage is large. Regarding pricing, our offers are resonating: having a product with substantial capacity and mainstream usage at $50 including taxes and fees, with no promotional gimmicks, is very compelling. The response to our offers is strong. We don't aim to chase every competitor's pricing move; we focus on giving customers a strong product supported by network capacity and compelling pricing, and that is working for us.

Great, thanks.

We'll move next to Simon Flannery of Morgan Stanley. Please go ahead.

Thanks. Could you talk about some of the key priorities for the CapEx program? I think some were surprised in December when the guide went up year-over-year given that you've achieved the 210 million POPs already, so any color around that? Also, any color around the FAA dispute regarding C-band availability, and whether that gives you an opportunity to do more with enterprises that rely on connectivity around airports? How and when do you think that issue will be resolved? Thanks.

Thanks, Simon. This is a year to press our lead. We've built a very high-performing deployment machine — not just deployment crews, but supply chain, radio feature work, and logistics — and we want to extend our lead in 2022. We'll continue expanding coverage and capacity, support the T-Mobile Home Internet growth, and complete integration work such as upgrading high volumes of Sprint sites to add coverage and capacity. There's a lot ongoing and we have the teams and processes to execute. It's a great year to extend and lock in the leadership we've established.

Simon, on the FAA controversy: it would be tempting to sit on the sidelines, but we think the positions of AT&T, Verizon and the FCC will be validated once studies and assessments are completed. These are different frequencies than radio altimeters typically operate in, and a properly functioning radio altimeter should not be interfered with by C-band. We've been somewhat left out of the story because of how it's been reported, but we'll see how it unfolds. If it's ultimately found that some old or faulty radio altimeters pick up stray signals, I'm sure the country will address that. We're not in a rush to deploy C-band; we want it done right. We believe the industry and FCC positions will ultimately be validated.

Thanks a lot.

We'll go next to John Hodulik of UBS. Please go ahead.

Hi, Mike. A couple of questions. First on fixed wireless: do you have a sense of where those customers are coming from — cable, new to broadband, or moving from other categories? And in terms of the ramp, how long does it take to get to a run rate in net adds where you're at full speed — now that logistics have largely been worked out and the business model is clicking? And a follow-up on buybacks: given the potential magnitude and Peter's comments, is there any chance buybacks could start in the second half of the year, when you're largely through the integration? Thanks.

The great thing is we're across many different markets and seeing wins across all of them. We are seeing some customers who have never had broadband before, and certainly we do well in rural and small-town America. The majority of our customers actually come from suburban and urban markets and many are coming from cable and fiber. Why? In many cases, we offer a simpler, better-priced solution when you add in fees and charges from cable. Customers are generally unhappy with cable pricing and complexity, so our value proposition, the product simplicity and the customer experience resonate. As for trajectory, we follow the network build — Neville is covering the country and adding capacity, and our business grows and scales with that build. We expect continued growth as availability, capacity and supportability increase over the next several years.

On the buyback timing, there's no particular preconceived milestone. When we put out the thesis a year ago, we envisioned rapidly accelerating cash flow and value creation that would enable a large buyback program, potentially in 2023–2025, with the possibility of starting sooner. Everything we saw then is still intact and underlying trends like our cash flow performance this year are improving. I can't provide more details on Board deliberations at this time.

Got it. Thanks, guys.

Next question from Doug Mitchelson of Credit Suisse. Please go ahead.

Sorry to follow up on broadband, but can you offer context on business versus residential customers? Also, relative to the build-out of the network, is there any reason why Q4 isn't the right growth pace to look at for fixed wireless net adds in Q1 and beyond? And separately, regarding promotions like Netflix and Apple TV+, how have those impacted marketing? Would you look to add more services? Has that been efficient for you?

We see 2022 significantly bigger than 2021 and 2023 bigger than 2022 — a ramp up as we follow network build and increase capacity. Fixed wireless is a new industry and seasonality isn't well established yet. In 2021, we were still allocating capacity during integration; as capacity massively increases, it opens more doors because our opportunity in fixed wireless centers around excess capacity. Jon, on partnerships and content and their impact on marketing?

Thanks. We're very excited about the content strategy. We pioneered content offers like Netflix On Us in 2017 and followed up with YouTube TV discounts, Apple TV+ for a period, and in Q4 we announced Paramount+ for 12 months on us. This is resonating well: it's top-tier content delivered with the best value. In smaller and rural markets, people have seen Un-carrier messaging for years and want access to that value — now we're bringing it. Our coverage analysis uses 770 markets across the country. In the markets where we have permission to win across those, about a third of the markets are the initial focus. We moved market share from roughly 13% to 15% in a year by focusing on a subset of markets, and we see a much larger opportunity as we expand the permission to win into more markets. These are markets with limited choices and high costs, and our network superiority plus the Un-carrier playbook gives us a big opportunity to continue growing.

Helpful, thanks.

Next question from David Barden of Bank of America. Please go ahead.

With the DISH announcement and their relationship with AT&T and Verizon's TracFone deal, high-margin wholesale revenue is somewhat uncertain in 2022. You've said historically you expected this trajectory to go down over time. Can you share more color on how you think this will unfold into 2022?

You're talking about DISH and wholesale. Our plan with DISH has always been that, ultimately, they would build their own network and need less of ours. The AT&T deal they struck appears to accelerate that, and that's fully embedded in our guidance. Previously, in 2021 our revenues from DISH were under $2 billion; the guidance we gave today assumes a significant step down in 2022. As DISH customers move off our network, that frees capacity for us to pursue our core business. We recently struck a deal for a thoughtful multi-year transition with TracFone and have an exclusive multi-year agreement with Google for their offers. We're in discussions on renewals and new wholesale opportunities. So while wholesale revenues from certain partners will decline, that opens more capacity and opportunity for our core retail and fixed wireless businesses, which are growing strongly and are part of our long-term strategy.

Thanks, guys.

All right, we have time for one final question.

Our final question comes from Peter Supino of Bernstein. Please go ahead.

Time flies when you're having fun. I have a long-term question, so please expand your aperture many years. T-Mobile has about 27 million accounts. The market appears to trend toward more bundled relationships with consumers, and your fixed wireless broadband initiative looks timely in that context. But investors often ask: how does T-Mobile thrive over the long run and maintain a valuation multiple when there's a finite ability to sell fixed wireless in a converging marketplace? Does that get solved by densification, more spectrum, or other strategies? What's the long-term plan?

Great question. First, the premise assumes certain convergence patterns that may or may not play out the same in the U.S. Broad secular trends work in our favor: content and communications have moved from linear to Internet, and much of that Internet activity is moving mobile. We're the leading pure-play mobile Internet company in the U.S., which is a strong position. We have a differentiated asset base with significant capacity: our mid-band and millimeter wave portfolios and years of deployment advantage. That capacity allows us to create businesses, both pure connectivity and services that surround connectivity, as we're already doing in enterprise. We're entering revenue-generating agreements for advanced 5G services with major organizations, including federal and large logistics customers — not trials but commercial agreements. With a differentiated asset base, strong balance sheet, trusted brand, and an entrepreneurial team, we can continue to create growth paths. We thought this through over a five- to six-year horizon and see trends that give us confidence in significant shareholder value creation ahead.

Thanks so much.

Okay, great. Jud, any final words?

No, I just appreciate everyone joining us today. We look forward to speaking with you again soon and telling you more about this exciting journey in 2022. If you have any additional questions, feel free to reach out to the Investor Relations team or the media relations team. We look forward to speaking again soon. Thank you.

Bye, everybody.

This concludes the T-Mobile Investor Relations Fourth Quarter Earnings Call. If you have any further questions, you may contact Investor Relations or the media department. Thank you for your participation. You may now disconnect and have a pleasant day.