Greetings from North Carolina, Missouri and Iowa. We are opening with a picture of most of the T-Mobile leadership team from the 2015 Deutsche Telekom’s Capital Markets Day (from left to right: Nils Paellmann, Neville Ray, Braxton Carter, Mike Sievert, and John Legere) for this week’s edition. The reason why will be apparent in the “What They Said” section below.
There is a lot to cover in this week’s Brief – after a shorter than normal market commentary we will dive into comments and announcements by AT&T, T-Mobile and Charter Communications and analyze how they could impact third quarter earnings (current schedule is posted nearby).
Please note that the Apple iPhone 17 backlog charts will not be incorporated into the Brief but will be published on Sunday evenings.
The Fortnight That Was
This has been a fairly quiet couple of weeks for the Fab Five with some profit taking in the week prior to quarter end. Through the first nine months of 2025, the Fab Five have added $1.8 trillion dollars in market capitalization. Their telco counterparts have added $23 billion. Three of the Fab Five have grown their market value by 20% or more so far in 2025 (Google, Microsoft, and Meta) while AT&T has added more market value than Verizon and T-Mobile combined. We anticipate market values will not meaningfully move until 3Q earnings announcements have been made.
We really like watching hardware event announcements, and, after some discussion of the Made by Google event in our Labor Day Brief, Amazon launched a slew of upgrades at their event last week. Most impressive to us was the addition of a color version of the Kindle Scribe. For those of you who are not aware of the Scribe, think if it as a reader for notetakers (textbooks and media that requires freeform editing). The first Scribe was introduced in 2022, and Amazon has made changes each year. The addition of color is important and will broaden their adoption rate and addressable market.
Amazon also announces upgrades to the Echo, Fire TV, Fire Stick, Ring, and Blink product sets. A full chronicle of the changes can be found from The Verge here.
What They Said (Part 1)
We think that there are three major noteworthy activities over the past month that will help set the tone for earnings: 1) John Stankey’s note to all AT&T employees after the annual survey; 2) The announcement that Srini Gopalan will replace Mike Sievert as CEO of T-Mobile on November 1; and 3) Spectrum’s recent actions in the broadband and mobile market outlined by CEO Chris Winfrey at the recent Goldman Sachs Communicopia event.
John Stankey has a way with words. A lot of ink has been slipped on his lengthy note to employees (GitHub copy here). This note is not directed to investors or customers, but employees, many of whom are upset that the “familial trust” between employee and Ma Bell has been broken. Moving employees is costly and disruptive, and greater productivity can be achieved when employees are given greater freedom to perform.
We were disappointed that the note did not go far enough. The note John wrote was good, but it failed to rally the troops because it failed to acknowledge that AT&T has a clear cut enemy (cable) and that to win, cable must lose (Chris Winfrey would agree – it’s time for John to acknowledge this directly and not fear government retribution). AT&T is a lot closer to victory than they think but must be more fleet of foot.
Here’s what we would have written:
“While we are spending $25 billion on telecommunications infrastructure in 2025, our new competitors (Meta, Amazon, Microsoft) are spending far more. Last quarter, they spent $100 billion, and this follows quarterly spending of $75 billion per quarter for the previous two quarters (see nearby chart from a July 31, 2025, Wall Street Journal article.
This spending is not only for data center capacity, but also includes fiber leases, Inline Amplifiers (ILA shelters), and OSS/BSS infrastructure. And they are funding this remarkable level of expenditures from cash on hand which is generated by software and cloud businesses. Google, Microsoft, Meta and Amazon have a combined negative net debt of $181 billion (meaning they have $181 billion more cash on hand than short and long-term debts) even with this spending. And they have a combined market capitalization of nearly $11 trillion dollars, nearly 60 times that of AT&T.
On top of this, they are enabling other companies who directly vie for cloud services from AT&T customers. Coreweave, a company less than ten years old, is more valuable ($67 billion per Yahoo!) than a standalone AT&T Business. Artificial Intelligence startups like OpenAI are now valued as much as $500 billion. We have come a long way but still are dwarfed by infrastructure newcomers who have deep coffers. Software and supporting infrastructure companies are now building their own backbone networks. Where will that fiber infrastructure expansion stop? What impact does that have on our longevity? Do we even have a long-term value?
That’s why our last mile investment (fiber and wireless) matters so much. We can be the consistent connectivity partner for AI. We can provide the largest, most reliable multi-gig fiber network (with wireless backup) to tomorrow’s businesses and consumers. But we need to Win as One. We are in a race that we must win, and to do that, we need to defeat cable as an alternative. Everybody needs to mobilize and get the word out that AT&T is the best provider, a “no brainer.” To get to that level, we have to make a lot of changes – soon. We are just getting started.”
The Srini Gopalan Era begins. Prior to the September 22ndannouncement that Mike Sievert would be stepping down, he and Srini Gopalan appeared at the Goldman Sachs Communicopia conference, where Mike had the following response on succession planning (transcript courtesy of Market Screener):
“My approach as CEO all along and my predecessor’s approach has been to showcase this bench the entire time. Have you ever noticed how every one of our earnings — we bring the whole management team, conferences like this. It’s not just the two of us. We have Mike Katz, our President here with us as well. We bring the team who lead this company because I never want to investors to have any worry that the secret sauce of this Un-carrier outperformance is at risk and it’s held by this team. We finish each other’s sentences, we’re unconfused about what’s important, and yes, we challenge each other all the time. And we do a lot of that right in front of our owners. So they can see how we think and operate.
And that way, for me, when I brought Srini in and announced he was joining us at the beginning of this year, but that was a combination of a kind of a years long effort. We’ve been friends and coworkers for many years. I made it very clear that, that was as a part of a succession planning process. And I think that’s a lesson other companies should take. I benefited — I followed an iconic leader years ago, six years ago when the company announced I would be CEO. I was stepping into the shoes of somebody who is very famous and effective and Wall Street looked at it and said, “Yes, that makes sense. Good on you guys.” And sort of we all moved on.
And that is what great succession planning looks like. I think John [Legere] showed a great path for that, and I’m trying to do the same thing. Now we’re not here to make any predictions about exactly how and when it will all unfold or where we’ll land. But that’s been my philosophy, the whole time. And Srini and I kind of run this company together. He’s got 90% of the employees of this company.”
Less than two weeks later, the succession announcement was made. Whether Mike was ushered out earlier than he wanted (note: he will be staying on in a Vice Chairman role) is irrelevant. The reality is that Srini is now in charge, and the John Legere era (see picture above) is over.
It was September 2012 when Legere started, and one of his first hires was Mike Sievert. Along with Neville Ray, Braxton Carter, and Dave Carey, they formed the nucleus of one of the strongest management teams the telecommunications industry has ever seen. This was the pirate ship of telecom, swashbucklers hellbent on winning through growth. They conquered a smaller ship, Metro PCS, and then acquired Sprint. They grew much faster than their peers and eclipsed the market capitalization of Verizon and Comcast in 2022.
Like the Jimmy Buffet song “A Pirate Looks at Forty”, we can understand that the “cannons don’t thunder/ there’s nothing to plunder” relative to where the company was in 2012. But there’s still a big tank full of fuel left at T-Mobile. Our questions for Srini are threefold:
How will capital allocation change? Why expatriate funds to Germany (through Deutsche Telekom stock sales) when there is a lot of room left to earn returns above T-Mobile’s cost of capital? Using the song reference mentioned earlier, is there “nothing to plunder?” If there is, why repurchase shares and hike the dividend?
How will T-Mobile beat AT&T as the most attractive partner for AI in the US? Can a “good enough” network with a large base win the beauty contest? Is there a scenario where Verizon wins? What needs to happen to be the clear leader tomorrow and in 2030?
How does the company return to its swashbuckling roots? Srini has the unique opportunity to create a rallying cry, and it’s a lot bigger than the promise of T-Life. Can he create a better vision? With what team?
If Chris Winfrey is right, Charter is poised for sustained greatness. Here are a couple of snippets from his fireside chat at the Communicopia conference (transcript courtesy of Market Screener):
“Today on residential, our penetration is right around 20% of our customers having mobile product with us. And the way I think about it is why shouldn’t it be 100%? And the reason I say that is because we are a — we’ve always thought about mobile as an extension of our broadband product. And we are a facilities-based provider of wireless today, both to our own mobile subscribers as well as to everyone else’s as well through WiFi. And if you think about the mobile lines and the service that’s being provided, in essence, it’s an additional broadband connection or in cable speak, it’s an outlet. And so it’s an additional broadband outlet that exists provided by largely for the vast majority of traffic by our WiFi.”
“mobile is just an extension of our broadband business. It’s another WiFi extension together with the CBRS that we’re now deploying, allows us to provide that. However, if you were to take a look at mobile as a stand-alone product, and we don’t think about it that way. We don’t market or service it that way, but we have the ability to financially express that internally. It has been free cash flow positive for some time, as you highlighted, and it’s growing. And the reason it’s growing is because the underlying economics are very good.”
The articulation of wireless as an outlet (akin to a wirelessly connected printer, TV or other home-based device) is correct – while that device is in the home. Once the customer leaves the home, unless they are on CBRS or outdoor Wi-Fi, they are on Verizon.
Based on Winfrey’s statements, they should clearly be able to articulate the answers to two questions:
How many broadband RGUs (% or total of net additions) come from customers who were previously on a fiber competitor? How many come from customers who were previously on a fixed wireless product? How many have come from new builds and what percentage of new passing wins has Charter won?
When AT&T enters a legacy Charter market (re: AT&T is deploying a lot of fiber in California and Texas markets), what percentage of the Charter base moves to fiber (answer should be 20% in first year, and 40% within three years)? How will Charter half these loss ratios in the next three years?
If Chris Winfrey is right, and the experience is the same/ similar between Wi-Fi and traditional wireless, then Spectrum should be able to grow both broadband and mobile faster than their fiber competitors. If the experience is “kinda sorta” like traditional wireless, and Charter cannot fix the gaps, then both they and their cable brethren are in for a rude awakening in late 2026 and 2027.
There is a lot more to say about each of these companies, but we will hold that commentary until the next Brief. In the meantime, if you have friends who are interested in being notified each time we publish a Brief, please have them sign up at www.sundaybrief.com.
Important disclosure: The opinions expressed in The Sunday Brief are those of Jim Patterson and Patterson Advisory Group, LLC, and do not reflect those of CellSite Solutions, LLC, or Fort Point Capital.
Exploring technology, telecommunications, and the internet. Written by Jim Patterson, an experienced telecom leader with over twenty-five years of leading change in the telecommunications and information services industries.
