Investors saw a lot of red in 2022. But a company known for its magenta logo was a stock market darling this year.
T-Mobile is now worth about $175 billion as well, more than Verizon and AT&T, both of which are Dow components. T-Mobile’s solid performance on Wall Street was one big reason why CEO Mike Sievert is the CNN Business pick for CEO of the Year.
Sievert beat out several other contenders, including Michele Buck at Hershey (HSY), Occidental Petroleum’s (OXY) Vicki Hollub and Arvind Krishna of IBM (IBM). He joins 2021 CEO of the Year choice Albert Bourla of Pfizer (PFE) and previous winners Marc Benioff of Salesforce (CRM), Target (TGT) CEO Brian Cornell and Chipotle’s (CMG) Brian Niccol.
T-Mobile had an impressive year despite many economic challenges, including inflation. The company continued to gain market share at the expense of its rivals.
CNN Business spoke to Sievert about how T-Mobile has continued to perform well in a super competitive business.
Sievert said the company is aware that “consumers are fearing inflation.” That’s why T-Mobile is trying to keep prices down, even as competitors have raised the cost of many of their plans because inflation hurt their profitability.
“It’s just another example of us making a big investment in customers, changing the industry in their favor, putting them first, and making an investment in them,” Sievert said.
The strategy is working. T-Mobile, thanks to its merger with Sprint in 2020, is now the second-largest wireless carrier in the US, ahead of AT&T and trailing only Verizon.
The company has about 112 million customers and has been adding subscribers at a faster clip than both of its main rivals. A 2021 data breach, which T-Mobile paid $350 million for this year to settle class-action suits, hasn’t dented growth either.
Is wireless recession-proof?
But there are some concerns. Sievert said inflation is among them, mainly for its employees. He explained that the company has boosted worker pay to account for rising prices. That has led to higher expenses, but Sievert said T-Mobile is less worried about inflation than other consumer firms.
“We’re somewhat insulated from inflation,” he said, adding that T-Mobile’s average revenue per customer has increased this year, not because of price increases but due to the fact that one of the company’s more popular plans is a higher-priced service that offers more features.
Growing recession worries are an issue too, even though Sievert said “we don’t see it as a foregone conclusion that a recession is coming. But we are prepared if it is.”
Sievert noted that wireless customers are probably going to be very reluctant to cut back on using their phones though, even if the economy heads south. That could make any downturn next year less of a problem than the 2008-2009 Great Recession was for cell phone companies.
“We are in a category that people will retain. This is very different than 2008 before the smartphone revolution. People will hold on to wireless,” he said.
Cell phone service from the stars
It helps that wireless technology is also a lot more advanced now than 14 years ago. Sievert said T-Mobile has also been able to capitalize on the fact that it has spent a lot on wireless spectrum auctions to fill out its 5G coverage map across the country.
“It’s about more devices being able to connect customers with devices that serve all purposes in their life, including rapid growth of 5G home broadband,” Sievert said.
“We feel so fortunate to have this massive multi-year lead on the 5G race in this category,” he noted, adding that T-Mobile was “dead last” in the 4G market not that long ago.
But AT&T and Verizon are both ramping up their 5G coverage plans too. And let’s be honest. There’s not that much anymore to differentiate one wireless carrier from another. They all pretty much offer the same new and popular phones from Samsung (SSNLF) and the latest iPhone 14 from Apple (AAPL).
Enter SpaceX. T-Mobile announced a joint venture with Musk’s rocket launching company this year to use SpaceX’s Starlink satellites to offer wireless services in areas with little to no coverage.
“The idea of being able to get you connected wherever you can see the sky, that’s potentially groundbreaking,” Sievert said. “We’re now heads down attempting to create together a service that will connect your mobile phone directly to a satellite,” he said.
Sievert said he and Musk worked together “on several occasions” to get the deal right, adding that he was impressed by “how mission driven” Musk and the entire SpaceX leadership team are.
“You can just feel the passion when you’re talking to Elon or any senior person at SpaceX that they deeply believe in the importance of what they’re doing for humanity,” he said.
Prepared for more competition
Sievert, who has been with T-Mobile since 2012, took over as CEO in 2020 from long-time CEO John Legere. Sievert may be a little less bombastic and flamboyant than Legere, who was known for taunting the competition, not to mention his rockstar-length hair and penchant for leather jackets.
Still, Sievert remains confident that the company will continue to keep growing. To that end, he’s not worried about the fact that cable companies are trying to cash in on the wireless boom too. Both Comcast (CMCSA) and Charter (CHTR) have deals with Verizon to offer cell phone service over Verizon’s network.
Sievert said he respects the competition from cable.
“These are very successful companies who seem very serious about the space,” he said. “But I’d much rather be a mobile company using advanced 5G technology to challenge the cable space than the other way around.”
But Sievert is not too concerned about them denting T-Mobile’s growth.
“Cable’s been at it in wireless now for years, and they’re realizing a certain amount of success,” he said. But he added that it’s been more at the lower end of the market.
T-Mobile instead wants to keep trying to attract more subscribers willing to pay up for premium packages. And Sievert said that T-Mobile can do that by continuing to market itself as the so-called “un-carrier” that is different from all its rivals. That includes the heavy use of its prominent magenta logo.
Sievert even joked about the fact that Pantone just named Viva Magenta as its color of the year.
“We’re on trend for 2022 and 2023,” he said. “But this has been a part of our imagery for a long time. And what we want people at one glance is to see that our company is a little different than everybody else. This isn’t a tired and staid old telco. This is a technology company that’s deeply passionate about what we do.”