T-Mobile US (NYSE:TMUS) will continue to hunt for 700 MHz A Block spectrum but already has spectrum in that band covering 185 million POPs in 24 of the top 30 U.S. markets, according to CFO Braxton Carter.

T-Mobile has made acquiring low-band spectrum in the A Block a mission this year. Speaking at the UBS Global Media and Communications Conference, Carter noted that T-Mobile has been "very active in private spectrum transactions," with deals covering 40 million POPs, 27 million of which related to the A Block. T-Mobile recently struck a deal with Paul Allen's Vulcan Wireless to get A Block spectrum in the Seattle and Portland, Ore., areas.

T-Mobile's first 700 MHz sites are already on air, and several Band Class 12-capable handsets are available in the market, including the Samsung Galaxy Note 4. Carter said that T-Mobile will release a "significant" number of Band 12-capable devices next year and "will be aggressive in rolling out low-band [spectrum] next year."

"I think the beauty about what we did with that strategy is we have optionality," Carter said, adding that T-Mobile now has nine of the top 10 markets covered with 700 MHz spectrum. The "only hole" in that regard is Chicago, and Carter said T-Mobile would be willing to buy it at the right price.

Over the past few months, T-Mobile has been striking a series of deals with smaller companies to roll up A Block licenses, and now has enough spectrum in that band to cover 70 percent of its footprint. "We own the markets that really drive the valuation in spectrum, which is the highly dense, major metropolitan areas at this point," he said.

More than 50 percent of the markets covered by the company's A Block spectrum are free and clear and ready to be deployed, though the remaining markets are encumbered by Channel 51 broadcasts, generally limiting T-Mobile's ability to use the spectrum until after the incumbent broadcasters are relocated after the 600 MHz incentive auction. However, the company has already entered into agreements to relocate broadcasters to new frequencies in six markets covering more than 17 million POPs, making those markets available for launch in 2015. Carter said T-Mobile can use other technical efforts to mitigate interference, but some markets, like New York City, will not be fully cleared and free of interference until after the incentive auction.

T-Mobile now covers 250 million POPs with LTE and plans to cover 260 million by year-end. The company is planning to expand that to 280 million POPs by mid-2015 and 300 million by the end of 2015. Verizon Wireless (NYSE: VZ) and AT&T have already hit that 300 million milestone. Carter said expanding T-Mobile's network footprint will increase customer satisfaction, help reduce churn and potentially offer T-Mobile new growth opportunities as it expands into markets where it has not historically competed because of a lack of network coverage.

Speaking of spectrum, T-Mobile and Verizon filed an application with the FCC to swap AWS and PCS spectrum. In total, the spectrum involved in the transaction covers 92 counties in all or parts of 41 Cellular Market Areas throughout the country. As a result of the proposed intra-market and inter-market swaps, T-Mobile would hold 30 to 102 MHz of spectrum in total, and Verizon would hold 52 to 127 MHz of spectrum. The companies contend the swaps would "allow each of them to hold larger blocks of contiguous spectrum and/or align spectrum blocks with those already held in adjacent markets, which in turn would permit more efficient operations." T-Mobile and Verizon have swapped spectrum before, and T-Mobile purchased A Block spectrum from Verizon covering150 million POPs in a deal that closed earlier this year.

Apart from spectrum, Carter said that T-Mobile's expansion of its MetroPCS prepaid brand into 40 new markets during the past year and a half or so has been "very, very successful for us." T-Mobile has now moved 84 percent of its legacy CDMA MetroPCS customers onto its GSM-based network (up from 78 percent at the end of the third quarter), and T-Mobile has refarmed 63 percent of MetroPCS' AWS and PCS spectrum. Over the next few years, Carter said T-Mobile's goal is to deploy 20x20 MHz LTE channels in 90 percent of its markets.

Interestingly, Carter noted that during the past two years, T-Mobile has tightened its credit standard but has seen a migration of its prepaid customers to postpaid, and concluded that some customers were on prepaid by choice because they passed credit checks. Customers who wanted the benefits of no-contract plans have come to T-Mobile's Simple Choice plans, he said, adding that T-Mobile has seen roughly 100,000 of its own customers move from prepaid to postpaid plans per quarter.

Carter said that the launch this fall of Apple's (NASDAQ: AAPL) iPhone 6 and 6 Plus has been a "major switching opportunity" and that T-Mobile has less downside in the frenzy to get iPhone customers to switch carriers because it got the iPhone last among Tier 1 carriers and has a smaller iPhone subscriber base.

"I think the iPhone has been impactful on the industry churn," he said, especially with the rise of equipment installment plans, which have made the cost of iPhones and other smartphones more transparent to consumers. "It gives the perfect switching opportunity to really optimize the wireless experience of the consumer." However, Carter said he thinks churn related to iPhone switchers will moderate during the next 12 months.

Looking ahead to next year for T-Mobile, Carter said that it is "hard to imagine that the level of growth we have this year is truly sustainable given the competitive dynamics." T-Mobile added 5.11 million net new wireless customers in the first three quarters of 2014, including 2.9 million branded postpaid customers.

Still, Carter said T-Mobile has momentum, strong brand perception and will continue to innovate. "We're very optimistic" he said.

For more:

- see this webcast

- see this FCC filing



Related Articles:

T-Mobile to raise $1B in stock sale to fund capex and spectrum purchases

T-Mobile aims to scoop up more 700 MHz spectrum for LTE deployments

T-Mobile will work with Nokia Networks to launch LTE carrier aggregation

T-Mobile to focus on 1900 MHz LTE deployment to expand network footprint

T-Mobile's Carter promises 20x20 MHz LTE 'in all of our major metropolitan areas' - at some point

T-Mobile to raise new debt, likely for AWS-3 spectrum auction