T-Mobile CEO Mike Sievert's contract punishes him if he leaves the job early
Rumors of Mike Sievert's early departure seem silly when you read his contract.
Focusing on technology, media, and telecom, MoffettNathanson is an equity research firm. Analysts with this firm met with T-Mobile's senior management this week. Normally, this might not have been a good week for the analysts to sit down with T-Mobile executives as there was talk about current CEO Mike Sievert leaving the carrier before his contract expires. There is talk of Sievert leaving early at the end of this year or next year.
Influential telecom analyst gives T-Mobile high marks for focusing on its core mobile business
Despite such a huge distraction, T-Mobile impressed the analysts with its focus on its core mobile business. While T-Mobile has side businesses that it is involved in such as fiber and fixed wireless access (FWA), analyst Craig Moffett feels that these businesses take away from the carrier's focus on delivering the best network to consumers at the best price because they deliver a very small percentage of company revenue.
T-Mobile CEO Mike Sievert is contemplating leaving before his contract expires. | Imagfe credit-T-Mobile
In a note to clients written on June 10th Moffett said, "We’ve periodically criticized T-Mobile for what we might call ‘distractability,’ or a focus on ancillary issues like a fiber strategy that covers less than 2% of the country, or even an FWA strategy that accounts for just a few percentage points of revenue. "Far more important, and sometimes lost amid these 'distractions' is, in our view, the core of T-Mobile's value proposition: the best network at the best price." The analyst believes that T-Mobile has a unique advantage having the best network and the best pricing.
Speaking with current CEO Mike Sievert, Moffett says that the man who replaced the legendary John Legere as Chief Executive neither confirmed nor denied the rumors about his early departure from T-Mobile. His comments were limited to quips like, "I love my job," "This team loves working together," and "It is unproductive to comment on the press." It should be pointed out that Sievert's contract with T-Mobile is public knowledge which is something that the CEO pointed out at the meeting.
Sievert must give 12 months written notice if he plans on leaving at the end of the 5-year term, or April 1, 2028. He would receive "substantially the same compensation and benefits as he would receive in a qualifying termination." If his proposed retirement date is on or after April 1, 2026, but before April 1, 2027, he would have to provide at least 12 months' written notice to the Company but receive only 60% of his retirement compensation.
He will receive 75% of his retirement compensation if he proposes to retire on or after April 1, 2027, but before April 1, 2028. Again, he would have to provide the company with at least 12 months' written notice. Would Sievert be willing to give up one penny of his retirement compensation to leave early?
The man that will supposedly replace Sievert as T-Mobile CEO is the carrier's COO Srini Gopalan who also sat in the conversation with MoffettNathanson's analysts. Gopalan reminded the analysts that even though he is new as a T-Mobile insider, he has been a member of the company's board since 2021. He also ran the German operations of T-Mobile's parent company, Deutsche Telekom.
The T-Life app is one of the most downloaded apps even topping TikTok over the last few months
The bottom line according to Moffett is "T-Mobile sounds to us to be fully re-focused on what matters most: taking share from AT&T and Verizon in mobile." Another important part of the meeting was a discussion on how T-Mobile will use AI to anticipate and prevent customer pain points. Moffet said that the controversial T-Life app is part of this strategy as it has become the most downloaded mobile app over the last few weeks even topping TikTok.
20 million active T-Life users are engaging with the app seven to eight times per month. Since it is used to upgrade to more expensive plans, T-Life could be generating big-time revenue for T-Mobile.
Other interesting things that came out of the meeting according to MoffettNathanson's report:
If EchoStar sells off its spectrum, T-Mobile, AT&T, and Verizon would each concentrate on obtaining more capacity for their preferred bands. This would amount to only 15% of the amount of airwaves currently owned by T-Mobile, AT&T, and Verizon in their preferred bands. T-Mobile's preferred bands include 2.5GHz mid-band and 600MHz for low-band.
T-Mobile's Starlink partnership has 600 satellites in orbit putting them ahead of the competition. National parks are where most of T-Satellite's traffic comes from with 500,000 square miles of the U.S. that cannot be covered by cellular towers in those parks.
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Things that are NOT allowed: