Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the T-Mobile US First Quarter 2015 Earnings Call. [Operator Instructions] This earnings call is being recorded today, April 28, 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.

Good morning. Welcome to T-Mobile's first quarter 2015 earnings call. With me today are John Legere, our President and CEO; Braxton Carter, our CFO; and other members of the senior leadership team. Let's get [ph] to the very brief disclaimer here. During this call, we will 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 as usual on non-GAAP financial results on this call. You can find the reconciliations between GAAP and these non-GAAP results in our Investor Factbook 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 the first quarter Un-carrier earnings call and our third open Twitter conference. We're providing a live video stream again, so you can actually watch all the action that’s going on here from San Fransicsco if in fact that’s what you feel like doing today. Now we're going to generally go with the same Q&A approach as last quarter. And to accommodate all your questions, we’ve allocated up to 90 minutes, certainly won’t use all that time as in fact it’s not necessarily. We’re going to take questions via Twitter, text as well as the dial in questions that we normally take. But before we go into that and to make it brief we did send the information out. I just want to give you some of the highlights of what was a fantastic quarter for the company. Now we clearly started the year with a bang. 1.8 million total net adds in Q1 and that included 1 million postpaid phone net adds. So I will carefully say that we are very confident that our postpaid results are the best in the industry by a long shot and that we have captured all of the industry postpaid phone growth in the first quarter of 2015 and importantly as I’ve told you before we won’t stop and these results prove that. A significant accomplishment of the quarter was delivering all time low branded postpaid phone churns of 1.3% with the second two months of the quarter actually lower than 1.3%. Now, this is a record low for us. It’s down 17 basis points year-over-year and it demonstrates the real improvements we’ve made at T-Mobile. The Un-carrier is taking hold and it’s giving customers not only a reason to come but a reason…

Thanks, John and good morning everybody. I’m so excited to be here to again provide financial highlights to another outstanding Un-carrier quarter. Our industry leading growth again translated into strong financial performance. Service revenues were up 9% year-over-year, total revenues were up 13% year-over-year and adjusted EBITDA grew by 28% year-over-year. We are highly confident that these growth metrics will again lead the entire US industry. And it is important to note that we achieved this growth despite the non-cash revenue deferral from Data Stash which reduced adjusted EBITDA by $112 million in the quarter. Sequentially service revenues declined 0.9% but this was due entirely to the impact from Data Stash. Excluding Data Stash, service revenues grew 0.9% sequentially and double digit 11% year-over-year. And customer quality remained strong. Bad debt and factoring expense as a percentage of total revenue declined year-over-year and bad debt expenses excluding factoring also declined in absolute dollars in the fourth quarter. The sequential increase in factoring expenses was primarily the result of a non re-occurring item due to a change in our factoring agreement. Prime flow of EIP receivables remained in line with the overall trends over the last two years. As expected, adjusted EBITDA declined from the fourth quarter but this is due to our stated intention to invest heavily in growth in the first half of 2015 as well as the Data Stash impact. To echo what John said before, we see momentum accelerating into Q2 as we continue to invest in growth. The Data Stash impact will also turn from a headwind in Q1 to a tail wind as the year plays out. We have revised our strong outlook for 2015 by increasing guidance for branded postpaid net adds from a range of $2.2 million to $3.2 million to a new…

[Operator Instructions] We'll go first to Brett Feldman with Goldman Sachs

Was obviously quite strong in the quarter, could you talk a bit about the extent to which you think that was seasonally seeing lower churn across the industry and to what extent you think its structural and any incremental color you can provide around that would be helpful. And then just as an extension of that question, how are you thinking about churn or how were you thinking about churn for the remainder of the year when you updated your net add guidance? Thanks.

And Brett before you go up, you came in after I think your first sentence. I’m assuming that the entire question was about churn.

Yes, sorry.

All right, you want to start Mike.

Yes, hey Brett this is Mike. Churn hit a record low and what’s more interesting is that the sequential improvement was the biggest in the industry. So everybody had pretty good churn this quarter. But we had the best improvement on a sequential basis. And so, yes there were some industry dynamics but those industry dynamics favored T-Mobile. The truth is people are reacting to both the Un-carrier story and what it delivers them but most importantly this is driven by the radical improvements that we’ve made over the last year in the network. It’s not retric [ph] people are coming to this brand, they are kicking the tires and they are liking what they see and they are staying at record rates, it’s simple as that.

Brett there is from a standpoint of the company and where we see it going and how things are going since we embarked on this journey. When we initially Braxton and I started giving our five year views for what we thought the company was going to do, you just recall that the churn on the postpaid side back at that point was about 2.5% and it was our plan that we could gradually in successive years get it down to about 2017 is when we thought it would be 1.6 and so we’re running well ahead of that as I think we kind of said and Braxton is going to elaborate. There are some seasonal increases in churn in the second half of the year that you can expect but outside of that I think that the churn changes in the business are somewhat directly co-related to the amazing changes that are taking place in our network and I think those are only going to get better plus the customer care improvements in our company are fantastic and the feedback that we’ve been getting on that front is fantastic as well. So as we start planning the new few years we see these kind of churn levels with some seasonality that there being no reason why we can’t continue to perform this way. Braxton, do you want to comment.

Yes Brett. I think it’s really one of the true highlights of the quarter in a very, very significant development. And a couple of things I want to add is when we do our cohort analysis on churn the highest churn in a customer’s life is during the first six months of tenure. And we see a steady fall off of churn as that customer matures overtime. And obviously with 8.3 million net additions another outstanding growth quarter in the first quarter we have a fairly young base which means that from a more mature standpoint our churn is actually elevated. John has had the reasons very well incredible network performance amazing innovation from a marketing standpoint. But one of the things that we’re really excited about is with 700 megahertz rollout can do and Neville will talk about the great progress that we are seeing with the rollout of 700 megahertz and a very key part of the business case and the rationale behind that investment was customer retention. So, yes there is some seasonal impact but we think that we have a lot of things going on and especially that one of the best customer service organizations in the industry and that’s really going to help us in the future and continue to effectively retain our customers and that is the holy grail to the economics of the wireless business.

Okay, let’s take one more on the phone then I’m going to jump over to twitter and then we’re going to go to the text message. So let’s take the next dial in question, operator.

We’ll take our call from Simon Flannery with Morgan Stanley.

Thanks so much. John you talked about the upside you still have to market share the headroom you have and you recently launched Un-carrier 9.0 around the enterprise. Can you just talk a little bit more about what you see as the opportunity there and if you can share any earlier results since you roll that out? Thanks.

Yes, the – first of all Un-carrier 9, I’m sure everybody has gotten a chance to see what it was. I think that’s got incredible upright to the business for a number of reasons which is when I talk about the combined market share that we have across the big four in the wireless spaces, it’s far far, far or less on any aspect of the business side. And the immediate impact of course on small and medium businesses and people going into the retail stores, its’ actually up about 128% in the weeks that followed. So a significant surge and I think on the business side, that kind of flow is not something that can’t get even greater and greater in size and I’ll let Mike comment that in a second, but I think Simon there is some things that excite me significantly about our ability to continue to grow. I only talked about the 16.5% because if the people are starting to think about the sizeable growth and we’ve gone from 33 million customers to 57 million customers in the last two years including Metro coming in. And the porting, postpaid porting ratios are continuing to escalate and from a standpoint of the things that we’ve launched, I have two things to say, we launched 9 Un-carrier moves and yes, 10 is coming very soon to a scared set of carriers near you. But most importantly what we track and Mike tracks very carefully is the awareness level in the United States on all customers and on likely switches of the first nine moves that we’ve done and I can only tell you that the awareness levels of some of our most innovative moves range from 10% to 29%, which means that two thirds of the customers that are out there don’t really know that we have free international data roaming and they don’t know some of the things that are constantly once they understand are major switching move. The components of Un-carrier 9 are absolutely phenomenal. I mean the simplified pricing that’s taking place, the way data is being handled, the tools that we are giving to small business with GoDaddy and Microsoft and then the implications for families on the business family discount it’s a big deal and the thing I can’t measure, but I wish I could is an addition to the 128% flow that’s happening in our stores. What’s happening in the business customer rooms of AT&T and Verizon as their customers are strolling in with T-Mobile’s transparent simplified pricing and asking those scared to debt [ph] business players, hey, can you please explain to me how my 1050 line is $10 a line and includes a gig of data. And I’m pretty sure that these guys have no comment. So that piece I like as well and it’s so far so good, but Mike you want to comment on…

Well just that to amplify what John is saying this is really about opening up a new front for us. And the time to do that is when in your main thrust there’ s tons of room left and you think about our 16.5% market share. It shows we have got tons of room left on the consumer side while at the same time plunging ourselves into real competitiveness in the business space. And for those and our maths geniuses 128% growth that’s a doubling of our flow rate which was already well established just in the last two months. So we’re really really pleased with how the worlds responded to this and remember Un-carrier 9 wasn’t just for business, it also included the Un-contract a really innovative new way for people to think about how they can rely on their pricing and their value proposition from us forever and also involved Carrier Freedom a big extension of our contract freedom initiative from last year and that will pay off not just your early termination fee but will pay every penny you owe on your old phone as well. So really, really great contribution to our quarter’s results in Un-carrier 9.

Hey give me one thing too. You notice on some of the last calls with our competitors they have now decided that porting ratio is not something they want to talk about. It’s like that doesn’t mean anything to us, one thing you notice with us is we’ll talk about all of them. Any variable you are in, and no variable in, in of itself is going to give you the full list, but they are all good leading indicators. Let me give you an explanation why the other carriers don’t want to talk about porting ratios. For Verizon, the Q4 porting with T-Mobile was 1.4 so you get that certainly 1.4 times as many customer came in this direction as the other one. And then of course in Q1 when they were going to get aggressive it went to 1.6. And so far in Q2 it’s 1.8, so the trend is fairly clear. AT&T is interesting, they were 1.8 then they went to 1.85 and so far they are 2.05. And if you’ve been waiting to ask the question as to and I do think it will be interesting to see Sprint’s earnings I think they are doing some interesting things but just from a standpoint of the postpaid porting ratios with Sprint they were 2.2 in Q4, they went to 2.45 in Q1 and they are running 2.75 in Q2. So, so far certainly not worthy of a task for us to understand how to change the trend, so a little…

Thanks for all the color.

Let me go over and take one twitter message because he is tweeting all of us on the side as well and he’s probably periscoping himself while he’s tweeting. But Walt, Walt Piecyk, an avid twitter user and follower has the question and he’s already told us that I shouldn’t answer it which means he wants a detailed technical answer from Neville Ray. Does the plan to expand LTE to 300 million POPs require more 700 megahertz spectrum purchase?

And maybe Neville, while you’re at it – that one from Reed [ph] as well, because this is on the same topic from Reed Dear?

Reed says says, yes, when will new coverage build out kick off and will it be 700 megahertz, its only full LTE, MTS, GSM suite?

So, the immediate answer is, no, we don’t require any more A-Block licenses to reach the 300 million POPs of LTE. And so if I look through the balance of the year tremendous progress through Q1 to 75 million in the books. We’re said, we are targeting 285 mid-year very, very confident on that metric. And to get to the 300 million, it’s a combination of our continued work to modernize our sites with AWS and PCS-based LTE. And building on the great progress we’ve had with 700 megahertz build already this year through the end of the year. This is on existing licenses we own. We’re on an incredible tear. We’ve had great success actually clearing any license encumbrance issues that we have across the vast majority of the markets that we’re targeting for this year, so we have over 80% of the licenses clear and free for us to build and operate within. We have 1000s of sites already construction complete and coming up. The list of markets continues to grow. And so, just as of this morning we lit up and turned on Denver with our A-Block license, so that adds to D.C., Minneapolis, Philly, Dallas, Houston, Detroit, Tampa, San Antonio, Colorado Springs, that list is kind of growing with 700 momentum every day. So, delighted with our progress we have a clear path with the licenses that we cleared to-date to get to the 300 million. We’d love to do more. Performance results are truly exciting. We’re seeing big enhancements on in building coverage, the performance and reach in suburban and rural areas with 700 is spectacular and we’ve got a great handset lineup building, the new Galaxy 6, Samsung 6 that came out, 12 -- band 12 capable and just rocking away on that new 700 spectrum. So we’re making great progress there. The second question about new build, we are building out the sites across markets, many of those in areas where we don’t have 700 megahertz spectrum, that program is already well underway this and there are improvements in multiple markets coming through without 700 build. I’ll stop there.

Okay. Let’s jump around. Operator, I think we have next questions from Philip Cusick.

From JP Morgan.

Hi. This is Eric in for Phil. CapEx came in a little lower than the run rate. What was the reason for the lower spend, are you guys waiting anything before ramps? And then, with regards to factoring, what should we expect from that going forward? Are you guys looking to factor handsets as well, as well as the service receivable?

Yes. The CapEx profile is just purely timing. We are again reiterated our guidance for the $4.4 billion to $4.7 billion in cash CapEx spend during 2015, so I wouldn’t read anything into slight dip in Q1 CapEx. On the factoring fronts, there will not be any more service receivable factoring. But we have been transparent in the capital and liquidity section of MD&A that we are in fact exploring securitization of the $4.9 billion net that we’ve invested off of our balance sheets and EIP receivables. And this is something that we continue to take a look at. Of course, structurally we would be looking at something that was very favorable from a cost of capital standpoint in regards to putting say, five, four year bonds out in the marketplace. But just stay tune. Something we’re looking at, but no definitive announcement at this point.

Okay. I’m going to jump over to the text message, because the first question that’s come in is something that I’ve been seeing on various forms of social media overnight and in the last couple of day. Is it true that users 20gig plus are now being throttle. It’s not prioritization because speeds are hovering around 0.02 speeds. Now couple of things, first of all, I want to make sure you understand those of you that are writing in as well. You are heard, I did read the Reddit trend on this and see what’s going on and I’ve seen it starting to fuel on social media. And I will just tell you that there -- from my observation there are multiple issues being talked about at the same time they have nothing to do with each other and I want to reiterate that on unlimited 4G LTE customers we do not throttle. So that’s the thing that people are hovering around. And I did see the Reddits and the social media definitions about individual customers who happen to be high users, who are showing very low speeds. And one of the things that is being conversed and I’ll give you solution in a second, is that very well publicize only in areas where our network is completely congested for short periods of time, it could seconds, it could be minutes, it could be periods of time where large volumes of people are that the network management practice is how do you clear out he congestion at a time when nobody has speeds. And I think what I’m watching happening is we must have some high volume users who are in congested areas who are looking at their speeds and believing that they are being throttled and putting several items together on the threads. But I want to reiterate, we do not throttle 4G LTE unlimited customers. And what I think we’ve decided to do. I talked with the team this morning is we’ve going to setup some sort of a separate forum, maybe we’ll do a Reddit AMA or we’ll do periscope discussion just too deep dive into this. So we don’t give you a short answer, but those of you that are trying to connect this together and say, hey, its T-Mobile throttling? We’re not throttling. And so, let’s take that off to the side but also make sure you understand that your comments on Reddit. Your comments on Twitter and various forms of email and social media. We are seeing all of them. So I appreciate the question coming in and I know it’s indicative of a question a lot of people have. Okay. Let’s go back to the phone for the next question.

We’ll take Jonathan Chaplin with New Street.

Thank you very much. I'm wondering if you could give us little more color on the arrangement from Google? So I guess two quick questions. First of all, our understanding is that you can pull a plug on the relationship once they get above a certain threshold of subscribers, and I'm wondering how large that is. And secondly, it seems like Google is going to pour R&D into disruptive technologies, particularly around sort of Wi-Fi to cellular handoffs. And I'm wondering to what extent your agreement with Google gives you access to the sort of the IP that they developed through this process?

Okay. Well, couple of things and I’ll see if Mike wants to. We’re not going to disclose terms of the agreements with Google, but I would say, the last thing in my mind right now is how to unhook Google. I think this is one of the most exciting thing that’s going on and its great enhancement for us in a very profitable relationship and one that we’re very excited about. And I think it’s quite consistent with our business going forward. But we’re not going to disclose the terms either on how we can extend, expand or exist and/or any of the technology sharing relationship and other things.

And we certainly are excited about it. I mean, this is a strategic partnership. We’re excited about it really on two fronts and it really goes to your questions. The first one is we expect to make on this. This is something that allows more customers onto our network on terms that are very favorable for T-Mobile. We’re probably more importantly this is something where we get to collaborate deeply with some really smart thinkers and that our whole DNA around change, changing the norms in the industry, bringing about things that are better for customers, tackling a bunch of the important why questions and why not questions that remain in this industry and they’re passionate about that too. And so we get to go look at what’s possible together to implementing these technologies takes work on both sides. And yes, to the premise of your question, if there are things that land on the Google side that turn out to be popular many of those thinks we can bring over and offer on the T-Mobile side as well due to the collaborations. So, we’re really excited about it. We think it will be great for us financially, but as importantly -- we’re of like mind. And this is about disruption and it’s about changing the norms and the standards in the industry and we think it really lines up nicely with who we are.

I’ve actually said a couple of times as well. Even I see this, there’s a big difference between way our business is structured, the way we think about customers, the way we think about where the industry is headed. And what to most of our competitors is a threat or something they hope to not see coming is something that we embrace and want to enhance. And it’s very clear and this question on Google can go into a broader array of thinking about the future of the industry. And it’s very clear as we all see it that contents and social media and entertainment are all moving to the internet and the internet is all moving to mobile. And so there’s a real synergy between what we’re doing. And I think we think far to simplistically about the four major carriers and what the structure of the industry is going to be without understanding that the tangential players in various industries are touching mobile players in the way that’s going to make the partnerships and the capabilities and the go-to-market approach of us with them and T-Mobile being the most likely obvious candidate to do these things. It’s quite an exciting time and this relationship with Google is just one small aspect. Neville, did you want to say something.

Yes, just a quick comment on the kind of the R&D and especially on the Wi-Fi calling. There’s no doubt we’re the leading company on across the earth really on Wi-Fi calling and you’ve seen how others have embraced our capabilities notably the Apple team with the iPhone 6 launches and T-Mobile the first who enable Wi-Fi calling and transition into voice over LTE environment, which is absolutely the future of this industry. And so I think for the Google folks there’s R&D and capabilities that they are looking to leverage from us as much as the other way, which is great to see. So clearly there’s a Wi-Fi capability on the Google Fi service. At some point in time we can get to where we are with handover into the VoLTE environment, but that’s going to take some of the other folks that they are working with to actually even launch VoLTE and start moving towards to future state of these networks.

I’m going to jump over to the Twitter feed, then we’ll come back to the phone and then I actually saw Rick Prentiss who got a question coming in on text. So we’ve got things going on. Now first wireless I’m going to have it reader of has a question, this T-Mo not feel any pressure who invest in areas like connected car, Internet of Things that complement the consumer business. I think that’s a consistent question to what I was just saying. Now if you think about a number of adjacent industries and businesses, its heavily likely that our two biggest competitors Dumb and Dumber will continue to attempt to use their balance sheet and they access profitability from their business that we’re competing in to go invest in own and control all aspect of the industry that they feel like they need to compete with, which will therefore annoy and cause all of the other innovators in those space to look at people that they want to work with partner with, invest with, align with or merge with in order to play in that space and its highly, likely that the innovation will come from other than the one big one that Dumb and Dumber buy. And so yes, we don’t feel pressure, but we see ourselves uniquely positioned to be the player that these innovators look to drive their business to mobile customers as well as the large array of retail presence with our brand, but I know Mike, you think about this is lot. Did you want to comment?

I’ll just say that, the short answer is Internet of Things yes, variables absolutely, connected cars probably not so much, but there’s a lot of areas converging here and we’ve got seeds planted in a number of different areas either alone or with partnership, but I also thing that this quarter’s results are steady in the value of focus. Look we kicked everybody [Indiscernible] on postpaid phones. That’s where – that’s what our view and I think everybody in the industry understands that’s where the profits are, that’s where the customers are, that’s how we can change the industry. And you’re going to see everybody else trying to find something that points you in their results because we’re taking all of the valuable customers. AT&T is going to point to $10 tablets or somebody is going to point to their low revenue connected cars. I’m quite sure Sprints going to prance around and point at low value prepaid customers as something to points you when we’re rolling up all of the valuable customers in the industry. And as long as everybody is doing that and they’re happy with that. I’ve got to tell you, we’re very happy with that.

I would like to point out for everybody on the call that we’re 43 minutes into the call and Mike Sievert and I have yet to use any following at this point in time and I’m quite proud of that. Let’s go to the phone for the next call.

We’ll go to Amir Rozwadowski with Barclays.

Thank you very much. John just wanted to see if we could dissect some of the positive subscriber momentums you folks have experienced. Specifically, you mentioned that you benefited from some prepaid conversions to postpaid, and I believe you gave a number of around 195,000 was the net benefit. If we think about your expectations for continued subscriber momentum, how much of that is predicated from this type of conversion versus around competitive displacement. And from a bigger picture perspective, how should we think about these two pools of subscribers sort of merging, given some of the changes that have occurred to pricing and contracts that you folks have initiated in the market?

Those are very good question. Let just roll a few pieces together there, right. So, we’ve had eight quarters in a row where we’ve added more than a million net customers to the business. On the postpaid phone side we’ve let the industry totally in five quarters in a row, six of the last seven. Here’s a fun factoid for you. We added more postpaid phone customers this quarter by a factor of three than AT&T has added in the some total of the last two years. So these are trends that are not just one quarter. The migration from prepaid to postpaid. This is something that we embrace tremendously. And this two variables here, I ask the team to talk about this as well, because most of things that we’re seeing is the industry and we may have spent a bit too much time on this black and white between prime and sub-prime and when it relates to what we’re seeing from smartphone owners that were heretofore classified as sub-prime their payment streams on this most important item that they have with some enhancement things like smartphone and quality what we can expect is quite strong. But from a standpoint of the trend and what are the expectations, Mike you want to talk about that.

If you think about just to amplify what John saying, in this quarter we had the highest migrations from prepaid to postpaid that we’ve seen, certainly our smartphone a quality initiatives which is an initiative to let high value customers into our postpaid side. People with proven payment track record we’re now letting them into our postpaid side, which actually increases the quality of the postpaid base which is quite counter intuitive. But as evidence by the fact that bad debts rates are falling year-over-year and sequentially as a percentage of total revenues, so you can see that whether it’s on the bad debt side or whether it’s a the achieving record churn level even as this dynamic has unfolded, it shows you that the quality of the customers that land at T-Mobile on the postpaid side, not as evidence by their credit ratings but as evidence by their performance with T-Mobile is as good as it’s ever been.

And then Mike, just to follow up on that comment, if we think about sort of the quality of that subscriber because there have been a lot of questions around sort of the different levels and tiers of subscribers across the industry, how do we think about the marginal benefit of making that transition from a prepaid customer to a postpaid? It does seem like from a brisk perspective from potential churn, you folks have the controls in place to manage that risk, but I'd be interested in terms of the marginal benefit for pulling that type of subscriber on?

Yes, I start maybe Braxton can add to it, but the way we use is that once we get somebody on the postpaid we’re able to really deepen the relationship with them. We get a better uptake of family plans. We get better uptake of data attach. We get much better uptake on super funds, the devices that have the best retention, partly because that’s the place where people qualify for our device financing and so all those things creates sticky factors with our brand because they delight our customers. We don’t believe in the kinds of sticky factors that are all about tying people down. We believe in the kinds that are about adding value to that customer relationship and our customers are voting with their dollars. This quarter we hit an all time high on average revenues per account as our customers on the postpaid side partly fueled by this dynamic, you’re asking about have deepen their relationship with us. Paying us more than ever before in service revenues on an account basis and when you adjust for Data Stash paying us more than ever before on a total billing spaces as well. And that’s not because we’ve raised our prices. It’s because we’re earning a deeper relationship with our customers.

I actually love – I love the genesis of this question, because let’s be candid when we say these questions are being raised what we mean is that big and bigger this is their explanation as to why we’re growing and they’re not. They are taking our low end sub-prime customers. And I have got two things that are very important for me to say to my two friends in the ivory towers. If everybody is happy with the way things are going let’s just keep doing it this way. I can tell you exactly how many quarters it will take before we’re bigger than them completely. Second is, when you change your mind and you go to customers and you change your thought process they won’t listen to you anymore. And what’s fun for me is that Dumb and Dumber are they talk about customers like they are thing. And I know in Verizon’s earnings they’ve refer to we’re not going to chase those low end customers that are price sensitive, and come on these are customers that are choosing to go somewhere else and I know the wireless guy over at AT&T, he actually refer to the customers as these are things we’ve acquired and since we paid money to acquire them we’re going to hold on to them as long as that Reddit continues we win, because customer don’t think or what to behave that way. And at the top of all we do, the Un-carrier revolution is about changing an industry run by those kinds of more on and changing things for the benefit of consumers and it creates brand and that’s the momentum that we’re really into it. The questions around that is so exciting for me, because it means that there are further quarters where they’re going to sit over there and try to protect that fortress and that’s a best news of all after two years of us kick in their [Indiscernible] that will continue be able to keep doing it. Sorry for the rant but I just woke up its early here. Why don’t we try Rick since he was innovative enough to try texting us, question from Rick Prentiss any thoughts about the broadcast incentive options in terms of timing and rules setting? Neville, you want to start and then I will certainly pontificate on this?

Yes. Rick, I’d love to see it as soon as possible I think this is a major event for the industry. It’s probably the last opportunity for many, many years to further level deploying field wireless, low-band spectrum and all the success that we’re driving through with our A-Block low-band spectrum is critical for composition in the industry and today way too much of it, 73%, 74% is in the hands of the big two. And that needs to change. This auction is a vehicle to enable that change. I think the FCC Mr. Wheeler, are very focused on driving that auction to a successful outcome in the first half of 2016 and we love to see that, and we’re excited about more low-band spectrum being release to the U.S. marketplace. Critical for competition as you look out into the future of this industry.

Yes. I have a few thoughts on this and I won’t spend too much time on it. Couple of things to think about, one is I think what we’ve learned out of Washington in the past year or so is when they set their minds to certain items you can predict that they’re going to happen. I think that the FCC and Chairman, Wheeler are pretty clear that they want this auction to happen early in 2016 and so I have got a belief that based upon track records lately that that’s where we’re headed. Second is with the AWS three auction that took place, a tremendous amounts of money were raised, but one of the objectives of the auctions that was not accomplished is doing the things with spectrum that you need to do to ensure a competitive environment takes place. So that will be pinnacle in this auction, which is why we certainly have rallied around the idea of having a reserve of at least 40 megahertz or 50% of the spectrum and not allowing more than one person to get more than 20 megahertz. And I think with those we plan to be present in the auction. And for me now our team here thinks ahead and we think about the time that Neville not only deploys what we are doing in the 700 we deploy the 300 million POPs but we also get a nationwide swath of low-band 600 and we deploy that. And you look out for three years to five years and you start thinking of the competitive environment and that its better for America and its better for consumers and it makes Verizon and AT&T compete aggressively for their customers. So I think Washington believe that and I think the American population does, so I have to believe that’s going to be the outcome and I think it’s going to be – it’s going to be a very positive event for the whole industry. So those are our thoughts on the process and we’re going to be driving our business as if that’s going to take place.

Christian asks on that very topic, Christian Princler [ph] on that Twitter. We’re going to see marketing shifts to tell customers about this coverage footprint and all the expansions in Q4 and Q3. And the answer is yes, and in fact you’re going to see us doing something that nobody in the industry has done a lot, which is very favorable comparing ourselves to Verizon. Let’s face it, we are the fastest 4G LTE network in the country. We have more data capacity per customer than AT&T or Verizon and now we have this rapidly unfolding coverage footprint. By the end of the year we’ll compare with anybody. What we did last month was we rolled out the first crowd source maps in the industry. We’re the only ones in the industry putting our data and what actual real customers experiences are on every street corner. So you can see what have real customers experience in that area. And we’ll continue to augment that and make it better and better/ But the idea is about transparency, truth, honesty, showing what the crowd is really experiencing while we undertake the most rapid expansion of network LTE that the industry has ever seen. So you’ll be hearing a lot more from us on this topic.

And I just -- you watch these non-stop ads that are being placed just do a little ticker and think about the costs of having every second commercial now be one of Dumb and Dumber’s assessments with bicycles, with pieces missing and trying to convince you to never settle et cetera. We’re going to have to reply to that. But here’s what I would suggest you. Right now, nobody argues, it’s very clear, T-Mobile has the fastest 4G LTE network in the U.S. So, we could spend millions of dollars but we don’t on that, why settle for slow, when you can have fast. Secondly, we know everyone knows that Verizon for example is more expensive, they’re more complex, they are less flexible, they are less focused on their customers and they are less likely to adapt to what customers want in the future. Now I can’t tell you the date but there will be a time when T-Mobile coverage will be superior or equal to Verizon then what. We’re faster. We’re bigger. We’re more focused on customers. So that day is coming. I can’t put it on the calendar but it’s coming. And that is why when you see this question on the auction they don’t want any part of that. What commercial could they run? Do business with us because we’re more confusing. We hate -- we hate to more. We’re less complex. We really need your profitability with our 55 points of EBITDA margins, so we can go invest in content. So we can hold you hostage for that too. I mean that’s what’s going on and it’s exciting. Two years into the Un-carrier here’s we are, two years from now. I can only imagine. Let’s go to the phone and I think Craig is the next question.

We’ll take Craig Moffett with MoffettNathanson.

Hi. John, you talked in the past about the benefits of consolidation in the industry. I wonder if you could reflect on the recent developments around Comcast and Time Warner cable, and just does that change your view about the feasibility of the wireless industry being allowed to consolidate?

Actually let’s that topic, right, because I’m going to add a few words to the sentence I’ve always use. I have always said on consolidation, it’s not a matter of if it’s when and how and now I’m going to add and who, because I think as we think ahead you need to think I still reiterate that in five years we will think it comical that we thought about the industry structure as the four major wireless carriers and as I said before and as Mike says many times as content and entertainment and social are moving to the internet and the internet is moving mobile, these industries, the adjacent industries are in the same game that we’re in. So whether it’s what you see Google doing. What you see the social media companies is doing or as you start to see cable players trying to move content Wi-Fi integration with mobile network et cetera, these are individual customers that are looking at both offer sets. So I think you need to think about the cable industry and players like us as not competitors but potential partners and alternatives for each other in the future. So I think once you broaden the definition of things and I think in my mind the fixed wire and home broadband industry is the one that was of a concern there, but when you start to broaden the definition as I said of content and entertainment and video going to customers on fixed and mobile devices together and you start thinking of that industry is a far more broad set of potential partnerships integrations and mergers that the United States could be looking at and in that case I think you will see consolidation of a much broader set. Okay. Let’s got to the one more in the phone and then we’ll jump over to Twitter.

We’ll take John Hodulik with UBS.

Okay. Great. Thanks. John, just a follow-up to some of your comments, it does seem like the number of new promotions in the industry is starting to slow here in early 2015, just as some bigger carriers are talking about being more price disciplined. Is that what you view as really driving the subscriber momentum you have and some of the reporting ratios and you expected to help as we move through 2015? And then maybe for Braxton, just looking at the financials, cash flow from operations is a bit weaker than we thought here in the first quarter. Could you talk a little bit about what was driving that? Was it timing differences in the working capital or some more color on that would be great? Thanks.

Yes. Let me start and throw to Mike. I don’t care what they do. The amount of promotions which are usually reactive temporary attempts to stem their erosion versus us, our plans of what we do and how we rollout Un-carrier moves and promotions is agnostic to whether they do anything or not. And our pace is not going to slow down. Our focus on the customers will not slow down. We have multiple Un-carrier moves continuing to come. And frankly this could just be some of competitive strategy 101 [ph] that learned 25 years ago in school and then just protecting themselves and trying to assess whether for their own greedy profitability its cheaper to seed a few share points than to price their whole base down. But our focus has been on our customers and our brand and our momentum and with eight quarters in a row of reporting positively against the industry whether they are in a promotional period or not we’re continuing to grow, our brand is continuing to grow and frankly I don’t think it matters what they do over the next quarter or two. However, I tend to like to the idea of them laying down and if they want to continue to do that, it would be well appreciated.

Here are some numbers just underscore what John saying, just to prove the point. Look at the fourth quarter, everybody says, this was a quarter of hyper switching and serious competitiveness, everybody put everything in. We delivered a 1 million postpaid phone net adds. Q1 was a period everybody said, oh, it’s pretty quiet. There wasn’t much switching. Churn is down for all the carriers. Maybe people were taking a breath. We delivered a 1 million postpaid phone net adds. We delivered a 1 million in both quarters sequentially in completely different environment and it really shows you what John saying is the case. We’re executing our game plan. Our game plans working. Customers love this value proposition and we’re completely uninterested in the promotions of our competitors.

And your question on operating free cash, John, I think the shaping of that was as expected. With an investment in growth upfront in the year which has a benefit of paying for itself in Europe from an EBITDA standpoint. We expect that there will be a decline in EBITDA and certainly guided to that on our yearend earnings call. I think one of the bright points here is when you look at the major item that’s been affecting working capital which is our investment in EIP, net investment of $4.9 billion at the end of the first quarter that growth in EIP significantly moderated from the fourth quarter. We did $1.4 billion in growth EIP new receivables, but our billings on existing EIP receivables offset all but $150 million of the investment which was a very significant moderation. And I’ll reiterate on a fully levered operating free cash flow basis T-Mobile US will be a net generator of cash in 2015 and it gets very exciting when we look at the growth benefit in our cash flows when we go out the outer years.

Just stay tune, don’t get confuse as to what is an aggressive offer or customer proposition that shows that competitors are finally waking up and serving customers. I mean, two weeks after or one week after Verizon said they are not going to chase low end customers. They came out with an offer and let me tell you what the offer was. It was the creation of mid-tier data bucket, which is nothing other than the insertion of something that will spin the cycle back to tricking customers into buying data buckets that are small than the ones that they had before so they can charge them overages when they exceed those data buckets. So it’s going to be highly ineffective, but it still isn’t a stopping and a listening to customer and providing them what they want and I particularly celebrated AT&T earnings, the summary of which is high, we’re one of the biggest companies in the world, we’re going to raise the synergies on our direct TV process then we’re going to close at this quarter, any questions. Which for me is not exactly what American Wireless consumers wanted to hear from them and the focus on those guys. Did you see on the Twitter, anybody got what they want to take? One of the top ones is SMS. It’s a very outdated method of communication, any plans on T-Mo’s part to implement a newer form over the top communication. Yes, absolutely. I’m not going to tell you what and when though, but as sooner that you might think. Some that came in on text which is for John. A marriage of two [Indiscernible] networks, why no partnership with cable? They can use your network for their wireless offering. You could use their network to deploy small cells et cetera. This is again I won’t get into this specific of it, but I think I am quite consistent on what I just said. These are the kind of things. If it’s something intuitively obvious with the integration of technology of the ability to interface with customers is going to provide a better capability to customers. The market will find those alternatives and that is why I’ve been consistent since day one. These are not -- adjacent industries are not threat. They are just partnerships for integrations waiting to happen. So yes, you’re absolutely right, bring it on. We’re going to the phone. And I’m going to give a little warning here. We have more time. We’ll take the questions. But at about six minutes, I’ve got to go because I’m going to be on CMBC in like 22 minutes or so and we’ve calculated how long I have to get over this. So let’s go to the phone and at some point if I disappear I’ll announce it and then the team can continue.

We’ll go next to Michael Rollins with Citigroup.

Hi. Thanks for taking the question. I'm wondering if you can discuss a little bit more about the integration with MetroPCS? In terms of what cost savings you've been able to generate to-date and how you think about the flow of those savings and maybe some metrics we should be watching over in the future? Thanks.

I don’t know which one you guys want to talk about and I appreciate you bringing it up, because it is one of the most amazing stories of what we have. It bodes well if we need to do further mergers and integrations in the beginning. I want to start by saying we have 16.4 million prepaid customers now and we are by far the biggest prepaid business and we’re three times bigger than we were before they came in. And I think maybe you guys can just pick up on the exactly where we have with how many customers are left to move off of CDMA on to our network and what these savings are and what they are look like in the future.

Yes. I think definitely textbook execution, the whole strategy of migration of this space over to the T-Mobile network. But we are really at the very tail end of that. We disclosed today that we now have less than 500,000 customers utilizing the T-Mobile – utilizing the old legacy MetroPCS CDMA network, which means that we’re getting very, very close to shutting down the three major remaining markets from a CDMA network standpoint. What we said is, we still expect that to happen in this second half of this year. We believe that we’ll be in a much better position to give you a precise dates in connection with the second quarter earnings call. But these larger markets will take some time to decommission. And Mike that we’ve had discussions about really not being able to account for the realization of the synergies until those sites in these shutdown markets are completely decommission which is anywhere from a three to five months periods. So, we expect that we’ll achieve very good timing on that, but the full run rate of those synergies will not occur until 2016 at which point we’ll be at a 1.5 billion run rate. And that I think bodes very, very well when you’re looking at the EBITDA progression along with the growth that we’re putting on in the current year to what we’ll see what EBITDA for 2016. Neville, do you want to add anything?

Yes. The one thing I’d add on top I mean, we – the program is so ahead of schedule it’s incredible. The progress has been truly amazing and we’ve so successfully grown the Metro brand throughout this in new markets in the prior metro market situation. The piece that’s usually exciting for me is the spectrum story. And as Braxton reference, there’s a small, very small number of customers left on CDMA and that’s supported us this opportunity to ahead of the synergy and run rate savings coming through from decommissioning of the network. We’ve been able to move the spectrum across to LTE and through really fuel and drive this wideband LTE story that you heard, John reference in the opening comments. So, we’re adding more and more spectrum. Pretty much every quarter has gone by we’ve added more and more spectrum to our LTE offering and that continues through this year and that’s been a huge benefit for our customers that supported our fastest LTE position. That’s a five quarters in a row now who would have believe that five quarters in a row T-Mobile feeding the likes of Verizon on LTE the best fastest performing LTE. And a big part of that success has come through our ability to secure early access to MetroPCS spectrum. So, that’s a big, big part of the success story, we look forward to the decommissioning moving a pace and great cost savings and synergy savings hitting that full ramp as Braxton said in 2016.

And hats off to the MetroPCS team. We’ve done this migration with very, very minimal impact to the MetroPCS customer base and you can see that reflected in the overall churn metrics on prepaid. So we’re very, very pleased. The team has done an amazing job. And I think the vision that was led out with the original merger of these two companies you’re seeing that totaling come to fruition, so very, very exciting.

Braxton on Twitter, there's a question that we haven't gotten to yet, which is from [Indiscernible] around, can you comment on the impact of Data Stash on net income, EBITDA, ARPU et cetera and maybe you could give us a little bit of a overview on this. Because even with all that folded in we had record, we think industry best year-over-year EBITDA even with that extra temporary, artificial pressure built in we had ARPA at its highest levels ever, but there is still an impact from it that was short term and non-cash maybe you could talk about the size of that?

It’s a great question. I really appreciate you highlighting that. So with Data Stash we gave existing customers a 10 gigabyte gift of data throughout year and that’s the way that we do things. We never rollout a new program or we don’t consider the base. I mean, that’s one of the key tenants and foundational principles that we have with Un-carrier. And from an accounting standpoint when you give that type of offer to a base, you have to allocate part of the revenue that you’re receiving from those customers on to this new piece of the offering that you have in the marketplace. So, what that meant is in the first quarter we had a $112 million non-cash revenue deferral that impacted EBITDA. It hit the top line fell down to EBITDA and that was completely a non-cash timing issue. As our customers utilize the 10 gigabyte gift throughout the year and it does expire at the end of the year that $112 million will fully reverse during the year and there will be zero impact on EBITDA and that income for what we’ve done through the year. And I think that’s important to note because when you look at all of these metrics on service revenue on the face of it had a slight decline but you normalize for this non-cash accounting item we actually had about a 1% increase in the sequential service revenues and that applies to all of the metrics that we put out. The average billing per user, the ARPU of two-thirds, the decrease of the APRU were directly related to the Data Stash 10 gigabyte gift. So that’s really how it works. Nothing to be alarmed about but what is a little bit of a headwind in Q1 will turn into a tailwind and its part of the shaping that we expect to the year. And again, I said we’re highly confident that we’ll deliver on EBITDA and all aspects of our guidance of not exceed them.

That kind of helps people understand the shape of the year, right, because if you think about EBITDA at the center point of our guidance is 25% year-over-year growth and in the first quarter we delivered 27.6%, so we’re already ahead. But that’s with this rather artificial non-cash timing oriented Data Stash accrual that we put in. If you look at our operational results and you put that a $112 million on top operationally we were really 37% year-over-year improved in EBITDA showing that we’re well on our way to that 25% and then with push in midpoint on the year. And so the shape of the year is that it’s lower and then it builds throughout the year and as Braxton’s says, we remain very confident and the guidance that we gave. Braxton, you want to go on the phone for another one.

Yes. Let’s do that. Let’s take Mike McCormack

Couple of things, Braxton on ARPU, you outline as sort of Data Stash reversal and clearly looking at and up into the right functions throughout the year I assume and granted 4Q 10,000 pressures perhaps from new promotional activities, but is it out of the question to think about handset ARPU going positive on a year-over-year basis in 4Q. And then maybe just one with respect to the EIP payouts its early days, but what’s been the reaction by consumers that offering?

Yes. Really good question. So, when you look at the shaping of ARPU from Q4 to Q1, there was a 3.8% decrease, but when you normalize for the non-cash Data Stash impact that we just discuss ARPU would have decreased to 1.2% and what that 1.2% relates to is our investments in family plans. AT&T and Verizon have a very high percentage of their base in family plans. We all know that there is higher customer retention with family plans, where our acquisition cost, higher MPV, so we’ve made a conscious decision by pulsing promotions in the marketplace since specifically the four for 100 that we did in the late Q4 and continue throughout Q1 and had some ARPU dilutions but when we’re looking at the value creations and the MPV of the customers that we’re bringing in it’s a trade off well worth making. The family plan promotions at this point have been promotional. We’re not going to talk about some of the future innovations that we have plan, but I think Un-carrier 10 coming soon, we’re excited about that as well as other innovations throughout the year I think one of the challenges we have as a management is with the innovation and things we are bringing into marketplace how can we continue to target these family units coming out Verizon, AT&T with a little bit of ARPU dilution, although it makes a lot of sense, but offset that dilution which has been fairly minor with other innovations that we bring in the marketplace and this is something that the team is certainly interested in. From an EIP standpoint we are now at 91% of our base. It is eligible to take, to really utilize the EIP construct. But as we control it by overall credit profile and…

And that’s one of the reasons why the churn profile is so much smoother than it was under the old contract model where you had these really spiky periods of churn laid in contract tenure while people had pent up demand to go do something differently. Our customers don’t experience that. The vast majority of people with EIP also have jump which gives them the Freedom to start over at any time on a new device and it really smoothes things out because it serves their needs. I think like you ask specifically about the EIP pay off program too.

Yes and just from an inbound perspective what you guys are seeing?

Yes, it’s been really popular. It’s a natural extension of contract freedom that we launched last year. We’re calling it Carrier Freedom because now we’ll pay off the ETF or and/or the device. I would just say it’s been popular and it’s been slight in early going. It’s been slightly less expensive to us than we had anticipated. Typical our cost in the $100 to $150 range so far a little less than we had modeled. So if its’ popular and a slightly less costly then we have thought so far so good.

Hey Braxton, if I can just maybe – on the cash flow comment you said net cash generation 2015, is that predicated on equipment factoring or is that a totally different discussion?

Yes I think anything that we do on EIP factoring would just be enhancing to that profile. Analyst Okay, great. Thank you guys.

There’s one on text that says Neville if Sprint sold some of that 2.5 gig spectrum would you be interested in buying it, would it be a good solution for dense markets?

The fun question I think you kind of have to ask Sprint first what they are doing with their 2.5 gig spectrum. And I think there’s been a series of uncertain headlines in terms of what will happen there. I still say where’s the spark I suppose is my comment, but if at some point in time they figure that stuff out and they decide that they have more than they need and they look to move into a sell process of course we’d look at it. 2.5 gig is –it does suffer with propagation and in building penetration I mean it’s not the best spot on the spectrum map but kind of work in intension [ph] of environments relatively well. So I think you kind of have to ask the question of Sprint what is their plan and the network strategy, what do they plan to do with 2.5 outside of that they are pretty light on other spectrum and you can see that in terms of the LTE performance they have today, probably the slowest in the nation by a big distance. So we’ll wait and see and once I sold themselves out with the 2.5 gig strategy we’ll see if they push any of this to market.

And we have a great spectrum portfolio. That’s allowed us to be smart and opportunistic in how we enhance it. So we were very smart and how we brought in the 700. We were very smart and how we handled the AWS auction last year, opportunistically bringing in spectrum at a fair price and we would be smart and opportunistic if the spectrum that comes to market that we can get to extend our customer experience at a fair price then we are always interested.

I think the only other thing I’d add is that with opportunities in and our license to specially with license assisted access in LTE so this is 5 gig spectrum that’s going to be a real opportunity in 2016. We are aggressively trailing solutions and we are confident we can bring their services to market next year. And that again is kind of a then [Indiscernible] application set, it sells with LAA leveraging 5 gig on license. So there are going to be a series of alternatives that the surface that we are working very hard on to assist in kind of the urban capacity and 2.5 gig is by no means the only path or option. There’s also a 3.5 gig spectrum option and process which is moving through the FCC right now, so some good activity in that area.

Okay, we’ll take our final question on the phone Paul from Bernstein.

Great, thank you. I had two questions, the first is you are the first carrier to complete the transition of your base the EIP and I was wondering if there is anything that surprised you operationally or financially about serving a base that’s all on EIP as opposed to the traditional contracts? And then the second question is with regard to tablets. I think you guys are probably still under penetrated compared to TNBC [ph] to tablets. And I was wondering sort of why you think that is and whether we should think of that as a source of growth going forward?

We just we could all jump in. On the first piece I think we just got it a second ago. With phone payment plans and jump the customer is much of a participant in their choices with us. There is way more transparency and what they are paying for and what they get for what they are paying, and so satisfaction is a little bit higher. People like this construct a lot more than they like contracts. And they have a lot more freedom of movement because with jump they can move to the new device at any time, at virtually anytime. So what that does is it smoothes out as I said before the churn curve which is great, it makes it more predictable and we are serving the customer in a better way and I think that’s one of the dynamics at play.

And on that [Indiscernible] transparency on the true cost and value of that phone, we’ve actually seen people keeping their phones longer than we had anticipated in the initial business case. And I think that’s very, very healthy for the industry. When everything was buried into a contract, no visibility phone were viewed more as disposable items and I think there is no more of a true consumer appreciation for the value of handsets in the marketplace and I think that’s very, very healthy for the industry. And your second question was related to tablets.

Yes, I think our results show that we’re really focused on the best customers in the industry. And what we find is when we have a finite set of marketing and distribution dollars to invest in our growth we want to be investing in the things that get the very best returns for our shareholders and satisfy the most possible customers. And that’s why we’ve been going after the postpaid smartphone business. We’ve managed to extend the industry leading prepaid business even despite a massive, we think irrational competitive onslaught. We think Sprint will be prancing around bragging about prepaid results that they probably weren’t able to economically acquire and we think the big guys faced with major losses on postpaid phones have been forced into the lower return tablet business, either $10 a month customers they are investing massive amounts to get these $10 a month customers just to be able to demonstrate that they can get points on the scoreboard. We’ve been extending our tablet business every quarter systematically, methodically, extending our base, serving more and more customers and we think that’s the way to do it. Generally around seasonal times we come in with a short term offer or sale around holidays and then the rest of the quarter we have a great value proposition on tablets. Our customers can add tablets to their plans for $10 a month but unlike the other guys we are charging $10 and giving you the gig included. The other guys charge $10 a month just to give you access to the data you’ve already paid for which is on top of everything else slightly absurd.

Great. Thank you very much.

Okay, well we want to thank everybody for dialing in, for the twitter questions, for the text message questions. We are looking forward to the second quarter and being back with you in three months. Thanks for your time today and have a good one [ph]

Ladies and gentlemen, this concludes the T-Mobile US first quarter 2015 conference call. If you have any further questions, you may contact the Investor Relations or Media Department. Thank you for your participation. You may now disconnect, and have a pleasant day.