T-Mobile stakes its future on AI

The self-styled un-carrier aims to grow annual service revenue to between $75 billion and $76 billion by 2027, up from $63.2 billion in 2023. It has also set a target of growing adjusted EBITDA from $29.1 billion to $38 billion-$39 billion. As for adjusted free cash flow, T-Mobile hopes to generate $18 billion-$19 billion by 2027, compared to $13.6 billion last year.

T-Mobile has also earmarked a whopping $80 billion through 2027 for various corporate activities. They include $50 billion for paying dividends and funding buybacks. $10 billion will be used to pay for announced acquisitions, while $20 billion will be retained as a war chest for organic and inorganic growth opportunities, paying down debt, or potential additional shareholder returns.

When it comes to actually reaching these targets, T-Mobile is leaning heavily on AI.

Together with Nvidia, Ericsson and Nokia, it has agreed to establish what it claims is the industry's first AI-RAN innovation centre.

By imbuing its access network with AI, T-Mobile claims it will have the ability to collect and analyse billions of data points, using them as the foundation for new algorithms that can determine optimal network adjustments to maximise performance, and make real-time predictions about capacity demand.

It has pledged to develop AI-RAN technology that is compatible with Open RAN and cloud-native network architecture. It also hopes to accelerate the performance of these networks with the employment of GPUs – presumably Nvidia's.

AI, says T-Mobile, is the secret sauce that will add extra flavour to the other network upgrades it has planned over the coming three years. They include massive MIMO, voice over new radio (VoNR), four-carrier aggregation (4CA), and what it claims will be the first widespread deployment of 5G Advanced in the US.

T-Mobile routinely ranks at or near the top in almost all network-related metrics collated by the likes of Opensignal and Ookla, and it reckons that by clever use of AI it can extend that leadership, attracting customers and standing further apart from AT&T and Verizon.

T-Mobile's AI bet doesn't stop with its network. It will also play a central role in overhauling customer experience.

With that in mind, it has established a partnership with OpenAI, and together they have pledged to develop what they call an intent-driven AI-decisioning platform, which they call IntentCX.

Set to launch in 2025, it will be trained on billions of customer interactions, including their real-time experience with T-Mobile's network and with services including its T Life account management app. It will also be integrated into T-Mobile's operations and transaction systems, giving it the power to suggest and implement changes based not just on prompts from the end user, but also taking into account various real-time network KPIs.

Armed with this knowledge and these capabilities, the intention for IntentCX is to be able to automate the management of the most complex of customer journeys. T-Mobile has set a target of reducing inbound customer contacts to its call centres by 75%, while simultaneously increasing satisfaction and "significantly" lowering operating costs.

Meanwhile, the three-year plan also comes with ambitious targets for its fibre and fixed-wireless access (FWA) operations. T-Mobile aims to pass 12 million-15 million premises with fibre by the end of 2030 through various fibre partnerships, and reach 12 million 5G FWA customers by 2028, up from 5.59 million at the end of Q2.

T-Mobile also hopes to improve its share of mobile customer additions both in highly-penetrated markets – called top 100 markets – and what are known as smaller markets and rural areas (SMRA). When it comes to the former, it notes that it ranks third in 30 percent of top 100 markets, representing an opportunity to disrupt AT&T and Verizon.

Its three-year strategy also includes a target for double-digit service revenue growth at T-Mobile for Business (TFB), and an ambition to spin up new lines of business. On that note, T-Mobile took the opportunity to introduce T-Priority, a network slicing service that delivers fast and reliable connectivity for first responders.

"T-Mobile is a company on the move with tremendous opportunities in front of us to further extend our outperformance in customer growth and translate that into strong top and bottom-line growth that will enable a compelling capital return opportunity over the next few years," said T-Mobile CEO Mike Sievert. "As the un-carrier we have always set big goals, and our track record over the last four years shows that we deliver on them. Now we're tapping into this momentum and dreaming even bigger for the next era of un-carrier, championing new standards for customer experiences, how networks are built and beyond. The opportunity in front of us is huge and we can't wait to capture it."

T-Mobile is being characteristically confident in its presentation – understandably so given its recent financial and operational achievements.

But this is a bold plan, one that puts a lot of pressure on AI technology to actually start delivering on its great promise within the next three years, and make a material impact on T-Mobile's balance sheet. Let's see if the un-carrier is up to it.