T-Mobile US Inc (TMUS) 2014 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by.

Welcome to the T-Mobile US fourth-quarter and full year 2014 earnings call.

(Operator Instructions)

This earnings call is being recorded today, February 19, 2015.

I would now like to turn the conference over to Mr. Nils Paellmann, Head of Investor Relations for T-Mobile US.

Please go ahead, sir.

Thank you very much, welcome to T-Mobile's fourth-quarter and full year 2014 earnings call.

With me today are John Legere, our President and CEO; Braxton Carter, our CFO; and other members of the Senior Leadership team, including our newly minted COO, Mike Sievert.

Let's get to the disclaimer.

We have another Un-carrier move today, we have a short disclaimer.

During this call we make projections and statements about the future performance of the Company which are based on current expectations and assumptions.

Please consider the risk factors included on our annual report on Form 10-K that could cause our actual results to differ materially from those in the forward-looking statements.

In addition we will comment on non-GAAP financial results on this call.

You can find reconciliations between GAAP and these non-GAAP results on our Investor Fact Book on the Investor Relations page of our website.

Let me now turn it over to John Legere.

Okay good morning, everyone.

Thanks for joining us.

Welcome to our -- the second Un-carrier earnings call and open Twitter conference.

We've actually added a live video stream here from the New York Stock Exchange.

And on Twitter you're going to get to see what's it's like right here in the room with a full behind the scenes experience as harrowing as that is.

Sort of like one of those restaurants with an open kitchen where you get to see the chef prepare your meal and decide how you feel about that.

But we're going to keep pushing the edge in making this a true Un-carrier experience for everyone.

We'll generally go with the same Q&A approach as last quarter.

However, we did learn last time that to accommodate more of your questions, we're going to extend the call for, and I'd be clear about this, up to 90 minutes and take questions via Twitter, text and on the phone.

But certainly if after 17 minutes, you are completely happy and the stock is going up considerably, we'll feel free to terminate it at that point in time.

You're going to see in the video that our CTO, Neville Ray, is not in the room today.

He's joining us remotely since he's out testing remote venues and destinations network coverage, which is a long way of saying he's skiing somewhere today at an undisclosed location.

So be safe out there, Neville.

Let me give you very briefly some of the highlights of our really fantastic results.

The net is the Un-carrier revolution continues.

2014 was a record year of growth as T-Mobile continued to be one of the fastest-growing wireless Company in America.

And we really blew away all of the competition.

Our 8.3 million total net additions clearly demonstrates the continued power of the Un-carrier approach.

Now 4 million of these were postpaid phone nets, which is the best in the industry by a very long shot.

Let me put that in perspective for you.

We captured virtually all, as in 100% of the industry postpaid phone growth in 2014.

And compared to our main competitors, we added three times as many postpaid nets phone additions as Verizon, five times as many as AT&T for the full year.

In the case of Sprint, I would have to say it's infinite for those of you that understand algebra, you'll understand.

I'm sure we'll all come back to that in a lot of different fashions during Q&A.

Now we are number one in the prepaid segment with over 16.3 million customers.

We added 1.2 million customers for the full year.

Again, the most in the industry and as much is 14 times our nearest competitors.

Much of this is fueled by the rapid expansion of our MetroPCS brand which is now operating in 55 markets, up from the 15 when we closed the transaction.

And a lot more to talk about with Metro today as well.

Here's another insight.

And I know you've been looking for a lot of final insight as to what took place in 2014 and what took place in Q4 and what's taking place now competitively.

Our postpaid porting ratios for the full year were 2.15.

And we were positive every single week of every single month for the whole year with every carrier.

So we will go into that with some detail.

But for the entire year, there was no week when any carrier posted ported positive with us.

And these are even improving into Q1.

So, we'll talk some about that as well.

The strong results are also an affirmation of our improving brand strength.

The Magenta brand is getting stronger and stronger as evidenced by the fact that our postpaid share of gross ads has increased 46% on a full year 2014 over 2013.

And that bodes very well going into 2015.

And the Un-carrier revolution is as you've seen far from finished.

We made a few significant moves in the fourth quarter including introducing Un-carrier 8.0 Data Stash.

We also brought back the popular 4 for $100 promotion and launched a 2 for $100 unlimited family plan promotion.

Data Stash and these continuing promotions have carried the momentum into the first quarter of 2015 and we'd be glad to field questions on whether future Un-carrier moves are coming around the bend.

T-Mobile's blazing 4G LTE network continues to be the nation's fastest.

We ended 2014 with 265 million 4G LTE POPs, that was significantly ahead of our committed 250 million target.

And by expanding our network to 300 million 4G LTE POPs by the end of 2015, we intend to further level the playing field with our major competitors.

We are quickly deploying wide band LTE already live in 121 market areas and are aggressively deploying low band spectrum most recently launching 700 megahertz A block spectrum in Houston and Dallas.

And now that the AWS-3 auction is complete and the quiet period is over, let me just touch on that topic.

I weighed in on the auction outcomes yesterday, but want to reiterate what we always said, that we would be disciplined in this auction and that's exactly what happened.

We won 151 licenses for approximately $1.8 billion in total spend at an average price of $1.59 per megahertz POP which is significantly lower than the average in the paired auction.

We improved our mid-band spectrum position in a number of markets including Houston, Miami and Kansas City to mention a few.

Overall and for the near term, near to medium-term, we feel good about our mid-band spectrum position.

For sure, the unrestrained bidding by the largest two carriers in the recent auction confirms the importance of a robust spectrum reserve in the upcoming incentive auction for low band spectrum with the two guys, large guys currently control 73% of all low band spectrum.

And if the government wants a competitive wireless market, they need to establish auction rules to reflect that.

In addition, we don't want to see a delay in the upcoming broadcast incentive auction, the sooner it happens the better.

We plan to participate strongly in that auction to obtain needed low band spectrum that will stretch in our coverage footprint even more.

Now, our CFO, Braxton Carter will provide you a quick overview of the key financial highlights and then we will get to your questions via Twitter, text message or on the phone.

Braxton?

Hey, thanks, John, and good morning, everyone.

Let me give a quick snapshot of our financial results.

Our industry-leading customer growth is translating into strong financial performance with an adjusted EBITDA of $5.64 billion, up 6% year-over-year.

We achieved our guidance even while by blowing away our customer growth expectations.

In fact, we were the only major US wireless carrier with expanding sequential EBITDA margin in the fourth quarter.

Once again, we led the industry in revenue growth with year-over-year service revenue growth of 13.6% and 19.4% total revenue growth in the fourth quarter.

We've also delivered on the MetroPCS synergies.

We expect to decommission all of the remaining CDMA markets by the second half of 2015.

We expect to incur additional one-time network decommissioning costs in the range of $500 million to $600 million with substantially all the cost expected to be incurred in 2015.

Total one-time network decommissioning costs, CapEx and OpEx since the acquisition of MetroPCS are expected to be between $1.5 billion and $1.7 billion.

Which is $600 million to $750 million lower than the original synergy guidance given upon the formation of TMUS.

The total MPV of synergies is now expected to be between $9 billion and $10 billion up from our original projections of $6 billion to $7 billion.

We expect to reach full run rate synergies of at least $1.5 billion by 2016.

We have a strong outlook for 2015 that balances growth and profitability.

We see continued momentum for the Un-carrier and are targeting 2.2 million to 3.2 million postpaid net additions in 2015.

At the same time, we are targeting adjusted EBITDA of $6.8 billion to $7.2 billion which represents an increase of approximately 25% at the midpoint.

Cash CapEx is expected to be in the range of $4.4 billion to $4.7 billion, slightly up from 2014.

I would like to point out that adjusted EBITDA in the first quarter of 2015 is expected to be significantly impacted by a large investment to front end growth in 2015 just as we did in 2014.

In addition, the first quarter will reflect the accounting treatment of Un-carrier 8.0 Data Stash which is expected to have a non-cash impact in the range of $100 million to $150 million.

The accounting treatment of the initial 10 gigabyte allotment from Un-carrier 8.0, which is a non-cash revenue deferral, is expected to fully reverse itself during 2015.

Rather than going on about such a great year, let's get onto your questions.

You can ask questions via phone, text message or via Twitter.

We will start with a question on the phone.

Operator, first question please.

(Operator Instructions)

John Hodulik, UBS.

A couple quick ones.

First John as you look out into the competitive environment in 2015, how does it compare to what you saw starting out 2014?

And then the 2 million to 3 million net adds you guys are calling for for this year, can you guys do that and still see improving ARPU trends at the same time?

And then I guess lastly, first quarter of last year, you had a huge quarter I think as a result of the ETF from Un-carrier plan.

As you look out into this year, you've got strong momentum, you've got the Data Stash, can we expect to see a similar quarter from a net add standpoint this -- in the first quarter of 2015 that we saw in 2014?

Thanks.

All right.

I'll start talking about the competitive environment and then I'll let Mike weigh in on questions two and three and we'll all chime in on them.

The competitive environment into 2015 obviously is intense.

The difference between 2014 and 2015 is going into 2014, there was a question about what will happen, what will Sprint do with their network?

Will they come out and fight?

Or will they keep the pardon us while we redecorate sign out there?

Will AT&T and Verizon respond?

And I think all of that played out as you'd expect.

We're in a similar spot.

We're still waiting to see what Sprint is going to do with their network.

However, they're swinging the bat pretty hard trying to get some activity flow.

And I think AT&T and Verizon played really hard.

And they felt the pain really badly.

And Q4, I think the hand on the hot stove by the young child didn't feel pretty good and they're taking the hand off the stove.

So it's an interesting move into 2015 because I think what T-Mobile has shown is it's not about what we're doing until somebody else responds.

We've got a truly differentiated approach to the wireless industry that customers are responding well to.

Our consideration is up in a great way.

Our share of gross adds is up considerably.

Our brand value is up tremendously and there's plenty more to do.

So going into 2015, I think the competitive environment is intense.

We're prepared for it.

We're thriving on it.

As I said our postpaid porting ratios last year with 2.15 overhaul, they're stronger so far I think through the first month and a half and it'll continue.

And it's about brand and it's about Un-carrier.

And I think there's a bit of schizophrenia on the other guys that they're going to have to sort out.

Hey, we're never going to lower ourself.

We're not going to compete.

They're trying to take our low end, that was Verizon.

And then a couple of weeks later, they tried to lower their low end prices and raise their data bucket prices.

I think AT&T is working on so many other things.

Somebody needs to remind them that they've got a US wireless consumer base.

And we're rooting for Sprint.

We need Sprint to help us take a few shots at the big guys and cause a little churn in the industry and churns good for us.

So that's off the top of my head.

But whatever it is, either they continue to fight and we continue to aggressively grow the way we are or they lay down and move a few share points to us and we're okay on either front.

Mike you want to talk about the --?

Yes, I think what's fascinating about the competitive environment that we're facing right now is that our data is crystal clear that people are not choosing T-Mobile because of price.

As John said they're choosing it because of the overall value proposition that we offer as the Un-carrier.

And that's fascinating because if you were to ask the big guys whether or not there's a price war on, they're likely to say, they'll try to downplay it but the truth is they're likely to feel over there like there's a price war going on.

Because if you've been sitting around like they have charging too much, overcharging, over monetizing customers and treating them the way that they treat them, then when we come in with a more rational value proposition, it sure feels like a price war to them.

From where we sit, not at all.

In fact people are choosing us because of the rounded Un-carrier value proposition that we have which kind of makes it interesting in comparison to Sprint who has really focused since they began playing harder last summer on price, just price, price, price.

And what's interesting is this category is so important to consumers that that's just not enough.

This is something we're not willing to make compromises and trade-offs on something as important as wireless.

And so we've struck a nice balance here between focusing on the fastest 4G LTE network, a great experience and an Un-carrier value proposition that's about solving their wireless problems, not just about low price.

And that's really attracting people.

The numbers speak for themselves with 4 million phone nets substantially all of the phone net in the industry.

And John, you also asked about ARPU, do you want to jump in on that one, Braxton?

Yes, I think that John one thing you need to take into account is the disclosures that we put out about the Data Stash and the 10 gigabyte allotment.

That is a non-cash revenue deferral that impacts the first quarter which will have a corresponding impact on ARPUs.

But it's very important to note that that will reverse completely through 2015 as that is actually utilized and of course that 10 gigabyte expires at the end of the year.

So there will be no impact at all on 2015 ARPUs.

Now once you take that into account, the one thing that we need to be aware of is that we have a tremendous focus on increasing family plan activations with the Un-carrier.

And we're going to do that in a very, I think, prudent manner that creates a lot of value throughout the year.

But that can be decretive to ARPU at given points in time given what we're doing from a promotional standpoint.

But from a holistic standpoint, that is very accretive to EBITDA.

When you're looking at the MPV of those additional family units coming on and the different acquisition cost relating to it, it is absolutely the right thing to do for Un-carrier.

We will -- again we're not going to share competitive future moves, but it's something that we all need to be aware of.

And if that does happen, there's definitely a benefit to the model in that we all know that family plans are much more stickier, much more accretive to value creation.

So yes we're very, very optimistic with what we're seeing for 2015.

And lastly, I was going to say given the momentum you guys are seeing, could you do 1 million plus adds in the first quarter similar to what you did last year?

The first quarter of last year was significantly north of 1 million on postpaid phone adds.

Of course we've said that we're making a very large investment in the beginning of the year and we're very pleased with what we're seeing develop.

Getting to the level that we had in the first quarter of 2014, and if you remember, we had Un-carrier 4.0 which was our ETF offering, that's going to be tough because there's a lot of embedded demand for switching that immediately got triggered when we did that.

But it's fair to say that we're very optimistic about what we're seeing for the first quarter.

John there's an interesting component of what you said and I don't want to go too deeply into this, but I would tell you what we've learned in our business is that we could do 1 million net adds any time we choose to at any point.

And what we've refined our skills on recently in Q4 is the ability to manage growth and profitability to our liking which is a beautiful spot to be in from a standpoint of managing and balancing growth when you want to grow and how you went to grow.

And so it's very exciting for us.

But appreciate your help.

Let's go to -- let's take one more on the phone and then I'll jump around and do some of this plethora of Twitter and other questions coming in.

Simon Flannery, Morgan Stanley.

John, you made some Management changes yesterday.

I was wondering if you could provide a little bit of color about what you're trying to achieve there?

And then Braxton, good news on the synergies $1.5 billion in 2016, how much of that is flowing into your guidance for 2015?

Thanks.

Yes, thanks.

I publicized a number of changes that we made yesterday.

And just very quickly, what they are is a redefinition of my Senior Leadership team in a couple of ways.

One is raising up to a Senior Leadership team level directly both the retail leadership in Ami Silverman as well as customer care and service direct on the team in naming Jon Freier.

We then also named Mike Sievert as Chief Operating Officer of the Company.

And acknowledging the great work that he has done but also acknowledging a continued need for a much more focused Chief Operating team to focus in the next level of Un-carrier growth.

In that organization also reporting to me and on and reporting to Mike, we expanded Tom Keys responsibilities, who as you know is the MetroPCS leader whose done an incredible job and named him the President of T-Mobile Indirect, giving him all indirect responsibilities as well and having him work with Mike on the trade-offs et cetera required there.

And then key move behind that is -- behind Mike as the Chief Marketing Officer of the Company also on the Senior Leadership team is Andrew Sherrard.

And Andrew was actually was here as the acting CMO preceding Mike and I. And the mystery will be out soon that a lot of what we did actually, Mike and I stole from Andrew who had the ideas when we got here.

So that's a few of the moves and we can talk a lot more about that.

But it's a great focus.

One thing I would say is Jim Alling who was the acting CEO when I got here and was the operating lead for the T-Mobile side, he'll be moving on to some other opportunities and we're taking some time also.

He is very loved in the Company and thank him for all of the great work that he's done.

But thanks for bringing it up.

Great, thank you.

Yes, Simon, on your other question, I'm -- toot the Magenta horn here for a minute.

In this history of wireless, I think this is textbook M&A integration.

We have transitioned all but 1 million of the legacy MetroPCS customers off that CDMA network onto the highest speed network in the country that Neville and his team have built.

And we've done it with estimates of losing 3,000 to 4,000 customers.

The integration has been seamless.

And it's also been significantly accelerated over the original time frames that have been laid out.

And as that acceleration plus a significant beat on the cost to achieve that's driving another $3 billion worth of total MPV of synergies into our business.

We will not reach the run rate synergy realization until 2016.

That's because we will have all of the networks decommissioned.

You just saw we shut down Atlanta and Detroit, all the California markets were shut down in the fourth quarter plus some others.

And the issue here is you have to completely decommission those CDMA networks before you can start realizing the synergy benefit from that decommissioning.

So not all of it happens in 2015.

But it's fully embedded in our EBITDA guidance of $6.8 billion to $7.2 billion, a partial run rate on that synergy.

But I think the important thing to note is we'll be [$1.5 billion] or over for 2016, which we're very, very excited about.

So basically there's more synergy to come 2016 over 2015?

Absolutely.

Thank you.

Okay.

I'm going to jump to a few quick ones in the Twitter feed.

This may be mine -- I'm not sure which feed it is., but I'll take it.

Jeff @Jeffpasttwo, any future plans working with Blackberry?

And I would just -- don't have a lot to report.

I would say that we are having discussions with Blackberry.

We're very optimistic.

We have nothing to report at this time.

But I think both we and Blackberry understand that there is a hard core zealot of T-Mobile fans and Blackberry fans that want to see the two of us do something together.

That message has been received.

John and I have spoken and our teams to find a way to make that work.

So nothing to announce, but we're positively disposed on the topic.

Okay, let's see.

Just a quick one here too as well.

Can you give any color on the uptake of the personal CellSpot offering?

Mike?

Yes, we're well on track.

This is something that we launched in September of last year called Wi-Fi Unleashed and it has several components to it.

One of which is the personal CellSpot.

We said at the time that we would do at least 1 million personal CellSpot well-placed to give great coverage to people in all kinds of nooks and crannies of the country including their basements.

And it's been wildly popular.

So that's a trajectory that will be easily achieved.

And probably as importantly, what we did on the same day is we announced that every phone that we carry in T-Mobile stores will either at the time of the launch or shortly thereafter support Wi-Fi calling.

And that's been something that our customers have responded incredibly positively to.

Because people know that despite what the wireless industry will try to make you believe, that there are places whether it's basements or out in the woods or faraway places, or certainly overseas and during travel, when Wi-Fi connection is there but cellular connection either isn't or it's hard to get or hard to pay for.

And so we're really proud of this, we're the only ones supporting it across the board.

We're the only ones with it for example on the iPhone 6. It's a real differentiator.

Before I take the next Twitter question, let me do a technological check and see Neville if you're there, if so please speak.

Yes, I am good John.

I can hear you guys and hear you loud and clear.

Okay.

So there's a number of questions coming in, I'll just read one from Christian Prenzler.

But Neville, why don't you use this for a quick, and I reiterate that term, update on what's going on with the great work that you all have done in the network.

But the question that came in from Christian is, hi everyone, how has the 2G to LTE expansion been versus expectations, cost, time, et cetera?

Yes I think that's a great place to start, John.

I mean the acceleration and the momentum we have on our LTE (technical difficulty) delighted to see us come in at the end of last year (technical difficulty) and to the heart of the question just raised, selection on our footprint came from 2G to LTE conversion in the 1900 megahertz band.

That momentum continues, we look to be at 218 million by midyear, if not before.

And you mentioned in the opening comments, the goal for the year is 300 million in uncovered POPs of LTE.

That's a pretty remarkable story considering that we have nothing.

If you went back just about two years ago.

And that can be I think pretty stunning in the marketplace.

(Technical difficulty) geographic expansion of our LTE footprint in a matter of months, it will put us on par geographically or very damn closed with the big two.

And that goal is in sight for us.

We have a lot going on with the combination with Metro that Braxton referenced.

That has been just a tremendous program for us.

We are into -- we're well along on the back 90, New York and Miami left to go.

The synergy piece that I love from that whole deal has been our ability to exercise the combination of the spectrum.

And 75%, three-quarters of that spectrum now being used on the TMUS network and more to come.

Think about more spectrum coming over to T-Mobile usable today in AWS 1 in big markets like New York and Miami in the first half of this year.

No waiting on spectrum to clear from auctions for T-Mobile.

We're going to be adding to our LTE strength as we move through just the first half of this year let alone second half.

So a lot going on.

Very exciting about expanding the network, the performance.

And we love that fastest LTE crown and game on, let the competition try and catch us.

Okay, I'm taking another Twitter question because one of our prolific followers on Twitter @WaltBTIG, Walter Piecyk, I think I've seen at least 27 questions from Walt.

So before he beats somebody where he is, we'll take one of them here and maybe we'll see him in the other queue.

But this question says phone ASP's were up.

Reference for higher capacity iPhones or EIP enabling driving higher end purchases?

You want to use that Mike to delve into what's going on there?

Yes, fourth quarter it's no surprise was a huge quarter for everybody on high end phones driven by the launch of the iPhone 6. But for us there were some particular dynamics.

And one thing that's interesting to note Walt, is that T-Mobile sold 28 million smartphones in 2014, over 30 million phones overall.

We think with some of the vendors that puts us at number one.

We think we may be number two overall.

But Q4 was dominated by the iPhone 6 as well as the Note 4. And so we did see average selling prices go up and we're attracting a different kind of customer.

And that's been a journey that we've been on for over a year now since the Un-carrier really started to kick into its highest gear in January of last year with the launch of contract freedom.

What's happening is we're bringing suburban families who can afford multiple super phones and these are prime customers.

You're seeing our bad debt rates fall.

You're seeing our prime portfolio continue to improve.

And you're also seeing higher end phone sales.

So all those things are tied together and it really shows how our brand has evolved over the past 1.5 years and the kind of customers we're now attracting.

Okay.

And Walt I'm sure we'll get a lot more from you.

Appreciate all your following us.

Let's go back to the phone, Operator.

Phil Cusick, JPMorgan.

So if I take your fourth-quarter EBITDA number and multiply it by 4 I get to the midpoint of 2015 guidance which is pretty rare in the wireless industry.

So one, can you talk about the puts and takes of getting that EBITDA number, it seems pretty conservative.

And second how do we move from there to free cash flow?

You said that the drag from EIP is going to slow in 2015.

Do you expect to use -- to sell the receivables to offset that?

How should we think about it?

Thanks.

Yes, I'm going to turn this to Braxton.

But I will just say this should be a big sticker on our earnings which is do not multiply times 4. Do not extrapolate divide by 4 for Q1.

We are very confident on the guidance that we are giving.

But if you look at last year for example, the shape and the curve of what we do with our EBITDA and our investments throughout the year have somewhat of a predictable pattern.

I think Braxton will outline -- there's a couple of very specific items in Q1 to look at.

So the EBITDA growth, we feel extremely comfortable with.

But simple algebra on how to put it into each pew in the church needs a little help and Braxton why don't you pick up on that.

Yes, sure.

And I think that's right on, John.

I think when we look at the shaping of the year, we should all be informed with how we executed in 2014.

We're making a very significant investment up front in growth in the year.

As you've heard from the team and John, that we're very comfortable with the momentum that we see so far in the first quarter.

And that is the best time of the year to grow.

You pay for that growth in year versus growth that comes on in the fourth quarter where you just have the acquisition cost and no resulting margin coming in from those customers.

We've already talked about the Data Stash, 10 gigabyte gift element being a deferral out of first quarter that completely reverses on the year and has no impact.

But I think when you look at the year in total sales, what we've done here is established a reputation for always meeting or exceeding our guidance.

And the credibility that we get from doing that, we think is very, very important especially when you look at the shaping of activity throughout the year.

We have a fairly wide range that we've given on our postpaid growth.

Like last year, as we demonstrate growth throughout the year, we will tighten that range.

And quite frankly, our aspirations are at the very high end of that range, if not higher.

So all that needs to be taken into account when you look at the overall EBITDA guidance that we've given.

On your other question, and again, I think this is a milestone year for T-Mobile.

When you look at what is implied by the guidance that we've given, there's very significant simple free cash flow accretion to this business.

And when you look at it on a levered basis, we are net generating cash in 2015 which is the key to ultimate value creation.

And the changes in working capital, and we have had a very, very significant on balance sheet investment in our EIP, that's moderating.

Because the base is now 89% penetrated and we said the terminal penetration, because not all of our customers and partners can offer EIP, is about 90%, we're at 89% right now.

Now certainly, there was a larger increase in the fourth quarter.

That was driven by the iPhone 6.

So we definitely expect on a fully levered operating free cash flow basis to generate positive cash which is a milestone.

And I think it's a testament to the whole thesis that we've had with Un-carrier.

Turn this into a significant growth platform leading to double digit revenue, service revenue, recurring service revenue increases which is now resulting in significant double-digit increases in EBITDA and brings us fully levered operating free cash flow positive.

(Multiple speaker) Go to the next question on the phone.

Ric Prentiss, Raymond James.

First congrats, Mike, well deserved on the COO role.

Want to -- one more guidance question and then we'll probably move on from there.

Braxton, I think if what I'm hearing, 2015 should look like 2014.

If we look back to 2014, we use the same phrase you did, you blew away the net adds based on the original wide range of guidance.

And yet you were able to really almost hang on at the low end up EBITDA even with blowing away guidance.

Should we look at 2015 being a similar thought process on how you guys plan things given the competitive environment?

Absolutely, Ric, and thank you for emphasizing that.

As I said, our aspirations are significant for this year.

But the positioning of our EBITDA and everything that we continue to do from cost transformation, the MetroPCS synergy starting to layer in, we're highly confident that we will deliver EBITDA at a very nice place within this range even with higher growth.

So absolutely.

And I think you've got a really good handle on it.

I think our competitors and the industry seem to think of a lot of what we're doing all at the same time as phases that they do one at a time.

Now we have a significant constant cost reduction program going on and we reduced cost by over $1.1 billion last year.

We continue that every single week and will.

There's always further cost to reduce.

At the same time, we're aggressively investing in our network and IT capabilities and growing because our business is on a fast trajectory plus driving profitability.

So these aren't phases for us, this is how we intend to run the Company.

And we said a couple of years ago, what our medium-term goals were for revenue growth and profitability and cash and we're dead on those and we'll continue to update you on them.

Let's -- I got to take one Twitter question that's coming in from Judahe it's @Judahe, this is going to give you more followers than I think you got in the last two years.

His question is any comments you can share on FCCs title II plan and how it might affect your music freedom?

It has, for those that everybody knows that there'll be an FCC vote on February 26.

And from what we understand about it, obviously we are big proponents of a free and open Internet.

But I think the short of it is, it's a 300-page document that certainly we haven't been able to crawl our way through.

But I'm comfortable that if passed as we understand it, it will have no impact on music freedom.

And relative to our competitors, I think we would continue to drive forward with our business as it is.

So there'll be a big event for us and we'll keep an eye on it.

Let's go back to the phone again.

Brett Feldman, Goldman Sachs.

Based on what you were saying around the first quarter and how well it feels like it's going, this is going to be the second year in a row where your first quarter shapes up to be a very big quarter from a customer acquisition standpoint.

Which is the absolute opposite of what we've historically assumed the first quarter is supposed to look like.

And so I'm curious, what have you seen that has caused you to say no, this is the quarter where we want to go hunting for customers aggressively when it seems the rest of the industry tends to still sit there a little less aggressive?

Okay well let's just put a couple of things in perspective, then I will turn to Mike and we will try to wrap it through.

Remember now, that we've had seven quarters in a row over 1 million net adds.

And we've had three out of the last four over 2 million.

So it's become a normal way of us doing business and our share is still low enough that we see it continuing into the foreseeable future.

Second is what's also becoming apparent is our growth is not related to our competitors actions.

We have weighted right through periods of their activity and inactivity and continued to grow.

So it is directly related to how we choose to deploy our capabilities throughout the year.

And obviously as both Braxton and Mike said, Q1 getting a fast start is the most economically advantaged way throughout a year to get a return within the year.

We certainly have started that and we have more that we're going to do very early in the year.

But Mike if you want to jump in on that?

Yes, I would just add it's a great time to play.

And if you look at the fourth quarter, we showed a lot of discipline in the fourth quarter to keep things in balance.

We posted great growth numbers and we're very pleased with our growth numbers.

But we also posted a big EBITDA performance and kept things in balance.

Why?

Because the fourth quarter is a really expensive time to play.

And it's interesting to us that our competitors don't seem to get that as they plowed all kinds of irrational money into the fourth quarter.

And you saw the damage that it did.

We didn't play that way.

Now Q1 is a pretty good time to play.

People are flushed with cash.

In many cases because of the tax effect.

The competitive environment has moderated a little bit.

Last year we played hard.

And of course, in a Company that has fiscal years on calendar years, our investments that we make in Q1, even if they're significant, we can recoup within the year.

And you saw our EBITDA shaping last year where growth was very big and EBITDA was light in Q1.

And then it shaped through and by the end we had a big finish on EBITDA and balance growth.

And that's something that we've been saying today is a shape that you can expect to be repeated again this year.

And just think about, so Q4 ends, dust settles, we all head into Q1.

What happened?

In Q4, Verizon and AT&T had 14% and 23% respectively increases in postpaid churn, unheralded increases in churn.

And they both reported significant margin pressure.

So it didn't feel very good.

We're announcing a record year of great profitability and growth in Q4.

And I'll clue you in, from November 1 through mid-December, we were watching.

And if you saw, Q4 is a little bit like amateur day.

It's like people that only go out on New Year's Eve, there's all the activity focused and through Black Friday.

So even with them playing and us somewhat watching to make sure that we were balanced, I've already given you the results.

Now we go into -- we left, we came out hard in the second half of December and we left into January with tremendous momentum and then started putting in a series of programs early in the year.

And before you can catch your breath and see if they're going to respond to those, I think you won't have to wait later than March-ish for us to put the foot on the pedal again.

Which is just going to cause a series of meetings this week with all of the new wireless CEOs I think.

Great.

Thank you for taking that question.

Let's go -- let's stay on the phone.

We got a big queue there.

Michael Rollins, Citi.

Curious if you could talk a little bit about how you're perceiving the cost of capacity going forward.

John, I think you put up a blog last night talking about the auction.

And as you look at the success you're having in growing customers to date, how do you think that the capacity that you have on your current spectrum position and platform of sight?

Thanks.

Okay, why don't I let Neville start, and maybe Peter in the room.

But Neville, this time don't use your Sprint phone.

(laughter)

How is that John, is that better?

A little better good.

Keep, stay on that, that's smart you switched.

Just for the record I'm outside of the US borders, John, so it's not on our network, so there we go.

No I think to your question, the capacity position we have, and we've talked about this at length, we're in a very good position with the mid band spectrum portfolio that we have.

And we've added to that during the auction although AWS-3 spectrum is not going to be in commercial use for some time.

But I roll back to -- we've combined the two most dense networks in the country between Metro and T-Mobile.

The spectrum synergies, the site synergies, all of those capabilities are spinning off a lot of capacity that affords us to put the best LTE into the market place today.

The most capacity and the most speed, the numbers speak for themselves.

Obviously, we're not sitting on our laurels.

We have more spectrum to migrate from the Metro business as I referenced earlier.

We continue to work on our network densification, over 12,000 DAS nodes within the business right now and we continue to push there.

Our first small cells in place, we're pushing MIMO 2x4 and 4x4 which has significant capacity benefits.

And then you look at 2016, we're looking to start leveraging unlicensed spectrum with technology such as license assisted access.

So a lot of capability in the ground for us.

On top of that, we're adding 700 megahertz this year and that program moving extremely well.

Another 10 megahertz of great spectrum coming to bear.

So we have a lot of growth ahead of us for the capability on the network to maintain and support that and at the same time deliver that great performance that Mike talked about.

Yes, and I'll just add again there'll be plenty of forums for us to talk about incentive auctions and Washington policy.

And don't get me wrong, I'm not whining and waving the white flag that things won't continue the way they are.

There are various forms of ways that we can succeed.

What I'm really trying to put a light on for the United States consumer and for Washington itself is this competition that is happening, if you like it, you've got to do things to ensure that it will continue.

I would submit to you that most of -- if you take Verizon's investment in their network, and I don't know what that thing is they call that whatever it is, that name they gave, XLTE, it's a fancy branding name for we woke up and invested in our network because speeds were slow.

And in effect, most of those changes are coming because we forced them into it on behalf of the consumer.

Now, when you go out to these auctions, this low band spectrum, this is a once in a lifetime activity.

There's no more coming.

And they control the predominant share, and we just had an auction.

And in that auction if you take the players that are competing right now, that'd be AT&T and Verizon, they controlled 93% of what came out, when you move aside what Dish had.

So going ahead, if you allow them, they will use one of their weapons which is economic prowess and the ability to pass that on to customers as a way to just control the tables.

And it's one of those times where if you look at all of Washington policy and the various auctions that take place, there are a number of things to accomplish.

One of them happened.

The truck is backing up with $45 billion, which is really good for the country.

It funds public safety which was one of the issues.

But they have as a goal something that hasn't been accomplished yet which is to ensure competition continues to exist.

And yes this will play into multiple other policy issues associated with industry structure et cetera.

So I think it's something that the American consumer should watch and understand and more money into Washington if in fact you think about it as nothing more than how much did AT&T pay, maybe they paid $6 per American consumer.

And if they turn around and pass it onto them, that's not really the way it should be.

So that's that front.

No whining.

Just want to lay it out, let's get the rules set.

And with a good set of rules, we can have this fun competition gain in perpetuity.

Okay.

If I could follow up real quick.

John, do you look at Dish as a possible strategic partner or as a competitor?

How are you looking at that entity today?

No I would add -- I would put Dish in the same category as a lot of potential influencers in the wireless industry.

And to the big guys, everybody's a threat.

Google coming into the business is a threat.

SoftSim is a threat.

Dish coming in is a threat.

To us, they're all great for increasing flexibility and competition.

And the interesting part about T-Mobile versus AT&T and Verizon, their thought process on anything they need to do is that they go buy it.

We become a standalone adjunct to many other versions of how the United States industry arranges itself for the next phase of competition.

So I look at the spectrum portfolio and the video content et cetera that Dish has as a fascinating idea to consider.

But most interesting is I'm very confident in the fact that equally those other players are looking at T-Mobile as a fascinating brand and distribution capability in an innovative group of people that could become a platform for them.

So it's an exciting set of options that the Company is in a great position playing a portfolio from.

So no I think Dish is a great opportunity both for the country and for possibly T-Mobile.

I just had one last thing, John -- or Michael since you asked the original question on the cost of incremental capacity.

I'd say the answer is for us to put an incremental gigabyte to work, it's a lot less than our two major competitors.

A lot less.

Because our cost of capacity is predicated on the spectrum that we have per customer which is a superior position to that of AT&T and Verizon.

And if the spectrum auction that just finished validated anything, it validated the superior position in mid band that T-Mobile had going into the auction.

With the best portfolio in the industry and by far the best when you adjust for our size.

So spectrum per customer continues to be an advantage for us and that makes the cost of an incremental gigabyte lower for us.

Thanks very much.

One more on the phone.

Jonathan Chaplin, New Street Research.

Two quick questions, if I may.

First, John, I'm wondering if you can expand on the comments you just made.

With respect to MVNOs, it was rumored -- reported in the press that Google has an MVNO with you.

I'm not sure how much you can comment on that, but I'd love to get more insight into how you think about MVNOs in general?

How you can partner with people like Google and maybe cable companies without undermining your own business?

And then on the Dish theme, how open you would be to entering a network sharing agreement with somebody like Dish?

And how feasible that is for you with the way that your network is constructed?

And then quickly for Braxton, your detractors or your competitors would say that in order to get the growth that you're reporting for the moment you guys are digging deeper and deeper into subprime base.

And we can't see it that the bad debt numbers that you report.

My understanding is that you guys just have a different approach to assessing credit and I am wondering if you could expand on that a little bit?

Thanks.

You sure that's all?

(laughter)

That's it.

I said it all without taking a breath.

Let me jump around.

I'm going to start by commenting on the last item that Braxton will answer after I go through some of the -- your preliminary questions.

But yes I think you had it right, our competitor/detractors.

My first comment is the longer that their answer on our success is fear, uncertainty and doubt and financial markets kind of attacks the better.

Because they're really missing the boat, which I've said many times, if I woke up running Verizon or AT&T, I would immediately realize that my issue is with the customer.

And with those capabilities, the day they wake up and realize that they just have to realize that they've abandoned their customers, their customers hate them and they're losing them because that's not what they're focused on, they may do well -- better.

But this fear, uncertainty and doubt, I gave a stat last quarter that I reiterate which is if you look at all of the customers that are reporting from Verizon, 93% of them are postpaid, so we're not taking -- and 77% of them are prime.

So if -- to those customers that are leaving, somehow you are the prime customer that this industry wants and they think that you're inadequate and they'd love you leaving.

So if you're sitting over there, that's how they think about you.

It's just not true.

And frankly, I think that behavior and thought process opened the door for example to smartphone equality that we announced this week.

There's just some things that even we find that are just age old, bureaucratic, paramilitary hierarchy thinking.

But when you stop and an individual customer says to you, hey John, Mike, Braxton, I've been your customer for seven years and I have never not paid my bill.

And then we do an analysis and we realize that variable is a better indicator of future payment capability than anything else.

A, because a smartphone maybe the most valuable thing in their life and the fact that they missed a car payment six years ago and one of the rating agencies has then low doesn't matter.

But those guys won't think about it.

A, because they don't talk to individual customers.

And B, they think of them as credit classes not as individuals.

So I love it by the way.

I hope Fran has a call after right now and says some highfalutin stuff targeted straight at all the analysts and that'd be fine with me.

Back to the beginning question.

We have a long-standing historical relationship with Google.

We love all of what they're doing.

It's highly disruptive.

I'm not going to comment at all on anything that may or may not be happening by them or us.

And frankly, I'll save my Google rumor bump for another time when we need it.

And on things like network sharing, I think the big questions around now relate to what is Dish going to do with their capability, and frankly we're open to all versions of it.

There's a lot of question underneath that.

So far I would say most of the analysis on what is Sprint doing and what is Dish doing, they're very spreadsheet oriented.

They're not really taking fully into account that underneath this is real execution and integration and creation of capabilities either for wholesale or retail customers and it takes an awful lot of capability that I think will get rational about that.

So we'll wait and see.

But I see no version of what Dish is doing as not being a positive for us.

And we'd be interested in each aspect of it including some sort of a sharing.

But obviously if there's a sharing, somebody has to create it to be able to be shared, which also is opportunity for us.

John, it's Neville, if I could jump in.

Last time I looked I don't think Dish has a network to share.

But we have a great one.

And we have a great history combining technologies and we have a very clean band plan that allows us to host equipment very rapidly.

So great opportunities for us to host somebody else's spectrum for sure.

But Charlie does need the network at some point in time, he does have build out requirements.

And Braxton, do you want to get the last piece?

Yes, Jonathan.

I think that you definitely highlighted the bad debt and the right way to look at bad debt because we've gone off balance sheet with part of our service receivables is looking at bad debt plus the loss on the factoring.

That's a holistic view and the right way to look at it.

And what you've seen is the last two quarters sequentially, the actual total dollars have decreased.

And that's in the context of a rapidly growing business with more and more customers coming on.

And the facts are the facts.

Yes, we have some highly sophisticated credit mitigation techniques that we deploy.

Over the last two years, we have actually tightened credit.

We further tightened credit in the fourth quarter.

We're very comfortable with the types of customers that we're bringing in.

And remember, we're getting the vast majority of our flow from AT&T and Verizon.

So I think John covered a lot of other aspects that put the spotlight on this issue.

But the facts are the facts.

And we are actually having decreasing real dollar total bad debt and loss on factoring and that's a prime indicator of what we're doing.

Okay.

We're going to jump to now -- I have to give on Twitter -- there's a skill here.

As you know, I'm a prolific person on Twitter.

But Walt Piecyk has the line of the day Jonathan, and I'm sure it's directed at you and this is -- follow Walt -- Walt's tweeted too bad analysts are not limited to 140 characters on quarterly calls.

Well done, Walt, you're the man.

Okay, I hesitate to do this but I'm going to do it anyway.

There's a question coming in on SMS and I'm going to be very brief on it.

We can talk about it a lot later.

Yes, I wondered -- all right I'll do it anyway.

When you expect to pass Sprint?

I've been very gracious on this and as the year ended and people are saying hey he predicted he's going to pass Sprint and he didn't.

Well, we did.

That's the gig.

Let me give you a little history on this topic.

Going into 2013, Sprint had 55 million customers.

At the end of -- going into 2014 they had 55 million customers.

Going into this year, they have 55 million customers.

In that period, they lost 3.3 million postpaid customers as well.

At that same time period, T-Mobile had 33 million customers.

We merged with MetroPCS and went to 42 million customers.

And we've since added 13 million customers to get up to guess what 55 million customers.

But there's a little footnote I think you all should take a look in Sprint's filings.

In Sprint's filings there's an industry standard that between 60 and 90 days on MVNO customers if there's no usage or revenue we all turn them off, between AT&T and Verizon it's either 60 or 90 days.

That used to be the policy for Sprint.

They actually changed their policy to six months.

And if you go to their filings right now, there are 1.7 million customers at the end of the year with no usage or revenue greater than six months.

So do the math.

But I decided I'm not going to bring that up today.

Because at the run rates that we're talking about, by the next quarter or two, the math will be easy enough for even Walt to figure out in 140 characters.

Okay, let's go back to the phones then.

Kevin Smith, Macquarie.

There has been a lot of talk about use of unlicensed spectrum both by Neville and by Verizon in the last few days.

Can you talk about when those chip sets will actually be available and is there concern over interference from Wi-Fi and other uses on that on those bands.

And how much capacity can this really free up for you over the next several years?

Okay, Neville?

Yes, thanks for the question, Kevin.

I'll be brief.

It's a push into unlicensed primarily our focus and I think Verizon's is on the 5 gigahertz band.

There's a lot of spectrum there over 500 megahertz.

A lot of it's underused or if used at all today.

The approach is to be a very good neighbor with any Wi-Fi use that's in the band.

And the timing, a lot of momentum in the industry from the chip sets, handsets, infrastructure guys.

So we're looking early 2016 to potentially have the first commercial products in market.

And you mentioned 12,000 DAS nodes today, think about the use of 5 gigahertz, how many small cells will you need to effectively utilize that spectrum long term?

Tough to predict, Kevin, on those types of numbers.

I think the first application that you'll see on 5 gig and LAA will be in building.

And it will be primarily in building commercial.

But potentially consumer too.

The great thing is we will move to outdoor.

The performance of LTE and the 5 gig band is significantly better.

The radio performance than what's seen with Wi-Fi.

But it's early days to call out numbers, but a great small cell opportunity as we move into 2016 and 2017.

Thanks a lot and glad you're taking advantage of the strong dollar.

Okay, let's keep on the phone, there's a big backlog.

Joe Mastrogiovanni, Credit Suisse.

One, are there any other attractive blocks of 700 A block spectrum still available on the secondary market?

And then, Braxton, there's a significant level of cash on the balance sheet, can you talk about the funding requirements over the next couple of years and your ability to meet those requirements, what do you think is the right leverage for the Company?

And let me start and ask Peter Ewens to briefly comment on a topic he could probably pontificate on until tomorrow.

But Peter?

Yes, so a brief comment on the A block.

We are always interested in A block.

We've said we'd be disciplined acquirers.

We're going to stick to that.

I think -- unfortunately, I think a lot of sellers now are going to have unrealistic value expectations.

So we'll just have to watch the secondary market and see.

I mean we're interested in that spectrum, we look to acquire more but we're only going to do so on valuations that makes sense for us.

Yes, so the second part of the question on funding requirements.

Obviously, we showed a great deal of discipline on the AW3-auctions with a total spend of $1.77 billion.

And looking at our year end liquidity, we obviously have a lot of firepower on the balance sheet.

When we look at our requirements over the next couple of years, we've made it very clear that looking at perfecting our low band footprint is a priority.

And I'll reiterate right now, over long-term guidance that we've had since the formation at TMUS is that leverage needs to be in the range of 3 to 4 times.

We're very focused on our ratings.

And you get over 4 times levered you will definitely be in a position for ratings downgrade.

That is no interest to us whatsoever.

Our leverage at the end of 2014 is 3 times pro forma for the final payment.

To the FCC for AWS-3 is 3.2 times.

But when you look at our leverage given the guidance profile that we put out for 2015, we have a very significant opportunity to fund all and more than what we think our needs will be within internal cash generation and debt.

There are no plans to do any additional equity.

Great, thank you.

Okay, just keep on the phone.

Craig Moffett, MoffettNathanson.

First, congratulations, Mike, that's terrific news.

I wanted to come back to this discussion that you've been having on the call today about Wi-Fi and small cells and things.

When you made this decision to enter into the MVNO agreement with Sprint, our understanding is that it includes some measure of lease cost routing and also it has a large Wi-Fi component to it where they're going to be taking traffic in general off of the network.

Can you just talk about how you think about the competitive risk that companies like Republic and FreedomPop and perhaps even Google pose to the economics of the macro cellular network when more of the traffic starts to go over Wi-Fi and presumably more of the value in the eyes of the customer starts to be associated with Wi-Fi relative to where it is today?

Peter, you want to start?

I will start I think.

You said an MVNO agreement with Sprint, so I don['t think we have any.

Sorry, I meant to say Google.

So I have a couple of comments.

First of all with respect to Wi-Fi, we're not running away from Wi-Fi.

We're running towards Wi-Fi.

I mean the fact of the matter is a great deal of everyone's traffic today is on Wi-Fi and yet usage on our cellular network continues to grow by 50%, 60%, 70% per year.

So we don't see Wi-Fi per se as a threat.

We see Wi-Fi as a natural compliment.

And Mike can comment on the stuff we do with Un-carrier's 7.0 and Wi-Fi Unleashed, but we're really running towards and embracing it.

As to Wi-Fi only offerings, they certainly will have a place and we're not against it.

And we think for certain customers, it's the equivalent of lifeline cellular service.

It's -- if it's Wi-Fi only it's of modest functionality today.

It will improve but the vast majority of customers want to be able to connect anywhere they are.

And so they'll all play the role and we're for -- we're absolutely for competition and proliferation in the market.

I think it shows how we're different from our competitors too.

Neville just talked about how we are fully embracing unlicensed LTE as a major opportunity.

We think it's a terrific technology.

And we made a major deal last year out of Wi-Fi Unleashed.

And as Peter said, we're running towards it.

We see some of these emerging players as potential complements, as part of the future and part of what consumers are looking for.

There are congested areas, there are urban areas, and Wi-Fi is there and it has capacity, why shouldn't your phone be able to attach to whatever is providing you with great capacity and great experience to not only conduct your data but to make great phone calls as well.

And we're really the only carrier that thinks this way about solving the problem for the customer.

What's the customer want?

Where is the customer?

How can we provide from all kinds of different technologies and resources, the thing that solves their problem.

And then we'll build our business model around it.

And it's just the way we're wired as a Company, it makes us very different from our competitors.

And I think it's inherent in -- there's a lot of questions that relate to the cable players or to Google.

And the questions get a bit specific about what the specific thing is that it sounds like they're launching and what our role is.

And I think much broader as I have been saying for well over a year or two, that we need to think differently about the industry structure around serving the needs of the current wireless customers and the portfolio of what their requirements are.

And you need to think about Google or Dish or Comcast or the other players as having ideas evolving that their existing customers want to dabble into areas that intersect with what we have.

And as opposed to it being a threat, I think the reality is whatever it is they're envisioning, trying to provide their customers, we have a significant greater portion of what that offer is in the relationship with the customers than they do.

So it's a perfect opportunity for us to continue positioning this brand, positioning with our customers innovation and solving their needs.

And then discuss with some of these other players as opposed to, oh my god here they come.

T-Mobile becomes a great example of how they may be able to accelerate their needs and expand ours.

So again, looking over five years, these are all great opportunities for us to accelerate the momentum and to partner with other people and help solve their issues as opposed to worrying about digging our heels in.

Okay, let's see, we're going to take one more on the phone and then there's two I want to do on Twitter.

Amir Rozwadowski, Barclays.

I was wondering Neville actually if we could talk a bit more about the network improvement strategy here?

If we look at the latest reports out of route metrics, what we've seen is a stark improvement with your network particularly in metro areas.

How should we think about the overall expansion in terms of being able to build upon that improvement from a nationwide perspective as well as how that can filter into enhancing the brand recognition even beyond what you folks have done so far?

Go ahead, Neville.

I think that's a great question for you to cover.

Yes, absolutely.

So I think clearly the route data is starting to catch up with what we've been telling the marketplace for a year.

And so there was some reflection of the progress we've made in 2013 and 2014 and the recent results.

But the testing still lags what we've really have done over the last three, four months.

And in the metros, the top 30 metros, the route data will tell you, we're just killing it.

Nobody is close to us in terms of speed and performance in top 30 metros.

And we're actually winning a lion share of the overall awards even from route.

We're a small second, a minor second place to Verizon but ahead of AT&T and clearly well ahead of the Sprint guys.

And so I think to your question, Amir, obviously the expansion of the LTE footprint is our major goal as we move through 2015.

And to take that metro footprint where we've been really powerful and strong with the depth of with LTE, expand that with the 1900 and 700 based LTE into more and more key parts of the US.

The geographic footprint expansion I referenced earlier is going to be extremely compelling.

The areas where we've already upgraded on 1900 footprint and 700 roll out in key markets like DC, Minneapolis, Cleveland, Dallas and Houston now are benefiting from 700 megahertz.

The difference is really being noted.

This is a very material game changer for us.

We have a lot of 700 to roll out, almost 190 million parts of licenses in the house today.

75% of that cleared or contracted to be cleared.

So it's going to be a big year in terms of seeing that great performance that we've had in the metro areas expand into other key parts of the nation.

Excellent, and then a quick follow up on the prior commentary around broadcast auction.

In terms of funding for being able to support additional spectrum acquisition it sounds like we should think that when that auction comes to fruition, funding should be an ongoing cash expectations as well as potential debt funding.

Is that the right way to think about things?

Yes, existing -- that is correct, existing cash plus debt.

No plans for any additional equity.

Perfect.

Thank you very much for the incremental color.

Okay, here is a Twitter question from [Tvola].

With the popularity of Data Stash, do you see the program lasting beyond 2015, 2016 is it permanent?

The answer is yes, it's permanent.

And I use this as a chance to reiterate that the Un-carrier moves our attempts to change the wireless industry structurally.

It's an attempt to get everybody else to do it.

So it's not a matter of wondering if they'll reply.

And they're permanent.

They're permanent structural moves.

That's a commitment we make to customers, it's also something that explains why it bothers our competitors so much.

Because it's not a special, it's not a program.

By the way it's not intended to have a short-term impact.

As Mike said, one of the big tricks of what we're doing is that the Un-carrier in T-Mobile is all about creating change and a set of benefits and opportunities that are the brand that customers want to come to.

And then things like contract freedom are a way to solve the barriers to get you to come where you want to be.

And that's very different than the industry norm which is everything's about the special.

And everything's about the decision factor.

And so yes, Data Stash is here to stay.

And I think the verdict so far is one follower who didn't quite follow figure out what the issue was that was trying to be solved but had a cute name and some old patents that they wanted to get out the door.

So they did it.

So we will see.

But I think they'll all come around.

My prediction is it'll take one of the bigger carriers probably a year to figure it out, a little bit more pain and so we'll see.

But they'll come at some point.

Okay, we're running out of time.

Let's go to the phones one more time.

Colby Synesael, Cowen and Company.

The first one, you talked a lot about front loading the growth in the year and making a large investment.

I was wondering if you could provide a little bit more specificity on what that actual investment is, is it simply just the cost of the promotions or is there something more there?

And then also as it relates to churn, we've obviously seen churn come down over the last year or two, but it seems to be stabilizing now at least on a seasonal basis.

Is the churn number that we saw roughly in 2014 good proxies for what we should be thinking about for 2015?

Thanks.

Yes, so from an investment standpoint, it's an investment to drive additional growth.

The growth certainly comes with acquisition cost.

So it's a combination of anything that we do from a promotional standpoint plus additional volume.

And that's the appropriate way to look at it.

I'll pass it over to Mike to talk a little bit about the churn dynamics.

We're seeing some very favorable trends so far in the first quarter.

But with that, I'll hand it over to Mike.

Yes, just picking up on what Neville was talking about on the network transformation, I'll give -- my personal color is I've been associated with the wireless industry since 2002 at the beginning of the year, and I've never seen a network transformation like what this team has pulled off over the last two years.

And 2015 will probably even out due what Neville has done, and his team have done over the last 1.5 years.

And so we've got huge aspirations for network this year based on utilizing those 700 megahertz assets that were purchased and rolling LTE to 300 million POPs from where we are.

And so we really are optimistic about the continuing evolution on churn to your question.

Now, when does that benefit start to come in, we're not going to give you a lot of detailed thoughts, but this year I think you can expect some modest improvement.

And in the long term, there's real opportunity for us.

And here's the part that's interesting, we don't need it to make good on the promises that we've made to you and to our investors.

Our model is based on the churn we've got.

Now again, I think we've got real opportunity, but our business model works at these levels and that's because our cost structure is radically different than our competitors.

What would happen if AT&T and Verizon were sustainably above one like we saw last quarter.

All hell breaks loose in their business models.

It's totally different for us.

And so we're a different Company with a different model.

We can make good on these promises and we see real opportunity here.

And by the way, 2015 is off to a pretty good start on that metric.

Yes, last item on that is I would say adding to it, when we set out three to five-year plans two years ago or so when we stepped into this, churn is already better than we anticipated in our conservative assessments it would be at the end of that period.

So we've had a lot of success.

So as Mike says, we can operate at these levels.

Second is there'll obviously be a seasonal decline in Q1 on churn that we're already seeing.

But there's a very important part that Mike with amplifying.

We get all, social et cetera, get all up in arms every time there's one of these route reports et cetera.

And you can't change the experience that customers are having on a network by putting out a report.

Sprint right now, everybody knows their network's in trouble.

And you can't change that with a report.

And I speak from experience on this, is two years ago or so when we had no LTE, we have very carefully, individually been working with every customer to raise their expectations as to when they can expect what in their experience with us.

And we've delivered.

So the LTE deployment which will move to 300 million has been very targeted ahead of plan.

This 2G to 4G migration, we are giving customers specific location information as to when they will experience the change.

And things like Wi-Fi calling, et cetera, it's just an understanding as to how to migrate that experience.

And in the time periods in the two years and even in the short future where customers don't have the right experience, our track record of how we work with them to move them off and to work with them as to when they come back is impeccable.

So this journey is quite predictable.

And as Mike said, each month that goes on, the T-Mobile experience is changing and changing and I think the biggest scary component for our competitors is the realization 1 year or 1.5 years go when it became clear T-Mobile's goal is to create the best experience on all aspects in the United States over a period of years and 300 million POPs.

And then when you get up to -- this is back to what I was on the soapbox on, one of the components that our competitors worry about is the only missing link in that vision is the low band spectrum that will come in the auctions.

And if you take a number of years in the US and you give nationwide low band spectrum to T-Mobile deployed in the way we can, it's permanent competition.

And so that's really where we are in managing individual customers during the journey is something we've done very well.

Okay I think we might have room for one more question, but then we've got to run.

And I'm going to go show my bad hairdo on a few TV shows in case you haven't had enough.

Why don't we go to the phone for one last question.

Jonathan Schildkraut, Evercore ISI.

This is Justin for Jonathan.

I was hoping you could talk about the EIP financings and billings and whether in 2015 if you see the billings overtaking the financings?

Yes, it's a great question.

You can see that with penetration of the base now thing about 89% on simple choice, that there's not a lot of additional significant EIP financing that will go on the balance sheet.

Now in the fourth quarter, you saw an increase in EIP financing versus the run rate that we had in the third quarter and the second quarter and that was really driven by the iPhone 6. So that definitely will moderate throughout the year.

And the other part of the equation is the amount of what under classic accounting would be recognized as service revenues is now over $1 billion in the fourth quarter.

So yes, the projections are that the billings will overtake new EIP at some point during 2015 with one caveat.

If we once again blow away our growth projections and attract significant growth above and beyond what our current guidance is, that inflection point could potentially move out to 2016.

But it'd be solely a function of growth and that's a high-class problem to have.

Definitely appreciate your question.

Thank you very much.

Okay.

So thanks everyone for listening in.

It's been great talking with you this morning and we're looking forward to speaking with you again next week during the Deutsche Telekom Capital Markets Day in Baun, Germany.

And we appreciate your time, have a great day.

Ladies and gentlemen, this concludes the T-Mobile US fourth quarter and full year 2014 conference call.

If you have any further questions, you may contact the investor relations or media departments.

Thank you for your participation, you may now disconnect and have a pleasant day.