1.1 Million Customer Net Additions,
Record-Low Churn of 1.18%, and 11% Growth in Service and Total
Revenues
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-leading customer
growth:
- 1.1 million total net additions - 4
years of adding more than 1 million every quarter
- 914,000 total branded postpaid net
additions - expect to lead industry for the 5th consecutive
quarter
- 798,000 branded postpaid phone net
additions - expect to capture over 250% of industry growth
- 386,000 branded prepaid net additions -
led by continued strong performance at MetroPCS
- Record-low branded postpaid phone churn
of 1.18% - down 15 bps YoY and 10 bps QoQ
Industry-leading financial growth (all
percentages year-over-year):
- $7.3 billion service revenues, up 11% -
expect to lead industry in growth for the 12th consecutive
quarter
- $9.6 billion total revenues, up 11%(1)
- expect to lead industry in growth for the 15th quarter in past 4
years
- $698 million net income, up 46%.
Earnings per share ("EPS") of $0.80, up 43%. Excluding after-tax
spectrum gains in Q1 2017 and Q1 2016, and certain net tax benefits
related to a valuation allowance release recognized in Q1 2017, net
income and EPS increased by $332 million and $0.38,
respectively.
- $2.7 billion Adjusted EBITDA(1)(2),
down 5%. Excluding spectrum gains Adjusted EBITDA up 21%.
- Net cash provided by operating
activities of $1.7 billion. Free cash flow(2) of $185 million.
Recent 600 MHz spectrum win is a game
changer for wireless consumers:
- Purchased 31 MHz of spectrum covering
100% of the U.S. for $8.0 billion, quadrupling our low-band
holdings
- Won 45% of the spectrum sold, enabling
more choice and competition for customers across the country
- Expect at least 10 MHz covering over
one million square miles will be clear in 2017
- Initial deployment of the spectrum will
start in 2017 with handsets arriving in time for the Q4 2017
Holiday season
Continued strong outlook for
2017:
- Guidance range for branded postpaid net
additions increased to 2.8 to 3.5 million from 2.4 to 3.4
million
- Net income is not available on a
forward looking basis(3)
- Maintaining Adjusted EBITDA target of
$10.4 to $10.8 billion, which includes leasing revenues of $0.8 to
$0.9 billion.(2)
- Maintaining guidance of $4.8 to $5.1
billion of cash capital expenditures, excluding capitalized
interest
- Three-year compound annual growth rates
(CAGRs) for net cash provided by operating activities and free cash
flow from FY 2016 to FY 2019 remain unchanged at 15% to 18% and 45%
to 48%, respectively(2)
________________________________________________________________
(1) The amortized imputed discount on EIP receivables
previously recognized as Interest income has been retrospectively
reclassified as Other revenues. The effects of this change in
accounting principle are provided in the financial tables on page
7. (2) Adjusted EBITDA is a non-GAAP financial measure and Free
Cash Flow is a non-GAAP financial metric. These non-GAAP financial
items should be considered in addition to, but not as a substitute
for, the information provided in accordance with GAAP.
Reconciliations for these non-GAAP financial items to the most
directly comparable GAAP financial items are provided in the
financial tables on page 7 - 10. (3) T-Mobile is not able to
forecast net income on a forward looking basis without unreasonable
efforts due to the high variability and difficulty in predicting
certain items that affect GAAP net income including, but not
limited to, income tax expense, stock based compensation expense,
interest expense and interest income.
T-Mobile US, Inc. (NASDAQ: TMUS) celebrates its 4th year as a
public company with another incredible quarter where it expects to
lead the industry in customer and financial growth. In addition,
the 600 MHz auction results represent a major milestone for
T-Mobile, enabling the Un-carrier to bring real choice and
competition to wireless customers in every part of the United
States.
In Q1 2017, we added 1.1 million total customers, marking four
straight years of adding more than 1 million every quarter. In
addition, we added 798,000 branded postpaid phone customers in the
quarter and expect to capture over 250% of the industry's postpaid
phone growth. The continued success at MetroPCS, the industry’s #1
prepaid brand, helped deliver 386,000 prepaid net additions. As
result of the strong customer growth, we grew service revenues by
11% year-over-year in Q1 2017, in a quarter where all of our peers
are expected to show declines. This level of consistent
outperformance continues to distinguish T-Mobile from the
competition, and our outlook for 2017 shows that we plan to
continue producing strong customer and financial growth.
"We’ve been beating up on the competition for over 4 years now
while making wireless better for consumers," said John Legere,
President and CEO of T-Mobile. "Q1 was no different with T-Mobile
again producing the best customer and financial growth in the
industry. Add to that our recent success in the 600 MHz spectrum
auction and it’s clear we’re just getting started!"
Industry-Leading Customer
Growth
T-Mobile has developed a winning Un-carrier formula built around
listening to customers and solving their pain points. For more than
four years, we have completely disrupted the wireless industry and
forced the competition to change. To date, T-Mobile has launched 13
consumer-friendly Un-carrier moves including the elimination of
annual service contracts, ending overages, enabling upgrades
anytime, free international data roaming in over 140 countries and
destinations, unlimited music and video streaming, and offering all
unlimited data plans with taxes and fees included. Customers have
responded and continue to choose T-Mobile over the competition.
(in thousands, except churn)
Q1 2017 Q4 2016 Q1 2016 Total net customer
additions 1,142 2,101 2,221 Branded postpaid net customer additions
914 1,197 1,041 Branded postpaid phone net customer additions 798
933 877 Branded prepaid net customer additions 386 541 807 Branded
postpaid phone churn 1.18 % 1.28 % 1.33 %
- Total net customer additions
were 1.1 million in Q1 2017, bringing our total customer count to
72.6 million. This was the 16th consecutive quarter in which
T-Mobile generated more than 1 million total net customer
additions.
- Branded postpaid net additions
were 914,000 in Q1 2017, which is expected to lead the industry yet
again.
- Branded postpaid phone net
additions were 798,000 in Q1 2017, driven by strong customer
response to our Un-carrier initiatives. Q1 2017 is expected to mark
the 13th consecutive quarter that T-Mobile has led the industry in
this category. Branded postpaid phone churn was a record low
of 1.18% in Q1 2017, down 10 basis points from Q4 2016 and down 15
basis points from Q1 2016.
- Branded prepaid net additions
were 386,000 in Q1 2017, driven by the continued success of the
MetroPCS brand. Branded prepaid churn was 4.01% in Q1 2017,
up 7 basis points from Q4 2016 and up 17 basis points from Q1
2016.
- Wholesale net losses were
158,000 in Q1 2017. We expect wholesale revenue growth in 2017 even
as our MVNO partners continue to de-emphasize Lifeline in favor of
higher ARPU customer categories.
Industry-Leading Financial
Growth
It’s not just about gaining customers, it’s also about creating
value for shareholders. T-Mobile continues to focus on translating
its incredible customer growth into financial growth - and that’s
clearly showing up in our Q1 2017 results.
(in
millions, except EPS)
Q1 2017 Q4 2016 Q1 2016
Q1 2017vs.Q4 2016
Q1 2017vs.Q1 2016
Total service revenues $ 7,329 $ 7,245 $ 6,578 1 % 11 % Total
revenues (1) 9,613 10,234 8,664 (6 )% 11 % Net income 698 390 479
79 % 46 % Diluted EPS 0.80 0.45 0.56 78 % 43 % Adjusted EBITDA (1)
2,668 2,607 2,814 2 % (5 )%
(1) The amortized imputed discount on EIP
receivables previously recognized as Interest income has been
retrospectively reclassified as Other revenues. The effects of this
change in accounting principle are provided in the financial
tables.
- Service revenues increased 11%
in Q1 2017 to $7.3 billion. This is expected to mark the 12th
consecutive quarter that T-Mobile has led the industry in
year-over-year service revenue percentage growth. Total
revenues increased by 11% in Q1 2017 to $9.6 billion. This is
expected to mark the 15th quarter in the past 4 years that T-Mobile
has led the industry in total revenue percentage growth.
- Branded postpaid phone Average
Revenue per User (ARPU) was $47.53 in Q1 2017, up 2.9% from Q1
2016 primarily due to benefits from Data Stash, a net positive
impact from the T-Mobile ONE rate plans, inclusive of Un-carrier
Next, and the MVNO Transaction. T-Mobile continues to expect that
branded postpaid phone ARPU in full-year 2017 will be generally
stable compared to full-year 2016, with some quarterly variations
driven by the actual migrations to T-Mobile ONE rate plans,
inclusive of Un-carrier Next.
- Branded prepaid ARPU was a
record $38.53 in Q1 2017, up 2.5% from Q1 2016 from the continued
growth of MetroPCS customers, a de-emphasis of T-Mobile legacy
prepaid products and a decrease in certain customers that had lower
average branded prepaid ARPU.
- Net income increased 46%
year-over-year in Q1 2017 to $698 million. Net income as a
percentage of service revenue was 9.5% in Q1 2017, up from 7.3% in
Q1 2016. Excluding after-tax spectrum gains of $23 million and $406
million in Q1 2017 and Q1 2016, respectively, as well as $270
million in net tax benefits recognized in Q1 2017 related to a
valuation allowance release, net income would have increased $332
million or 455%.
- Diluted Earnings per share (EPS)
increased by $0.24 year-over-year in Q1 2017 to $0.80. Excluding
the after-tax spectrum gains and net tax benefits discussed above,
EPS increased by $0.38.
- Adjusted EBITDA decreased by 5%
year-over-year in Q1 2017 to $2.7 billion. Excluding pre-tax
spectrum gains of $37 million in Q1 2017 and $636 million Q1 2016,
the year-over-year growth in Adjusted EBITDA was 21%. Adjusted
EBITDA margin, excluding spectrum gains, was 36% in Q1 2017, up
from 33% in Q1 2016.
- Cash capital expenditures
increased by 14% year-over-year in Q1 2017 to $1.5 billion. Cash
capital expenditures includes capitalized interest of $48 million
in Q1 2017 and $36 million in Q1 2016.
- Net cash provided by operating
activities was $1.7 billion in Q1 2017, an increase of $688
million year-over-year primarily from changes in working capital.
Free cash flow increased by $495 million to $185 million in Q1 2017
from an outflow of $310 million in Q1 2016 despite higher
year-over-year cash capital expenditures.
Recent 600 MHz spectrum win is a game
changer for wireless consumers
The 600 MHz auction is a huge win for consumers and for
T-Mobile. We recently announced our largest investment ever by
purchasing an average of 31 MHz of 600 MHz low-band spectrum
covering 100% of the U.S. for $8.0 billion or $0.83 per MHz / POP.
This spectrum will be used to strengthen existing LTE coverage and
increase capacity to meet customers' growing demand for mobile
data. T-Mobile expects that at least 10 MHz covering over one
million square miles will be clear in 2017 and we will begin to put
this new spectrum to use to benefit T-Mobile and MetroPCS customers
later this year. With this purchase, T-Mobile now has significantly
more low-band spectrum per customer than any other major provider
and nearly TRIPLE the low-band spectrum per postpaid customer
compared to Verizon.* Overall, this spectrum increases our total
spectrum portfolio by 39% and sets the stage for continued business
momentum.
T-Mobile provides 4G LTE coverage to 314 million people today,
and is targeting to provide 321 million people with 4G LTE coverage
by year-end 2017. We continue to increase the depth, breadth and
functionality of our LTE network by adding new spectrum, re-farming
existing spectrum, and implementing new technology. Collectively,
these network advancements help provide even further improved
network performance and reliability for T-Mobile's customers.
T-Mobile has substantially completed the deployment of its 700
MHz A-Block spectrum with the recent launch of Chicago. "Extended
Range LTE" is now live in over 530 market areas covering 269
million people. Our network expansion provides a unique ability to
grow our distribution footprint by 30 to 40 million POPs. We plan
to open 3,000 stores in 2017, including 1,500 T-Mobile stores and
1,500 MetroPCS stores.
At the end of Q1 2017, approximately 71% of then-owned spectrum
was being used for 4G LTE compared to 54% in Q1 2016. We expect to
continue to re-farm spectrum currently committed to 2G and 3G
technologies. Re-farmed spectrum enables T-Mobile to continue
expanding Wideband LTE, which currently covers 235 million people.
During Q1 2017, we continued to deploy and expand new technologies
like VoLTE, Carrier Aggregation, and 4x4 MIMO that have delivered
material capacity benefits to both customers and the T-Mobile
network.
All of these improvements have enabled T-Mobile’s 4G LTE network
to be the fastest in the nation based on both download and upload
speeds from millions of user-generated tests. This is the
thirteenth consecutive quarter that we have held the title for
fastest LTE network.
Continued strong outlook for
2017
T-Mobile’s 2017 guidance shows that we plan to continue with
strong growth in customers, Adjusted EBITDA, net cash provided by
operating activities and free cash flow.
Branded postpaid net customer additions for full-year 2017 are
now expected to be between 2.8 and 3.5 million, an increase from
the previous guidance range of 2.4 and 3.4 million. While net
income is not available on a forward looking basis, we are
maintaining our target of between $10.4 and $10.8 billion in
Adjusted EBITDA, which includes leasing revenues of $0.8 to $0.9
billion.
Cash capital expenditures guidance, excluding capitalized
interest, is unchanged at $4.8 to $5.1 billion. Three-year CAGRs
for net cash provided by operating activities and free cash flow
from full-year 2016 to full-year 2019 also remain unchanged at 15%
to 18% and 45% to 48%, respectively.
________________________________________________________________
* Spectrum holdings include the 31 MHz of 600 MHz low-band
spectrum that we have committed to purchase for which license
grants are expected to be made at the conclusion of the FCC’s
standard post-auction licensing process.
Financial Results
For more details on T-Mobile’s Q1 2017 financial results,
including the Investor Factbook with detailed financial tables and
reconciliations of certain historical non-GAAP measures disclosed
in this release to the most comparable measures under GAAP, please
visit T-Mobile US, Inc.'s Investor Relations website at
http://investor.T-Mobile.com.
T-Mobile Social Media
Investors and others should note that we announce material
financial and operational information to our investors using our
investor relations website, press releases, SEC filings and public
conference calls and webcasts. We also intend to use the @TMobileIR
Twitter account (https://twitter.com/TMobileIR) and the @JohnLegere
Twitter (https://twitter.com/JohnLegere), Facebook and
Periscope accounts, which Mr. Legere also uses as a means for
personal communications and observations, as means of disclosing
information about the Company and its services and for complying
with its disclosure obligations under Regulation FD. The
information we post through these social media channels may be
deemed material. Accordingly, investors should monitor these social
media channels in addition to following our press releases, SEC
filings and public conference calls and webcasts. The social media
channels that we intend to use as a means of disclosing the
information described above may be updated from time to time as
listed on our investor relations website.
About T-Mobile US, Inc.
As America's Un-carrier, T-Mobile US, Inc. (NASDAQ: TMUS) is
redefining the way consumers and businesses buy wireless services
through leading product and service innovation. Our advanced
nationwide 4G LTE network delivers outstanding wireless experiences
to 72.6 million customers who are unwilling to compromise on
quality and value. Based in Bellevue, Washington, T-Mobile US
provides services through its subsidiaries and operates its
flagship brands, T-Mobile and MetroPCS. For more information,
please visit http://www.t-mobile.com or join the conversation on
Twitter using $TMUS.
Q1 2017 Earnings Call, Livestream and
Webcast Access Information
Access via Phone (audio only):
Date: April 24, 2017 Time: 4:30 p.m. (EDT) Call-in
Numbers: 800-432-9830 International: 719-234-7318 Participant
Passcode: 4867010
Please plan on accessing the earnings call ten minutes prior to
the scheduled start time.
Access via Social Media:
The @TMobileIR Twitter account will live-tweet the earnings
call.
Submit Questions via Text, Twitter, or Facebook:
Text: Send a text message to 313131, enter the
keyword TMUS followed by a space Twitter: Send a tweet to
@TMobileIR or @JohnLegere using $TMUS Facebook: Post a comment to
John Legere’s Facebook Earnings post
Access via Webcast:
The earnings call will be broadcast live via our Investor
Relations website at http://investor.t-mobile.com. A replay of the
earnings call will be available for two weeks starting shortly
after the call concludes and can be accessed by dialing
888-203-1112 (toll free) or 719-457-0820 (international). The
passcode required to listen to the replay is 4867010.
To automatically receive T-Mobile financial news by e-mail,
please visit the T-Mobile Investor Relations website, http://investor.t-mobile.com, and subscribe to
E-mail Alerts.
Forward-Looking
Statements
This news release includes "forward-looking statements" within
the meaning of the U.S. federal securities laws. Any statements
made herein that are not statements of historical fact, including
statements about T-Mobile US, Inc.'s plans, outlook,
beliefs, opinions, projections, guidance, strategy, store openings,
deployment of spectrum and expected network modernization and other
advancements, are forward-looking statements. Generally,
forward-looking statements may be identified by words such as
"anticipate," "expect," "suggests," "plan," “project,” "believe,"
"intend," "estimates," "targets," "views," "may," "will,"
"forecast," and other similar expressions. The forward-looking
statements speak only as of the date made, are based on current
assumptions and expectations, and involve a number of risks and
uncertainties. Important factors that could affect future results
and cause those results to differ materially from those expressed
in the forward-looking statements include, among others, the
following: adverse economic or political conditions in the U.S. and
international markets; competition in the wireless services market,
including new competitors entering the industry as technologies
converge; the effects any future merger or acquisition involving
us, as well as the effects of mergers or acquisitions in the
technology, media and telecommunications industry; challenges in
implementing our business strategies or funding our wireless
operations, including payment for additional spectrum or network
upgrades; the possibility that we may be unable to renew our
spectrum licenses on attractive terms or acquire new spectrum
licenses at reasonable costs and terms; difficulties in managing
growth in wireless data services, including network quality;
material changes in available technology; the timing, scope and
financial impact of our deployment of advanced network and business
technologies; the impact on our networks and business from major
technology equipment failures; breaches of our and/or our third
party vendors’ networks, information technology and data security;
natural disasters, terrorist attacks or similar incidents; existing
or future litigation; any changes in the regulatory environments in
which we operate, including any increase in restrictions on the
ability to operate our networks; any disruption or failure of our
third parties’ or key suppliers’ provisioning of products or
services; material adverse changes in labor matters, including
labor campaigns, negotiations or additional organizing activity,
and any resulting financial, operational and/or reputational
impact; the ability to make payments on our debt or to repay our
existing indebtedness when due; adverse change in the ratings of
our debt securities or adverse conditions in the credit markets;
changes in accounting assumptions that regulatory agencies,
including the Securities and Exchange Commission (“SEC”), may
require, which could result in an impact on earnings; and changes
in tax laws, regulations and existing standards and the resolution
of disputes with any taxing jurisdictions; and other risks
described in our filings with the SEC, including those
described in our most recently filed Annual Report on Form 10-K.
You should not place undue reliance on these forward-looking
statements. We do not undertake to update forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Effect of Change in Accounting
Principle(Unaudited)
Effective January 1, 2017, we began presenting the amortization
of the imputed discount on our Equipment Installment Plan (“EIP”)
receivables as Other revenue on our Condensed Consolidated
Statements of Comprehensive Income. Prior to the change, the
imputed interest was presented as Interest income. We made this
change to provide a better representation of amounts earned from
our major ongoing operations, align with industry practice and
enhance comparability. We have applied this change in accounting
principle retrospectively and presented the effect of the change in
the table below. For additional information, see Note 1 - Basis of
Presentation of the Notes to the Consolidated Financial Statements
included in Part I, Item 1 of our Form 10-Q filed April 24,
2017.
Quarter (in millions, except for Adjusted EBITDA
margin and Net Debt Ratio) Q1 2016 Q2
2016 Q3 2016 Q4 2016
Q1 2017 EIP imputed discount $ 65
$ 65 $ 59 $ 59
$ 62
Other revenue - as adjusted $ 235 $ 211 $
224 $ 249 $ 241
Other revenues - unadjusted 170 146 165 190
179
Total revenues - as adjusted $ 8,664 $ 9,287 $
9,305 $ 10,234 $ 9,613
Total revenues - unadjusted 8,599
9,222 9,246 10,175 9,551
Interest income - as
adjusted $ 3 $ 3 $ 3 $ 4 $ 7
Interest income -
unadjusted 68 68 62 63 69
Operating income - as
adjusted $ 1,168 $ 833 $ 1,048 $ 1,001 $ 1,037
Operating
income - unadjusted 1,103 768 989 942 975
Adjusted
EBITDA - as adjusted $ 2,814 $ 2,529 $ 2,689 $ 2,607 $ 2,668
Adjusted EBITDA - unadjusted 2,749 2,464 2,630 2,548 2,606
Adjusted EBITDA margin - as adjusted 43 % 37 % 38 %
36 % 36 %
Adjusted EBITDA margin - unadjusted 42 % 36 % 37 %
35 % 36 %
Last twelve months Adjusted EBITDA - as
adjusted $ 9,124 $ 9,723 $ 10,396 $ 10,639 $ 10,493
Last
twelve months Adjusted EBITDA - unadjusted 8,754 9,401 10,123
10,391 10,248
Net Debt (excluding Tower Obligations) to
LTM Adjusted EBITDA Ratio - as adjusted 2.2 2.3 2.2 2.1 2.2
Net Debt (excluding Tower Obligations) to LTM Adjusted EBITDA
Ratio - unadjusted 2.3 2.3 2.2 2.1 2.2
T-Mobile US, Inc.Reconciliation of
Non-GAAP Financial Measures to GAAP Financial
Measures(Unaudited)
This Press Release includes non-GAAP financial measures. The
non-GAAP financial measures should be considered in addition to,
but not as a substitute for, the information provided in accordance
with GAAP. Reconciliations for the non-GAAP financial measures to
the most directly comparable GAAP financial measures are provided
below. T-Mobile is not able to forecast net income on a forward
looking basis without unreasonable efforts due to the high
variability and difficulty in predicting certain items that affect
GAAP net income including, but not limited to, income tax expense,
stock based compensation expense, interest expense and interest
income. We made an accounting change in 2017 to include imputed
interest associated with EIP receivables in Other revenues which
will be included in Adjusted EBITDA.
Adjusted EBITDA is reconciled to net income as follows:
Quarter (in millions) Q1 2016
Q2 2016 Q3 2016
Q4 2016 Q1 2017 Net income $ 479
$ 225 $ 366 $ 390
$ 698 Adjustments: Interest expense 339 368 376 335 339 Interest
expense to affiliates 79 93 76 64 100 Interest income (1) (3 ) (3 )
(3 ) (4 ) (7 ) Other expense (income), net 2 3 1 — (2 ) Income tax
expense (benefit) 272 147 232 216 (91 )
Operating income(1) 1,168 833 1,048 1,001 1,037 Depreciation and
amortization 1,552 1,575 1,568 1,548 1,564 Cost of MetroPCS
business combination (2) 36 59 15 (6 ) — Stock-based compensation
(3) 53 61 57 64 67 Other, net (3) 5 1 1 —
— Adjusted EBITDA(1) $ 2,814 $ 2,529 $
2,689 $ 2,607 $ 2,668 (1) The
amortized imputed discount on EIP receivables previously recognized
as Interest income has been retrospectively reclassified as Other
revenues. See the Effect of Change in Accounting Principle table
for further detail. (2) Beginning Q1 2017, we will no longer
separately present Cost of MetroPCS business combination as it is
insignificant. (3) Stock-based compensation includes payroll tax
impacts and may not agree to stock based compensation expense in
the condensed consolidated financial statements. Other, net may not
agree to the Condensed Consolidated Statements of Comprehensive
Income primarily due to certain non-routine operating activities,
such as other special items that would not be expected to reoccur,
and are therefore excluded in Adjusted EBITDA.
Adjusted EBITDA - Earnings before Interest expense, net of
Interest income, Income tax expense, Depreciation and amortization
expense, non-cash Stock-based compensation and certain expenses not
reflective of T-Mobile's ongoing operating performance. Adjusted
EBITDA margin represents Adjusted EBITDA divided by service
revenues. Adjusted EBITDA is a non-GAAP financial measure utilized
by T-Mobile's management to monitor the financial performance of
our operations. T-Mobile uses Adjusted EBITDA internally as a
metric to evaluate and compensate its personnel and management for
their performance, and as a benchmark to evaluate T-Mobile's
operating performance in comparison to its competitors. Management
believes analysts and investors use Adjusted EBITDA as a
supplemental measure to evaluate overall operating performance and
facilitate comparisons with other wireless communications companies
because it is indicative of T-Mobile's ongoing operating
performance and trends by excluding the impact of interest expense
from financing, non-cash depreciation and amortization from capital
investments, non-cash stock-based compensation, network
decommissioning costs as they are not indicative of T-Mobile's
ongoing operating performance and certain other nonrecurring
expenses. Adjusted EBITDA has limitations as an analytical tool and
should not be considered in isolation or as a substitute for income
from operations, net income or any other measure of financial
performance reported in accordance with GAAP.
T-Mobile US, Inc.Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures
(continued)(Unaudited)
Net debt (excluding Tower Obligations) to last twelve months
Adjusted EBITDA ratio is calculated as follows:
(in millions, except net debt ratio)
Mar 31, 2016
Jun 30, 2016 Sep
30, 2016 Dec 31, 2016
Mar 31, 2017 Short-term debt $ 365 $ 258 $ 325
$ 354 $ 7,542 Long-term debt to affiliates 5,600 5,600 5,600 5,600
9,600 Long-term debt 20,505 21,574 21,825 21,832 13,105 Less: Cash
and cash equivalents (3,647 ) (5,538 ) (5,352 ) (5,500 ) (7,501 )
Less: Short-term investments (2,925 ) — — — —
Net Debt (excluding Tower Obligations) $ 19,898 $
21,894 $ 22,398 $ 22,286 $ 22,746
Divided by: Last twelve months Adjusted EBITDA (1) $ 9,124 $
9,723 $ 10,396 $ 10,639 $ 10,493 Net
Debt (excluding Tower Obligations) to Last Twelve Months Adjusted
EBITDA Ratio (1) 2.2 2.3 2.2 2.1 2.2
(1)
The amortized imputed discount on EIP receivables previously
recognized as Interest income has been retrospectively reclassified
as Other revenues. See Change in Accounting Principle table for
further detail.
Net debt - Short-term debt, long-term debt to affiliates, and
long-term debt (excluding tower obligations), less cash and cash
equivalents and short-term investments.
Free cash flow is calculated as follows:
Quarter (in millions) Q1 2016
Q2 2016 Q3 2016
Q4 2016 Q1 2017 Net cash provided by
operating activities $ 1,025 $ 1,768 $
1,740 $ 1,602 $ 1,713 Cash purchases of
property and equipment (1,335 ) (1,349 ) (1,159 ) (859 ) (1,528 )
Free Cash Flow $ (310 ) $ 419 $ 581 $ 743 $
185 Net cash used in investing activities $ (1,860 ) $ (667
) $ (1,859 ) $ (1,294 ) $ (1,550 ) Net cash provided by (used in)
financing activities $ (100 ) $ 790 $ (67 ) $ (160 ) $ 1,838
Free Cash Flow - Net cash provided by operating activities less
cash capital expenditures for property and equipment. Free Cash
Flow is utilized by T-Mobile's management, investors, and analysts
to evaluate cash available to pay debt and provide further
investment in the business.
Free cash flow three-year CAGR is calculated as follows:
FY
FY (in millions,
except CAGR Range) 2016 2019 Guidance
Range CAGR Range Net cash provided by
operating activities $ 6,135 $ 9,400 $ 10,000 15 % 18 % Cash
purchases of property and equipment (4,702 ) (5,000 ) (5,400 ) 2 %
5 % Free Cash Flow $ 1,433 $ 4,400 $ 4,600 45
% 48 %
T-Mobile US, Inc.Reconciliation of
Operating Measures to Branded Postpaid Service
Revenues(Unaudited)
The following tables illustrate the calculation of our operating
measures ARPU and ABPU and reconcile these measures to the related
service revenues:
Quarter (in millions, except average number of
customers, ARPU and ABPU) Q1 2016
Q2 2016 Q3 2016 Q4
2016 Q1 2017 Calculation of Branded
Postpaid Phone ARPU
Branded postpaid service revenues $ 4,302 $ 4,509 $
4,647 $ 4,680 $ 4,725 Less: Branded postpaid mobile broadband
revenues (182 ) (193 ) (193 ) (205 ) (225 ) Branded postpaid phone
service revenues $ 4,120 $ 4,316 $ 4,454 $
4,475 $ 4,500 Divided by: Average number of branded
postpaid phone customers (in thousands) and number of months in
period 29,720 30,537 30,836 30,842 31,564 Branded postpaid phone
ARPU $ 46.21 $ 47.11 $ 48.15 $ 48.37 $
47.53
Calculation of Branded Postpaid ABPU
Branded postpaid service revenues $ 4,302 $ 4,509 $ 4,647 $ 4,680 $
4,725 EIP billings 1,324 1,344 1,394 1,370 1,402 Lease revenues 342
367 353 354 324 Total billings
for branded postpaid customers $ 5,968 $ 6,220 $
6,394 $ 6,404 $ 6,451 Divided by: Average
number of branded postpaid customers (in thousands) and number of
months in period 32,140 33,125 33,632 33,839 34,740 Branded
postpaid ABPU $ 61.90 $ 62.59 $ 63.38 $ 63.08
$ 61.89
Calculation of Branded Prepaid
ARPU Branded prepaid service revenues $ 2,025 $ 2,119 $ 2,182 $
2,227 $ 2,299 Divided by: Average number of branded prepaid
customers (in thousands) and number of months in period 17,962
18,662 19,134 19,431 19,889
Branded prepaid ARPU $ 37.58 $ 37.86 $ 38.01 $
38.20 $ 38.53
Average Revenue Per User (ARPU) - Average monthly service
revenues earned from customers. Service revenues for the specified
period divided by the average customers during the period, further
divided by the number of months in the period.
Branded postpaid phone ARPU excludes mobile broadband customers
and related revenues.
Average Billings per User (ABPU) - Average monthly branded
postpaid service revenues earned from customers plus monthly EIP
billings and lease revenues divided by the average branded postpaid
customers during the period, further divided by the number of
months in the period. T-Mobile believes branded postpaid ABPU is
indicative of estimated cash collections, including device
financing payments, from T-Mobile's postpaid customers each
month.
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Relations Contact:Nils Paellmann877-281-TMUS or
212-358-3210investor.relations@t-mobile.comhttp://investor.t-mobile.com
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