T-Mobile's Blueprint For Future Growth: AI-Powered Networks and More Personalized Services

This week, T-Mobile US outlined its growth blueprint for the next three years, anticipating that new customer growth and the application of new technologies, including artificial intelligence, will help propel its profits upwards.

The three major telecommunications carriers are facing fierce market competition, as they strive to prevent customers from switching to other platforms while also working hard to attract new users. As the second-largest mobile carrier in the U.S., T-Mobile is collaborating with OpenAI to develop a new platform called IntentCX, designed to provide faster and more personalized customer service. T-Mobile claims that IntentCX will analyze consumer data to deeply understand the needs of each customer and proactively solve their problems.

In this partnership, T-Mobile will utilize OpenAI's new 01 inference model, which can think more deeply before responding. This technology is particularly powerful in analyzing call records, capable of identifying and addressing customer pain points to improve the customer experience.

Sam Altman, CEO of OpenAI, stated at T-Mobile's capital markets presentation: The new generation of models excites us in many ways, including its ability to provide personalized services for each user or customer and to improve functional integration. These models can handle vast amounts of data, utilize numerous tools, and are expected to deliver truly magical experiences.

T-Mobile also announced collaborations with NVIDIA, Ericsson, and Nokia Oyj to design mobile networks integrated with artificial intelligence, bringing more cutting-edge features to the Radio Access Network (RAN). These companies are investing in the construction of an AI-RAN Innovation Center in Bellevue, Washington.

T-Mobile stated that AI-RAN will significantly enhance customer experience, meeting the growing demands for faster speeds, lower latency, and higher network reliability on mobile devices for the latest gaming, video, social media, and augmented reality applications. The company also mentioned that AI-RAN will use billions of data points to develop algorithms to determine the best network performance optimization measures.

Jensen Huang, CEO of NVIDIA, said at the event: We all saw the same opportunity to reinvent telecommunications with the fundamental technologies that are reinventing one of the largest industries in the world, which is computing. This underlying technology will unquestionably revolutionize every industry, he said, this is going to be a great new growth opportunity for the telecommunications industry.

Mike Sievert, CEO of T-Mobile, elaborated on the company's financial goals. T-Mobile expects its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to increase to $39 billion by 2027. Service revenue is projected to grow at a compound annual growth rate of approximately 5% from 2023 to 2027, reaching $76 billion.

During this period, annualized EBITDA is expected to grow by about $10 billion. By 2027, adjusted free cash flow is projected to reach $18-$19 billion. The company also announced a 35% increase in its dividend, to 88 cents per share.

T-Mobile's stock hit a record high this week, but after the forecast was released, the stock price temporarily fell by 2.8%, to $197.05, reflecting some investors' disappointment with the outlook.

T-Mobile also launched a priority service plan for first responders to ensure lower latency, and faster, more reliable 5G connections during network peak times.