AAPL - Apple Inc.

[rkbabang]

It's like that other non-innovative company Tesla motors.  They didn't come out with the first electric car.  Or SpaceX, why do people call them innovative?  They didn't invent the rocket.  And google wasn't the first search engine on the WWW.

 

No one gives you a prize for being first.

[rkbabang]

Yes, the person presenting the watch was definitely not a great presenter and it was painful to watch Fortunately, the watch hardware and software looks like it is on the right track and should grow nicely as a category over time. In a few years watch should be a very nice business for Apple.

 

TV is the real new news to me. I think the new TV puck/remote and TV App Store could be a bigger deal than people realize right now. Over the next year we should see lots and lots of great new developments now that developers have a platform to work with and Apple TV could really grow (in terms of how many consumers buy a TV puck and how much content is consumed via an App on a TV versus watching traditional TV channels).

 

You could be correct:

"For the first time ever, time spent inside mobile applications by the average US consumer has exceeded that of TV."

 

http://40.media.tumblr.com/ba1b1f6aee47ebaab95b455b9d61a191/tumblr_inline_nugo8lrIFf1tpd7xq_500.png

 

I wish they would have included an HDMI 2.2 output port with UHD/4K capability. Netflix and Amazon already stream 4K.  Also speaking of Amazon, I think there is no Amazon Prime channel which would be a deal breaker for me.

 

[oddballstocks]

Liberty,

I am gradually getting more and more convinced that you are right about AAPL.

As you already know I give a great importance to capital allocation. And that’s probably the only issue that I still have before pulling the trigger: do you think Cook is a great capital allocator? If yes, why?

Or do you think AAPL doesn’t need a great capital allocator?

 

Thank you,

 

Gio

 

Does it matter if it is?  Who cares if he can't allocate capital if he has a business that can turn ideas into capital.  Sometimes I feel like these "capital allocators" are the end of the line.  That is they own businesses that have no future but generate cash, and they turn that cash into investments into other businesses that have no future but generate cash pyramiding these things up into something that faintly resembles Berkshire.  And BRK has grown to a point where they're now investing in giant capital intensive companies that can suck up that cash to generate moderate earnings growth.  I mean how much bigger is BNSF going to get?  Are they going to suddenly double their track network?  Nope, they can't.  But can Apple create a new product that doubles their installed base?  Yes, they have in the past, and probably will again.

 

I believe this is Scott Hall's point about growth investing.  Why go for FCF when you can by a piece of a business that can internally reinvest their cash at much higher rates?  Something like Chipotle or Facebook.  That's worth a LOT more.  But these guys are stodgy value guys either, and it's harder to break apart returns.

[Liberty]

Liberty,

I am gradually getting more and more convinced that you are right about AAPL.

As you already know I give a great importance to capital allocation. And that’s probably the only issue that I still have before pulling the trigger: do you think Cook is a great capital allocator? If yes, why?

Or do you think AAPL doesn’t need a great capital allocator?

 

Thank you,

 

Gio

 

I think Cook is very good at capital allocation, from what I can tell. But that doesn't work the same way at Apple than it does at Berkshire, for example.

 

If anything, Cook seems to always err on the side of cautions and on the side of favoring the long-term over the short-term, which isn't bad.

 

Maybe doing a tender offer for 100bn back when the stock was much lower would've been a good move, but not doing it and taking a more measured approach to returning capital isn't hurting the business.

 

I think Cook understands how good the core business is and he isn't diluting it with all kinds of other stuff, which lesser managers tend to do when they are sitting on piles of cash (they start buying everything in sight... Hey, let's buy Skype for billions, then Nokia, Autonomy, oops, lets write them down). Rather than do that, Cook seems to be digging the moat all the time, buying small strategic bolt-ons that help differentiate the core business (because Apple is rather secretive, we don't know what happens to everything, but when they bought PA Semi for $278m, who knew that a few years later Apple would go from a nobody in semiconductors to arguable one of the leaders in the world. How many billions has PA Semi been worth to Apple over the years? that's probably a multi-bagger right there).

 

Another way in which I think Cook is a good stewart is that from everything I've heard from people inside, he's a great torch bearer for the Apple culture. Apple has certain outcomes because of the processes it has, and protecting that is very important. That's why they have Apple University for internal use, where they teach the company's philosophy and look at past case studies from the company's history of what they did in certain situations and why, what mistakes they made, etc. That stuff matters. If you strip out the Apple store employees, Apple is a relatively small company for its market size, hiring very carefully and taking time to absorb new people, and they still have small teams working on most things, which reduces bureaucracy and gives people more ownership of what they work on (but it also means they can't do everything at the same time). A lesser manager would just hire massively and dilute all this, and after a while you have B players hiring C players and the company is overrun in mediocrity.

 

Another way that I think he's doing a good job is that he knows where spending money matters and where to be super lean. It would be easy for Apple to become fat and bloated, but Cook is an operations guy at heart and he gets notoriously good deals from commodity parts suppliers (flash memory, screens, whatever). But he also spends on stuff where differentiation matters; nobody else can afford a lot of the very expensive manufacturing that Apple does. In China they have factories where as far as the eye can see, there are CNC machines milling solid blocks of aluminum. Nobody else would have dared go the unibody route at that scale because it's too expensive, but Apple knew that would be a differentiator and make for products that feel better, so it was worth spending on. That's just one example. In the same way you can become fat, you can also nickel and dime the wrong things and kill your brands with products that feel cheap and badly put together.

 

I've already mentioned to you previously that Cook's main capital allocation decision seems to be doubling-down on the core business. On the operational side, reinvest in existing products to keep making them incrementally better and spend a lot on long-term R&D to plant the seeds of new products over time, and on the financial side, the buybacks mean that each share of AAPL owns more of that core business with every quarter, which is different from another manager who might use the cash to run around and buy Twitter, Motorola, RIM, FOXA, whatever, diworsifying.

[Liberty]

Liberty,

I am gradually getting more and more convinced that you are right about AAPL.

As you already know I give a great importance to capital allocation. And that’s probably the only issue that I still have before pulling the trigger: do you think Cook is a great capital allocator? If yes, why?

Or do you think AAPL doesn’t need a great capital allocator?

 

Thank you,

 

Gio

 

Does it matter if it is?  Who cares if he can't allocate capital if he has a business that can turn ideas into capital.  Sometimes I feel like these "capital allocators" are the end of the line.  That is they own businesses that have no future but generate cash, and they turn that cash into investments into other businesses that have no future but generate cash pyramiding these things up into something that faintly resembles Berkshire.  And BRK has grown to a point where they're now investing in giant capital intensive companies that can suck up that cash to generate moderate earnings growth.  I mean how much bigger is BNSF going to get?  Are they going to suddenly double their track network?  Nope, they can't.  But can Apple create a new product that doubles their installed base?  Yes, they have in the past, and probably will again.

 

I believe this is Scott Hall's point about growth investing.  Why go for FCF when you can by a piece of a business that can internally reinvest their cash at much higher rates?  Something like Chipotle or Facebook.  That's worth a LOT more.  But these guys are stodgy value guys either, and it's harder to break apart returns.

 

I think you're right, but it depends how you define "capital allocator". To me, it doesn't just mean M&A, it also means internal reinvestment (not just the fact that it's internal, but investing on what and how) as well as what to do with the excess cash (there are options other than M&A).

 

Maybe there's another word than capital allocator to describe this, but I thought it fit within that umbrella (4 options of the capital allocator: M&A, organic growth, dividend, buybacks).

[TorontoRaptorsFan]

I wish they would have included an HDMI 2.2 output port with UHD/4K capability. Netflix and Amazon already stream 4K.  Also speaking of Amazon, I think there is no Amazon Prime channel which would be a deal breaker for me.

 

Why not purchase the new 4K Blu-Ray players that are coming out shortly. Samsung just announced theirs. Next month Panasonic and Sony will likely do so at the CEDIA show. They'll have Netflix & Amazon 4K streaming.

 

Other than a refreshed GUI, Siri, and some lackluster games I don't see a need to upgrade at this time. My AppleTV 3 will suffice. 4K penetration is still in it's infancy stages and besides it allows Apple to sell a new AppleTV two years from now with 4K movies and streaming capabilities.

[giofranchi]

Does it matter if it is?  Who cares if he can't allocate capital if he has a business that can turn ideas into capital.  Sometimes I feel like these "capital allocators" are the end of the line.  That is they own businesses that have no future but generate cash, and they turn that cash into investments into other businesses that have no future but generate cash pyramiding these things up into something that faintly resembles Berkshire.  And BRK has grown to a point where they're now investing in giant capital intensive companies that can suck up that cash to generate moderate earnings growth.  I mean how much bigger is BNSF going to get?  Are they going to suddenly double their track network?  Nope, they can't.  But can Apple create a new product that doubles their installed base?  Yes, they have in the past, and probably will again.

 

I believe this is Scott Hall's point about growth investing.  Why go for FCF when you can by a piece of a business that can internally reinvest their cash at much higher rates?  Something like Chipotle or Facebook.  That's worth a LOT more.  But these guys are stodgy value guys either, and it's harder to break apart returns.

 

Well, that might be your way of looking at good capital allocators… Mine is different. 

Good capital allocators imo give predictability to a business because:

1) If everything goes right, the business they own keeps generating lots of cash, and they keep investing that cash intelligently. Investors become ultra-rich.

2) If something unexpected happens, the business they own starts struggling and generates less cash than it used to, but they invest it intelligently. Investors at least don’t lose money, and probably get satisfactory returns.

Your way of looking at good capital allocators seems to believe we would always end up in case 2… I don’t believe so! And I hope to end up in case 1 very often!

In other words, I want both a company that could double their installed base (if everything goes right) and has a good capital allocator at the helm (in case its installed base for some reasons doesn’t double instead!).

 

Cheers,

 

Gio

 

[giofranchi]

I think Cook is very good at capital allocation, from what I can tell. But that doesn't work the same way at Apple than it does at Berkshire, for example. If anything, he seems to always err on the side of cautions and on the side of favoring the long-term over the short-term, which isn't bad.

 

Maybe doing a tender offer for 100bn back when the stock was much lower would've been a good move, but not doing it and taking a more measured approach to returning capital isn't hurting the business.

 

I think Cook understands how good the core business is and he isn't diluting it with all kinds of other stuff, which lesser managers tend to do when they are sitting on piles of cash (they start buying everything in sight... Hey, let's buy Skype for billions, then Nokia, Autonomy, oops, lets write them down). Rather than do that, Cook seems to be digging the moat all the time, buying small strategic bolt-ons that help differentiate the core business (because Apple is rather secretive, we don't know what happens to everything, but when they bought PA Semi for $278m, who knew that a few years later Apple would go from a nobody in semiconductors to arguable one of the leaders in the world. How many billions has PA Semi been worth to Apple over the years? that's probably a multi-bagger right there).

 

Another way in which I think Cook is a good stewart is that from everything I've heard from people inside, he's a great torch bearer for the Apple culture. Apple has certain outcomes because of the processes it has, and protecting that is very important. That's why they have Apple University for internal use, where they teach the company's philosophy and look at past case studies from the company's history of what they did in certain situations and why, what mistakes they made, etc. That stuff matters. If you strip out the Apple store employees, Apple is a relatively small company for its market size, hiring very carefully and taking time to absorb new people, and they still have small teams working on most things, which reduces bureaucracy and gives people more ownership of what they work on (but it also means they can't do everything at the same time). A lesser manager would just hire massively and dilute all this, and after a while you have B players hiring C players and the company is overrun in mediocrity.

 

Another way that I think he's doing a good job is that he knows where spending money matters and where to be super lean. It would be easy for Apple to become fat and bloated, but Cook is an operations guy at heart and he gets notoriously good deals from commodity parts suppliers (flash memory, screens, whatever). But he also spends on stuff where differentiation matters; nobody else can afford a lot of the very expensive manufacturing that Apple does. In China they have factories where as far as the eye can see, there are CNC machines milling solid blocks of aluminum. Nobody else would have dared go the unibody route at that scale because it's too expensive, but Apple knew that would be a differentiator and make for products that feel better, so it was worth spending on. That's just one example. In the same way you can become fat, you can also nickel and dime the wrong things and kill your brands with products that feel cheap and badly put together.

 

I've already mentioned to you previously that Cook's main capital allocation decision seems to be doubling-down on the core business. On the operational side, reinvest in existing products to keep making them incrementally better and spend a lot on long-term R&D to plant the seeds of new products over time, and on the financial side, the buybacks mean that each share of AAPL owns more of that core business with every quarter, which is different from another manager who might use the cash to run around and buy Twitter, Motorola, RIM, FOXA, whatever, diworsifying.

 

Great! :)

 

Thank you,

 

Gio

[Liberty]

Some on point criticism of apple's app model, which I hope they improve over time:

 

https://stratechery.com/2015/from-products-to-platforms/

[intothebreach]

It's like that other non-innovative company Tesla motors.  They didn't come out with the first electric car.  Or SpaceX, why do people call them innovative?  They didn't invent the rocket.  And google wasn't the first search engine on the WWW.

 

No one gives you a prize for being first.

 

You're right. It's actually quite the contrary: the first firm spends a disproportionate amount of resources and effort in creating something which can then be copied and/or improved upon at a fraction of the cost in the absence of sustainable competitive advantages or effective differentiation. Business history is full of examples (cars, airlines, railways, etc.)

 

What's that quote in Moneyball about the first guy over the wall always getting bloodied?

[intothebreach]

 

I think you're right, but it depends how you define "capital allocator". To me, it doesn't just mean M&A, it also means internal reinvestment (not just the fact that it's internal, but investing on what and how) as well as what to do with the excess cash (there are options other than M&A).

 

Maybe there's another word than capital allocator to describe this, but I thought it fit within that umbrella (4 options of the capital allocator: M&A, organic growth, dividend, buybacks).

 

I would add to that simply being prudent with capital rather than pursuing tons of initiatives, which I think Apple is. For example their M&A activities seem very focused (with the possible exception of Beats, still unsure) as opposed to acquiring left and right as is often the case in the tech sector.

 

I recall that story about Jobs asking Buffett what to do with his capital and being asked back whether or not he had more than what was needed to run the business and whether or not he thought his stock was cheap. This always makes me ponder what would happen to a cash-generating machine such as Apple if they decided to contact Berkshire and hire whoever came in third after Todd and Ted to look after that excess cash...

[Liberty]

It's like that other non-innovative company Tesla motors.  They didn't come out with the first electric car.  Or SpaceX, why do people call them innovative?  They didn't invent the rocket.  And google wasn't the first search engine on the WWW.

 

No one gives you a prize for being first.

 

You're right. It's actually quite the contrary: the first firm spends a disproportionate amount of resources and effort in creating something which can then be copied and/or improved upon at a fraction of the cost in the absence of sustainable competitive advantages or effective differentiation. Business history is full of examples (cars, airlines, railways, etc.)

 

What's that quote in Moneyball about the first guy over the wall always getting bloodied?

 

There's some of that, but the point is more about the fact that the "first" of something is usually not ready for prime time. So you can brag about being first, but you usually won't make a great product out of it (ie. Microsoft has been working on tablets for a very long time, but they sucked for years and years). Companies like Apple are very product-focused and they wait until things are good enough. There's probably tons of stuff that has been in the lab for years that they just never show because it's not good enough yet (you better believe that they had mockups of phones of all sizes in 0.1 inch increments for years before they actually made bigger screens).

 

But on top of it not being a race and the prize not going to the first over the line, there's also the fact that there's often more effort that goes into making something really good than actually went into coming up with the idea in the first place. iPhone might not have been the first smartphone, but it certainly doesn't mean that Apple just came in and copied the smartphones that preceded it and it was easy. They spent years on it and had to make thousands of decisions about every little detail to get it as right as they got it. People always say that the mouse and graphical windows interface was copied from Xerox PARC by Apple and then Microsoft, but if you find info about that original mouse and interface, it wasn't what actually came out in the Macintosh, it was extremely rough and certainly a much, much worse experience. A lot of work went into making it ready for prime time.

 

I find the idea of being obsessed with who came with it first kind of adolescent. It's like when I was 13 and I was obsessed by how fast guitarists could play solos rather than focusing on what they were playing. It's availability bias, I suppose; focusing on what is easy to measure and clear cut rather than on what actually matters, even if it's harder to figure out and more nuanced.

[intothebreach]

 

You're right. It's actually quite the contrary: the first firm spends a disproportionate amount of resources and effort in creating something which can then be copied and/or improved upon at a fraction of the cost in the absence of sustainable competitive advantages or effective differentiation. Business history is full of examples (cars, airlines, railways, etc.)

 

What's that quote in Moneyball about the first guy over the wall always getting bloodied?

 

There's some of that, but the point is more about the fact that the "first" of something is usually not ready for prime time. So you can brag about being first, but you usually won't make a great product out of it (ie. Microsoft has been working on tablets for a very long time, but they sucked for years and years). Companies like Apple are very product-focused and they wait until things are good enough. There's probably tons of stuff that has been in the lab for years that they just never show because it's not good enough yet (you better believe that they had mockups of phones of all sizes in 0.1 inch increments for years before they actually made bigger screens).

 

But on top of it not being a race and the prize not going to the first over the line, there's also the fact that there's often more effort that goes into making something really good than actually went into coming up with the idea in the first place. iPhone might not have been the first smartphone, but it certainly doesn't mean that Apple just came in and copied the smartphones that preceded it and it was easy. They spent years on it and had to make thousands of decisions about every little detail to get it as right as they got it. People always say that the mouse and graphical windows interface was copied from Xerox PARC by Apple and then Microsoft, but if you find info about that original mouse and interface, it wasn't what actually came out in the Macintosh, it was extremely rough and certainly a much, much worse experience. A lot of work went into making it ready for prime time.

 

Fully agreed, and I think that many people miss the fact that Apple, for all the hardware they sell, actually delivers first and foremost a user experience (ease of use, usually trouble-free, support, etc.) And that is one key to the competitive advantage that result in their superb margins. Hardware is a key component of it for sure, but in no way is it sufficient in itself (for most people, mileage does differ here).

 

 

[Liberty]

Since there seems to be newcomers to this thread, I thought this was a good read to better understand the company:

 

https://stratechery.com/2015/apples-new-market/

 

There's this idea that Apple is so integrated while it's competitors are so modulars, but that's not quite correct. Apple is very modular when it comes to commodity aspects, and very integrated when it comes to the differentiated aspects.

[Liberty]

Fully agreed, and I think that many people miss the fact that Apple, for all the hardware they sell, actually delivers first and foremost a user experience (ease of use, usually trouble-free, support, etc.) And that is one key to the competitive advantage that result in their superb margins. Hardware is a key component of it for sure, but in no way is it sufficient in itself (for most people, mileage does differ here).

 

Exactly. People who think Apple is a "hardware company" miss the point. A very large part of the differentiation of their products, which is what allows them to have these margins, comes from the software (and services to a much lesser extent). It's just that they monetize that software by selling hardware. But that doesn't mean that people are only paying for the hardware and would pay as much/desire as much a Mac or iPhone if it ran Windows or Android.

[Viking]

Timing is an under appreciated aspect of success. Great goal scorers instinctively know where to go on the ice and when to score. If they are early or late there is no goal scored.

 

Successful companies usually launch new products at about the right time. Based on their track record the past 10 years Apple perhaps does this better than anyone else (large company).

 

And yes, they are not perfect timers. One could argue they were 1 year late with the move to larger screens for iPhone. Given how well the 6 and 6 plus have sold the past year and estimates for the 6s and 6s plus for the coming year I think Apple is OK with how their iPhones are selling.

 

The watch timing looks about right to me. However, I expect it will take at least 2-3 years before we understand the size of this category.

 

The iPad pro timing is likely close enough. My. Guess is it will sell well and that is what is important.

 

Apple TV will be interesting to watch. I think it will do very well, but like the watch will take a few years to really come together.

[mcmaaaaath]

Leonardo 'invented' the helicopter but he was billions of R&D man hours from actually making the thing work. It often takes a lot more innovation to make something work well than to come up with the idea.

 

And anyways, what you see are release dates, not time of invention. For all we know, Apple has been working on 3D Touch since 2002. So saying they are just copying others with the watch or other features could mean nothing more than that they took longer to release it. They might have been first with this or that idea. You'll never know.

[portfolio14]

Another way in which I think Cook is a good stewart is that from everything I've heard from people inside, he's a great torch bearer for the Apple culture.

 

+1.

 

Right there. It is Apple's value generator. This is the asset not on the balance sheet and so intangible that the market and Wall St can't comprehend. Apple's value, moat and optionality are all rooted in its culture. (Or some people think in terms of "priority".) Operating a toll booth requires no specific culture. Operating Apple does. Screwing it up Apple will go through a slow death.

 

I reckon there is no better material to understand this than Catmull's "Creativity Inc". When your business depends on seizing the infrequent positive black swans, you need the right culture, be it Pixar or Apple.

 

One thing that I watch closely is whether the recent wave of new external hires in the mgmt team will dilute or destroy its culture.

[Liberty]

If malware keeps getting worse on Android, that could provide some more tailwind for Apple..

 

http://www.loopinsight.com/2015/09/10/android-wins/

 

Malicious apps that disable Android phones until owners pay a hefty ransom are growing increasingly malevolent and sophisticated as evidenced by a newly discovered sample that resets device PIN locks, an advance that requires a factory reset.

[Liberty]

Another way in which I think Cook is a good stewart is that from everything I've heard from people inside, he's a great torch bearer for the Apple culture.

 

+1.

 

Right there. It is Apple's value generator. This is the asset not on the balance sheet and so intangible that the market and Wall St can't comprehend. Apple's value, moat and optionality are all rooted in its culture. (Or some people think in terms of "priority".) Operating a toll booth requires no specific culture. Operating Apple does. Screwing it up Apple will go through a slow death.

 

I reckon there is no better material to understand this than Catmull's "Creativity Inc". When your business depends on seizing the infrequent positive black swans, you need the right culture, be it Pixar or Apple.

 

One thing that I watch closely is whether the recent wave of new external hires in the mgmt team will dilute or destroy its culture.

 

Yep. I'm reminded of an anecdote about Pixar. Someone asked Brad Bird (I think), one of their directors, on Twitter something like: "Where are Pixar's bad movies?" and he replied "We don't release them."

 

Pixar's not perfect, but they certainly had a better streak than almost anyone for a while, and even now that they've had a few lesser movies (mostly after being acquired by Disney, which might have had an impact -- though on the flipside they've also turned around Disney's own animation studio and helped them produce mega-hits there), they still have an incredible batting average. That's not because they only have good ideas, it's because they're ready to work on ideas longer, and kill their own ideas when they are not up to the high standards that they hold themselves to, and their culture rewards good stories and quality movies above all else.

 

I'm sure there's stuff that they were very advanced on when they killed it, and they could have released it and still made hundreds of millions, cashing in on their name to get people in the theathers, but that's not the way to play the long-game and attract and retain the very best talent that cares about the final product as much as about the money.

 

Catmull was a huge influence on Steve Jobs (and vice versa), and it shows when you study both companies.

[johnny]

Some thoughts on the Upgrade Program:

 

1. "Financed through Citizens One Personal Loans"

 

2. Already beaten substantially by a T-Mobile offer: http://gizmodo.com/t-mobile-undercuts-apples-iphone-upgrade-plan-with-20-1729796591

 

After having had some time to digest it, I think this is actually fine. I suspect it is less about Apple trying to desperately insert itself into the financing side of things, and more about Apple wanting to make sure there was a sort of widely-promoted and universally available "best alternative" offer on the table to make sure non of the carriers try to do anything tricky at the expense of iPhone.

 

In my view, I suspect Apple is actually indifferent to whether or not you use -their- upgrade plan. They care most about you knowing what the monthly price is, so that T-Mobile (or somebody) decides to try and beat it for a marketing victory every fall.

[supertutti]

But what sets the Apple plan apart from the carriers is that the phone is unlocked from the start, so now you have total freedom to change carriers as you wish. I think this could potentially increase the churn rate for carriers and make it more difficult for them to forecast out results in a meaningful way. Also, now people can switch to a T-Mobile or sprint from AT&T or Verizon for a month just to try out the service, since their monthly prices are lower. Could shift people to these carriers and force the big two to compete more heavily on pricing.

[Liberty]

Doesn't Apple's deal also come with Applecare+ (beefed up warranty)? That's worth something, though T-Mobile's deal might still be cheaper (though with more strings attached).

 

Either way, I don't think Apple cares too much where you buy your iPhone. I think there's probably a segment of top customers who would have upgraded yearly but were discouraged by the hassle of dealing with carriers and breaking contracts and such, and now they might do it because their phone is their most useful possession and a few hundred dollars a year isn't material to them. Apple will also make a bit of money on the embedded interest in the monthly price. I think this is all positive.

[supertutti]

Anyone think this could be laying the groundwork for Apple launching their own MVNO?

[rkbabang]

Anyone think this could be laying the groundwork for Apple launching their own MVNO?

 

I highly doubt it.  I don't see what value they could add, not owning the network itself.  Of course anything is possible.