The Un-carrier surpasses $40B in total
revenues and $30B in service revenues, reports 5.7M net customer
additions in FY 17
T-Mobile US, Inc. (NASDAQ: TMUS):
Record Financial Performance in FY 2017
Across the Board (all percentages year-over-year):
- Service revenues up 7.1% to $7.8
billion in Q4 2017 - up 8.3% to $30.2 billion in 2017
- Total revenues up 5.1% to $10.8 billion
in Q4 2017 - up 8.3% to $40.6 billion in 2017
- Net income of $2.7 billion and $4.5
billion in Q4 2017 and 2017, respectively
- Diluted earnings per share ("EPS") of
$3.11 and $5.20 in Q4 2017 and 2017, respectively
- The impact from the Tax Cuts and Jobs
Act ("TCJA") on Net income and EPS was a benefit of $2.2 billion
and $2.50 in Q4 2017 and $2.2 billion and $2.49 in 2017,
respectively
- Adjusted EBITDA(1) of $2.7 billion and
$11.2 billion in Q4 2017 and 2017, respectively
- Net cash from operating activities up
28.5% to $2.1 billion in Q4 2017 - up 29.8% to $8.0 billion in
2017
- Free Cash Flow(1) up 53.0% to $1.1
billion in Q4 2017 - up 90.2% to $2.7 billion in 2017
Customer Growth Again Leads the
Industry:
- 1.9 million total net additions in Q4
2017 - 5.7 million in 2017
- 1.1 million total branded postpaid net
additions in Q4 2017 - 3.6 million in 2017
- 891,000 branded postpaid phone net
additions in Q4 2017 - 2.8 million in 2017
- 149,000 branded prepaid net additions
in Q4 2017 - 855,000 in 2017
- 1.18% postpaid phone churn in Q4 2017,
down 10 bps year-over-year - 1.18% in 2017, down 12 bps from
2016
Strong Network and Distribution
Expansion:
- T-Mobile covered 322 million people
with 4G LTE at the end of 2017 - targeting 325 million people
across 2.5 million square miles by the end of 2018
- 16 quarters in a row with the fastest
network; first U.S. carrier to exceed 30 Mbps average download
speed
- Aggressive deployment activity of 600
MHz in 2017, accelerated pace anticipated for 2018
- 2,800 new stores opened in 2017,
including nearly 1,500 new T-Mobile and over 1,300 net new
MetroPCS
Outlook for 2018:
- Branded postpaid net customer additions
of 2.0 to 3.0 million
- Net income is not available on a
forward looking basis(2)
- Adjusted EBITDA target of $11.3 to
$11.7 billion which includes leasing revenues of $0.6 to $0.7
billion(1)
- Cash purchases of property and
equipment, excluding capitalized interest, of $4.9 to $5.3 billion.
This includes expenditures for 5G deployment
- Increasing three-year compound annual
growth rates (CAGRs) for Net cash provided by operating activities
and Free Cash Flow from FY 2016 to FY 2019 to 16% - 18% and 46% -
48%, respectively(1)
(1) 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 financial items based on GAAP as of December
31, 2017 are provided in the financial tables on pages 9 - 12. (2)
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 and interest expense. Adjusted EBITDA should
not be used to predict net income as the difference between the two
measures is variable.
T-Mobile US, Inc. (NASDAQ: TMUS) reported record revenues and
net income in Q4 and its best ever Q4 Adjusted EBITDA. This has
resulted in record full-year 2017 results across the board and
shows that the Un-carrier continues to outperform the industry in
both customer and financial growth metrics.
It’s been five years since T-Mobile launched Un-carrier by
declaring war on the wireless industry status quo in an effort to
change industry practices on behalf of consumers. The industry was
stupid, broken, arrogant and treated customers like second class
citizens. Five years later, it’s clear that the Un-carrier movement
has ushered in an era of change. Customers have responded in
droves. Over the past five years, T-Mobile’s reported customer base
has increased by more than 39 million in total - more than doubling
in size.
This trend continued in 2017. For the fourth year in a row,
T-Mobile added more than 5 million total customers and captured a
majority of the industry’s postpaid phone growth by adding 2.8
million branded postpaid phone customers in 2017. On top of that,
T-Mobile is the only company in wireless consistently growing
service revenues and reported the best financial results in the
company's history for 2017. In 2017, T-Mobile completed its fourth
year of growing service revenues, recording 8% growth in 2017 as
the competition continued to show declines. The Un-carrier
revolution shows no signs of slowing down.
"Wow - what a way to cap off 2017! Record financial results
across the board and over 5 million customers added for the fourth
year in a row," said John Legere, President and CEO of T-Mobile.
"We made incredible progress in 2017 building out our network and
retail footprint to set ourselves up for future growth. Our
business is clearly firing on all cylinders and our strong guidance
for 2018 shows that we have no plans of letting up!"
Record Financial Performance in FY 2017
Across the Board
T-Mobile’s record full-year financial performance in 2017 proves
that taking care of customers is also good for shareholders. The
Company continues to successfully translate customer growth into
industry-leading revenue and cash flow growth. The outlook for 2018
and beyond reveals a continuation of this winning formula.
(in millions, except EPS) Quarter
Year Ended December 31,
Q4 2017 vs.
Q3 2017
Q4 2017 vs.
Q4 2016
2017 vs.2016
Q4 2017 Q3 2017 Q4 2016
2017 2016 Total service revenues $ 7,757 $
7,629 $ 7,245 $ 30,160 $ 27,844 1.7 % 7.1 % 8.3 % Total revenues
(1) 10,759 10,019 10,234 40,604 37,490 7.4 % 5.1 % 8.3 % Net income
2,707 550 390 4,536 1,460 392.2 % 594.1 % 210.7 % EPS 3.11 0.63
0.45 5.20 1.69 393.7 % 591.1 % 207.7 % Adjusted EBITDA (1) 2,711
2,822 2,607 11,213 10,639 (3.9 )% 4.0 % 5.4 %
Cash purchases of property and
equipment,including capitalized interest
921 1,441 859 5,237 4,702 (36.1 )% 7.2 % 11.4 % Net cash provided
by operating activities 2,058 2,362 1,602 7,962 6,135 (12.9 )% 28.5
% 29.8 % Free Cash Flow 1,137 921 743 2,725 1,433 23.5 % 53.0 %
90.2 % (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.
- Total service revenues increased
7.1% year-over-year to $7.8 billion in Q4 2017 and 8.3% to $30.2
billion in full-year 2017. These results represent our best
quarterly and full-year performance ever, and mark the 15th
consecutive quarter and fourth consecutive year of leading the
industry in service revenue percentage growth.
- Total revenues increased 5.1%
year-over-year to $10.8 billion in Q4 2017 and 8.3% to $40.6
billion in full-year 2017. These record quarterly and full-year
results were achieved despite a lower contribution from equipment
sales in Q4 2017 compared to Q4 2016, driven by a lower branded
postpaid handset upgrade rate and an increase in the impact from
handset promotions.
- Branded postpaid phone Average
Revenue per User (ARPU) was $46.38 in Q4 2017 ($46.54 excluding
the impact from hurricanes), down 1.2% from Q3 2017 and down 4.1%
from Q4 2016 primarily due to dilution from promotions targeting
families and new segments and the impact of hurricanes. For 2018,
we expect ARPU to continue to be generally stable based on GAAP as
of December 31, 2017.
- Branded prepaid ARPU was $38.63
in Q4 2017, up 1.1% from Q4 2016, primarily due to continued growth
of MetroPCS customers who generate higher ARPU, partially offset by
the negative impact from hurricanes. For full-year 2017, prepaid
ARPU increased by 2.0% from 2016.
- Net income increased
year-over-year to $2.7 billion in Q4 2017 and to $4.5 billion in
full-year 2017, due to a combination of factors including: the
impact of the TCJA which resulted in a one-time net tax benefit of
$2.2 billion recognized in Q4 2017, after-tax spectrum gains of
$124 million in Q4 2017 and $174 million in full-year 2017, net
hurricane losses in Q4 2017 of $40 million and $130 million in
full-year 2017. We expect additional hurricane related expenses to
be incurred and customer activity to be impacted in Q1 2018,
primarily related to our operations in Puerto Rico.
- EPS increased by $2.66
year-over-year to $3.11 in Q4 2017. For the full-year 2017, EPS
increased by $3.51 to $5.20. EPS excluding the impacts of the TCJA
and other net tax benefits, spectrum gains and hurricane impacts
was $0.48 in Q4 2017 and $2.29 in full-year 2017, respectively. The
impact from the TCJA on Net income and EPS was $2.2 billion and
$2.50 in Q4 2017 and $2.2 billion and $2.49 in 2017,
respectively.
- Adjusted EBITDA increased
year-over-year to $2.7 billion in Q4 2017 and to $11.2 billion in
full-year 2017. Adjusted EBITDA excluding the spectrum gains and
hurricanes was $2.6 billion in Q4 2017 and $11.2 billion in
full-year 2017. Spectrum gains were $168 million in Q4 2017 and
$235 million in full-year 2017. The net impact from hurricanes was
$53 million in Q4 2017 and $201 million in full-year 2017.The
improvement in full-year 2017 Adjusted EBITDA reflects strong cost
performance, most notably in cost of services, which declined 80
basis points as a percentage of service revenues (excluding the net
impact of hurricanes) and SG&A, which declined 40 basis points
as a percentage of service revenues (excluding the net impact of
hurricanes) in full-year 2017.
- Cash purchases of property and
equipment increased by 7.2% year-over-year to $921 million in
Q4 2017 and included capitalized interest of $25 million. For the
full-year, cash purchases of property and equipment increased by
11.4% to $5.2 billion and included capitalized interest of $136
million. These increases were primarily due to growth in network
build as we continue deployment of 700 MHz and begin to deploy 600
MHz.
- Net cash provided by operating
activities increased 28.5% year-over-year to $2.1 billion in Q4
2017 and 29.8% to $8.0 billion in full-year 2017.
- Free Cash Flow increased
53.0% year-over-year to $1.1 billion in Q4 2017 and 90.2% to $2.7
billion in full-year 2017.
Customer Growth Again Leads the
Industry
T-Mobile delivers superior value over the competition, and
customers continue to respond by switching to the Un-carrier.
Customers are loving Un-carrier benefits such as Netflix On Us and
simple rate plans like T-Mobile ONE with taxes and fees included.
In 2017, more than 5 million customers joined T-Mobile for the 4th
year in a row - all thanks to consumer-friendly offers and an
Un-carrier philosophy that puts customers first.
Quarter
Year EndedDecember 31,
(in thousands, except churn) Q4 2017 Q3
2017 Q4 2016 2017 2016 Total
net customer additions 1,854 1,329 2,101 5,658 8,173 Branded
postpaid net customer additions 1,072 817 1,197 3,620 4,097 Branded
postpaid phone net customer additions (1) 891 595 933 2,817 3,307
Branded postpaid other customers (1) 181 222 264 803 790 Branded
prepaid net customer additions 149 226 541 855 2,508 Total
customers, end of period (2) 72,585 70,731 71,455 72,585 71,455
Branded postpaid phone churn 1.18 % 1.23 % 1.28 % 1.18 % 1.30 %
(1) During the third quarter of 2017, we retitled our
“Branded postpaid mobile broadband customers” category to “Branded
postpaid other customers” and reclassified 253,000 DIGITS customer
net additions from our “Branded postpaid phone customers” category
for the second quarter of 2017, when the DIGITS product was
released. (2) We believe current and future regulatory changes have
made the Lifeline program offered by our wholesale partners
uneconomical. We will continue to support our wholesale partners
offering the Lifeline program, but have excluded the Lifeline
customers from our reported wholesale subscriber base resulting in
the removal of 160,000 and 4,368,000 reported wholesale customers
as of the beginning of the third quarter of 2017 and the second
quarter of 2017, respectively.
- Total net customer additions
were 1.9 million in Q4 2017, bringing our total customer count to
72.6 million. Q4 2017 marked the 19th straight quarter in which
T-Mobile generated more than 1 million total net customer
additions. For full-year 2017, total net customer additions were
5.7 million, marking the fourth year in a row of more than 5
million total net additions.
- Branded postpaid net customer
additions were 1.1 million in Q4 2017 and 3.6 million for the
full-year 2017.
- Branded postpaid phone net customer
additions were 891,000 in Q4 2017 and marked the 16th
consecutive quarter in which T-Mobile has led the industry in this
category. Branded postpaid phone net customer additions were 2.8
million in full-year 2017 driven by the continued strong customer
response to our Un-carrier initiatives and promotional activities,
the growing success of T-Mobile for Business, continued growth in
existing markets and distribution expansion to new Greenfield
markets, and lower churn, partially offset by increased competitive
activity in the marketplace with all competitors having launched
Unlimited rate plans in Q1 2017.
- Branded postpaid phone churn was
a Q4 record at 1.18% in Q4 2017, down 10 basis points from Q4 2016.
For the full-year 2017, branded postpaid phone churn was 1.18%,
down 12 basis points from 2016. These improvements were primarily
due to increased customer satisfaction and loyalty from ongoing
improvements to network quality, customer service and overall value
of our offerings in the marketplace. Additionally, for the
full-year 2017, churn benefited from the impact of the MVNO
Transaction as the customers transferred had a higher rate of
churn.
- Branded prepaid net customer
additions were 149,000 in Q4 2017 and 855,000 in full-year
2017, down due to higher deactivations from a growing customer
base, increased competitive activity in the marketplace and the
de-emphasis of the legacy T-Mobile prepaid brand.
- Branded prepaid churn was 4.00%
in Q4 2017, down 25 basis points compared to Q3 2017 driven by the
overall value of our offerings in the marketplace. For full-year
2017, branded prepaid churn was 4.04%, up 16 basis points compared
to full-year 2016 primarily due to increased competitive activity
in the marketplace, partially offset by increased customer
satisfaction and loyalty from ongoing improvements to network
quality, customer service and overall value of our offerings in the
marketplace.
Strong Network and Distribution
Expansion
T-Mobile’s network continues to be faster and more
technologically advanced than our competition, and that trend will
only continue as we clear and deploy new spectrum, densify our
network, and lay the groundwork for 5G. We have been the fastest
network in America in both download and upload speeds for the past
16 quarters and this quarter, we were the first U.S. carrier to
exceed 30 Mbps average download speed with 31.6 Mbps. We will build
on our speed advantage, while extending our coverage even further
through the accelerated 600 MHz buildout.
T-Mobile's network is not only earning accolades from customers
but also from OpenSignal, the global standard for measuring
consumers' real-world mobile network experiences. In the most
recent report, OpenSignal named T-Mobile as the winner in five
categories, including mobile data speed and LTE signal
availability.
We continue to make investments to expand and improve our
network and distribution footprint including:
- Expanding our 4G LTE coverage breadth
to 322 million people by the end of 2017. By the end of 2018, we
are targeting a population coverage of 325 million and a geographic
coverage of 2.5 million square miles.
- Deploying 600 MHz spectrum. By year-end
2017, we had already lit up 600 MHz spectrum in 586 cities and
towns in 28 states across the country, covering 300,000 square
miles. Two 600 MHz compatible devices were available for the 2017
holiday season, and we expect more than a dozen compatible
smartphones to be rolled out in 2018.
- Using our 600 MHz spectrum holdings to
deploy America’s first nationwide 5G network expected by 2020.
Tax Cuts Jobs Act
("TCJA")
We expect that the TCJA will be very beneficial for us, both
through lower tax rates, as well as the immediate expensing of
capital expenditures for five years. Our effective tax rate is
estimated to be 24% to 25% for 2018. As a result of the TCJA, we do
not expect to be a material cash tax payer until 2024, compared to
2020 previously. We expect a positive impact on net cash taxes paid
of $6.5 to $7.0 billion from 2020 to 2027. Additionally, we do not
anticipate any permanent interest expense disallowance in the
future.
Stock Repurchase Program
On December 6, 2017, we announced that our Board of Directors
authorized a stock repurchase program for up to $1.5 billion of our
common stock through December 31, 2018 (the “Stock Repurchase
Program”). The Stock Repurchase Program does not obligate us to
acquire any particular amount of common stock, and the Stock
Repurchase Program may be suspended or discontinued at any time at
our discretion. Repurchased shares are retired. During Q4 2017, we
repurchased approximately 7.0 million shares of our common stock
under the Stock Repurchase Program at an average price per share of
$63.34 for a total purchase price of approximately $444
million.
From the inception of our Stock Repurchase Program through
February 5, 2018, we repurchased approximately 12.3 million shares
at an average price per share of $63.68 for a total purchase price
of approximately $783 million.
We also understand that Deutsche Telekom AG, our majority
stockholder, or its affiliates, is considering plans to purchase
additional shares of our common stock. Such purchases would likely
take place through December 31, 2018, all in accordance with the
rules of the Securities and Exchange Commission and other
applicable legal requirements.
2018 Outlook
In 2018, we expect postpaid net customer additions between 2.0
and 3.0 million.
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 and interest expense. Adjusted EBITDA should
not be used to predict net income as the difference between the two
measures is variable. Guidance is stated in terms of GAAP as of
December 31, 2017, and does not include impacts from the adoption
of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)"
and ASU 2016-15, "Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments."
Adjusted EBITDA is expected to be between $11.3 and $11.7
billion. Our Adjusted EBITDA target includes leasing revenues of
$0.6 - $0.7 billion. Including the estimated impact of the new
revenue standard, Adjusted EBITDA will increase by an additional
$0.2 - $0.5 billion for a total range of $11.5 - $12.2 billion.
Cash purchases of property and equipment, excluding capitalized
interest, are expected to be between $4.9 and $5.3 billion. This
includes expenditures for 5G deployment.
The three-year CAGR guidance (2016 - 2019) for net cash provided
by operating activities is expected to be 16% - 18%, up from the
previous guidance of 15% - 18%. The three year CAGR guidance for
Free Cash Flow is expected to be 46% - 48%, up from the previous
guidance of 45% - 48%. These increases are after considering the
impacts of the approved up to $1.5 billion stock repurchase
program.
Under existing revenue accounting standards, T-Mobile continues
to expect that branded postpaid phone ARPU in full-year 2018 will
be generally stable compared to full-year 2017, with some quarterly
variations. The adoption of the new revenue accounting standard
will impact the timing, amount and allocation of our revenue and is
expected to impact ARPU.
In 2018, we expect the following impacts from the adoption of
the new revenue accounting standard:
- Service revenues $(0.2) - $(0.1)
billion
- Total revenues $0.3 - $0.5 billion
- Operating expenses $(0.1) - $0.1
billion
- Net income $0.2 - $0.4 billion
- Adjusted EBITDA $0.2 - $0.5
billion
- We expect postpaid phone ARPU to be
negatively impacted from changes in revenue allocation under the
new accounting standard.
The adoption of the new cash flow accounting standard will
result in a reclassification of cash flows related to our deferred
purchase price from securitization transactions from operating
activities to investing activities. In addition, cash flows related
to debt prepayment and extinguishment costs will be reclassified
from operating activities to financing activities. In Q1 2018, we
plan to redefine Free Cash Flow to reflect the above changes in
classification and present cash flows on a consistent basis for
investor transparency.
We will provide additional disclosures comparing results to
previous GAAP in our 2018 consolidated financial statements. Please
see our Annual Report on Form 10-K filed on February 8, 2018
for more information.
________________________________________________________________
Financial Results
For more details on T-Mobile’s Q4 and full year 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.
Q4 2017 and Full Year 2017 Earnings
Call, Livestream and Webcast Access Information
Access via Phone (audio only):
Date: February 8, 2018 Time: 8:00 a.m. (EST) Call-in
Numbers: 786-460-7205 International: 866-575-6534 Participant
Passcode: 3857723
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 3857723.
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, industry consolidation, and
changes in the market for wireless services could negatively affect
our ability to attract and retain customers; the effects of any
future merger, investment, or acquisition involving us, as well as
the effects of mergers, investments, or acquisitions in the
technology, media and telecommunications industry; challenges in
implementing our business strategies or funding our 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 and the effects of such changes, including product
substitutions and deployment costs and performance; 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; unfavorable outcomes of 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 or to comply with the covenants contained therein; 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; the possibility that the reset process under our
trademark license with Deutsche Telekom AG results in changes to
the royalty rates for our trademarks; and other risks described in
our filings with the SEC. 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.
T-Mobile US, Inc.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 - Summary
of Significant Accounting Policies of the Notes to the Consolidated
Financial Statements included in Part II, Item 8 of our Annual
Report on Form 10-K filed on or about February 8, 2018.
(in millions, except for margin %'s and Net Debt Ratios)
Quarter
Year EndedDecember 31,
Q1 2016 Q2 2016 Q3 2016
Q4 2016 Q1 2017 Q2 2017
Q3 2017 Q4 2017 2016 2017
EIP imputed discount $ 65 $ 65 $ 59 $ 59 $ 62 $ 68 $ 74 $ 76 $ 248
$ 280 Other revenue - as adjusted $ 235 $ 211 $ 224 $ 249 $
241 $ 262 $ 272 $ 294 $ 919 $ 1,069 Other revenues - unadjusted 170
146 165 190 179 194 198 218 671 789 Total revenues - as
adjusted $ 8,664 $ 9,287 $ 9,305 $ 10,234 $ 9,613 $ 10,213 $ 10,019
$ 10,759 $ 37,490 $ 40,604 Total revenues - unadjusted 8,599 9,222
9,246 10,175 9,551 10,145 9,945 10,683 37,242 40,324
Operating income - as adjusted $ 1,168 $ 833 $ 1,048 $ 1,001 $
1,037 $ 1,416 $ 1,323 $ 1,112 $ 4,050 $ 4,888 Operating income -
unadjusted 1,103 768 989 942 975 1,348 1,249 1,036 3,802 4,608
Interest income - as adjusted $ 3 $ 3 $ 3 $ 4 $ 7 $ 6 $ 2 $
2 $ 13 $ 17 Interest income - unadjusted 68 68 62 63 69 74 76 78
261 297 Total other expense, net - as adjusted $ (417 ) $
(461 ) $ (450 ) $ (395 ) $ (430 ) $ (482 ) $ (417 ) $ (398 ) $
(1,723 ) $ (1,727 ) Total other expense, net - unadjusted (352 )
(396 ) (391 ) (336 ) (368 ) (414 ) (343 ) (322 ) (1,475 ) (1,447 )
Net income - as adjusted $ 479 $ 225 $ 366 $ 390 $ 698 $ 581
$ 550 $ 2,707 $ 1,460 $ 4,536 Net income - unadjusted 479 225 366
390 698 581 550 2,707 1,460 4,536 Adjusted EBITDA - as
adjusted $ 2,814 $ 2,529 $ 2,689 $ 2,607 $ 2,668 $ 3,012 $ 2,822 $
2,711 $ 10,639 $ 11,213 Adjusted EBITDA - unadjusted 2,749 2,464
2,630 2,548 2,606 2,944 2,748 2,635 10,391 10,933 Net income
margin - as adjusted 7 % 3 % 5 % 5 % 10 % 8 % 7 % 35 % 5 % 15 % Net
income margin - unadjusted 7 % 3 % 5 % 5 % 10 % 8 % 7 % 35 % 5 % 15
% Adjusted EBITDA margin - as adjusted 43 % 37 % 38 % 36 %
36 % 40 % 37 % 35 % 38 % 37 % Adjusted EBITDA margin - unadjusted
42 % 36 % 37 % 35 % 36 % 40 % 36 % 34 % 37 % 36 % Last
twelve months Net income - as adjusted $ 1,275 $ 1,139 $ 1,367 $
1,460 $ 1,679 $ 2,035 $ 2,219 $ 4,536 N/A N/A Last twelve months
Net income - unadjusted 1,275 1,139 1,367 1,460 1,679 2,035 2,219
4,536 N/A N/A Last twelve months Adjusted EBITDA - as
adjusted (1) $ 9,124 $ 9,723 $ 10,396 $ 10,639 $ 10,493 $ 10,976 $
11,109 $ 11,213 N/A N/A Last twelve months Adjusted EBITDA -
unadjusted (1) 8,754 9,401 10,123 10,391 10,248 10,728 10,846
10,933 N/A N/A Net Debt (excluding Tower Obligations) to
Last Twelve Months Net income - as adjusted 15.6 19.2 16.4 15.3
13.5 13.9 12.4 6.0 N/A N/A Net Debt (excluding Tower Obligations)
to Last Twelve Months Net income - unadjusted 15.6 19.2 16.4 15.3
13.5 13.9 12.4 6.0 N/A N/A Net Debt (excluding Tower
Obligations) to LTM Adjusted EBITDA Ratio - as adjusted 2.2 2.3 2.2
2.1 2.2 2.6 2.5 2.4 N/A N/A Net Debt (excluding Tower Obligations)
to LTM Adjusted EBITDA Ratio - unadjusted 2.3 2.3 2.2 2.1 2.2 2.6
2.5 2.4 N/A N/A (1) For purposes of Last twelve months
Adjusted EBITDA, prior quarterly adjustments were as follows:
Quarter (in millions) Q2 2015
Q3 2015 Q4 2015 EIP imputed discount $ 113 $
108 $ 84 Net income - as adjusted $ 361 $ 138 $ 297 Net
income - unadjusted 361 138 297 Adjusted EBITDA - as
adjusted $ 1,930 $ 2,016 $ 2,364 Adjusted EBITDA - unadjusted 1,817
1,908 2,280
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 and interest expense. Adjusted
EBITDA should not be used to predict net income as the difference
between the two measures is variable. We made an accounting change
in 2017 to include imputed interest associated with EIP receivables
in Other revenues which are included in Adjusted EBITDA.
Adjusted EBITDA is reconciled to net income as follows:
Quarter
Year EndedDecember 31,
(in millions) Q2 2015 Q3 2015
Q4 2015 Q1 2016 Q2 2016
Q3 2016 Q4 2016 Q1 2017
Q2 2017 Q3 2017 Q4 2017
2016 2017 Net income $ 361 $ 138 $ 297 $ 479 $
225 $ 366 $ 390 $ 698 $ 581 $ 550 $ 2,707 $ 1,460 $ 4,536
Adjustments: Interest expense 257 262 305 339 368 376 335 339 265
253 254 1,418 1,111 Interest expense to affiliates 92 121 134 79 93
76 64 100 131 167 162 312 560 Interest income (1) (1 ) (1 ) (1 ) (3
) (3 ) (3 ) (4 ) (7 ) (6 ) (2 ) (2 ) (13 ) (17 ) Other (income)
expense, net (1 ) 1 3 2 3 1 — (2 ) 92 (1 ) (16 ) 6 73 Income tax
expense (benefit) 2 100 184 272 147
232 216 (91 ) 353 356 (1,993 )
867 (1,375 ) Operating income (1) 710 621 922 1,168 833
1,048 1,001 1,037 1,416 1,323 1,112 4,050 4,888 Depreciation and
Amortization 1,075 1,157 1,369 1,552 1,575 1,568 1,548 1,564 1,519
1,416 1,485 6,243 5,984 Cost of MetroPCS business combination (2)
34 193 21 36 59 15 (6 ) — — — — 104 — Stock-based compensation (3)
71 43 52 53 61 57 64 67 72 83 85 235 307 Other, net (4) 40 2
— 5 1 1 — — 5
— 29 7 34 Adjusted EBITDA (1) $
1,930 $ 2,016 $ 2,364 $ 2,814 $ 2,529
$ 2,689 $ 2,607 $ 2,668 $ 3,012
$ 2,822 $ 2,711 $ 10,639 $ 11,213
(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. (4) Other, net may not agree to the
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 income
and 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 U.S. Generally
Accepted Accounting Principles ("GAAP"). In Q1 2017, we made an
accounting change to include imputed interest associated with EIP
receivables in Other revenues which are included in Adjusted
EBITDA.
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 Net
income and Adjusted EBITDA ratios are calculated as follows:
(in millions, except net debt ratio)
Mar 31,2016
Jun 30, 2016 Sep 30, 2016
Dec 31,2016 Mar 31, 2017
Jun 30, 2017 Sep 30,2017
Dec 31,2017 Short-term debt $ 365 $ 258 $ 325
$ 354 $ 7,542 $ 522 $ 558 $ 1,612 Short-term debt to affiliates — —
— — — 680 — — Long-term debt 20,505 21,574 21,825 21,832 13,105
13,206 13,163 12,121 Long-term debt to affiliates 5,600 5,600 5,600
5,600 9,600 14,086 14,586 14,586 Less: Cash and cash equivalents
(3,647 ) (5,538 ) (5,352 ) (5,500 ) (7,501 ) (181 ) (739 ) (1,219 )
Less: Short-term investments (2,925 ) — — — —
— — — Net debt (excluding Tower
Obligations) $ 19,898 $ 21,894 $ 22,398 $
22,286 $ 22,746 $ 28,313 $ 27,568 $
27,100 Divided by: Last twelve months Net income $ 1,275
$ 1,139 $ 1,367 $ 1,460 $ 1,679
$ 2,035 $ 2,219 $ 4,536 Net Debt (excluding
Tower Obligations) to last twelve months Net income 15.6
19.2 16.4 15.3 13.5 13.9 12.4
6.0 Divided by: Last twelve months Adjusted EBITDA
(1) $ 9,124 $ 9,723 $ 10,396 $ 10,639 $
10,493 $ 10,976 $ 11,109 $ 11,213 Net
Debt (excluding Tower Obligations) to last twelve months Adjusted
EBITDA Ratio (1) 2.2 2.3 2.2 2.1 2.2
2.6 2.5 2.4 (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. Net debt - Short-term debt, short-term debt to
affiliates, long-term debt (excluding tower obligations), and
long-term debt to affiliates, less cash and cash equivalents and
short-term investments.
Free Cash Flow is calculated as follows:
Quarter
Year EndedDecember 31,
(in millions) Q1 2016 Q2 2016
Q3 2016 Q4 2016 Q1 2017
Q2 2017 Q3 2017 Q4 2017
2016 2017 Net cash provided by operating
activities $ 1,025 $ 1,768 $ 1,740 $ 1,602 $ 1,713 $ 1,829 $ 2,362
$ 2,058 $ 6,135 $ 7,962 Cash purchases of property and equipment
(1,335 ) (1,349 ) (1,159 ) (859 ) (1,528 ) (1,347 ) (1,441 )
(921 ) (4,702 ) (5,237 ) Free Cash Flow $ (310 ) $ 419
$ 581 $ 743 $ 185 $ 482 $ 921
$ 1,137 $ 1,433 $ 2,725 Net cash used
in investing activities $ (1,860 ) $ (667 ) $ (1,859 ) $
(1,294 ) $ (1,550 ) $ (7,133 ) $ (1,455 ) $ (926 ) $ (5,680 ) $
(11,064 ) Net cash (used in) provided by financing activities $
(100 ) $ 790 $ (67 ) $ (160 ) $ 1,838 $ (2,016
) $ (349 ) $ (652 ) $ 463 $ (1,179 ) Free Cash Flow - Net
cash provided by operating activities less cash purchases of
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(1) three-year CAGR is calculated as follows:
FY FY (in millions,
except CAGR Range) 2016 2019 Guidance Range
(2) CAGR Range Net cash provided by operating
activities $ 6,135 $ 9,600 $ 10,000 16 % 18 % Cash
purchases of property and equipment (4,702 ) (5,100 ) (5,400 ) 3 %
5 % Free Cash Flow $ 1,433 $ 4,500 $ 4,600 46
% 48 % (1) In Q1 2018, we plan to redefine Free Cash Flow to
reflect the change in classification of cash flows resulting from
the adoption of ASU 2016-15. (2) The low-end of our 2019 guidance
range previously was: Net cash provided by operating activities of
$9,400 million less Cash purchases of property and equipment of
$5,000 million resulting in Free Cash Flow of $4,400 million.
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:
(in millions, except average number of customers, ARPU and
ABPU) Quarter
Year EndedDecember 31,
Q1 2016 Q2 2016 Q3 2016
Q4 2016 Q1 2017 Q2 2017
Q3 2017 Q4 2017 2016 2017
Calculation of Branded Postpaid Phone ARPU Branded postpaid
service revenues $ 4,302 $ 4,509 $ 4,647 $ 4,680 $ 4,725 $ 4,820 $
4,920 $ 4,983 $ 18,138 $ 19,448 Less: Branded postpaid other
revenues (182 ) (193 ) (193 ) (205 ) (225 ) (255 ) (294 ) (303 )
(773 ) (1,077 ) Branded postpaid phone service revenues $ 4,120
$ 4,316 $ 4,454 $ 4,475 $ 4,500
$ 4,565 $ 4,626 $ 4,680 $ 17,365 $
18,371 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 32,329 32,852 33,640 30,484 32,596
Branded postpaid phone ARPU (1) $ 46.21 $ 47.11 $
48.15 $ 48.37 $ 47.53 $ 47.07 $ 46.93
$ 46.38 $ 47.47 $ 46.97
Calculation of Branded Postpaid ABPU Branded postpaid
service revenues $ 4,302 $ 4,509 $ 4,647 $ 4,680 $ 4,725 $ 4,820 $
4,920 $ 4,983 $ 18,138 $ 19,448 EIP billings 1,324 1,344 1,394
1,370 1,402 1,402 1,481 1,581 5,432 5,866 Lease revenues 342
367 353 354 324 234 159
160 1,416 877 Total billings for branded
postpaid customers $ 5,968 $ 6,220 $ 6,394 $
6,404 $ 6,451 $ 6,456 $ 6,560 $ 6,724
$ 24,986 $ 26,191 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 35,636 36,505 37,436
33,184 36,079 Branded postpaid ABPU $ 61.90 $ 62.59 $
63.38 $ 63.08 $ 61.89 $ 60.40 $ 59.89
$ 59.88 $ 62.75 $ 60.49
Calculation of Branded Prepaid ARPU Branded prepaid service
revenues $ 2,025 $ 2,119 $ 2,182 $ 2,227 $ 2,299 $ 2,334 $ 2,376 $
2,371 $ 8,553 $ 9,380 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
20,131 20,336 20,461 18,797 20,204
Branded prepaid ARPU $ 37.58 $ 37.86 $ 38.01
$ 38.20 $ 38.53 $ 38.65 $ 38.93
$ 38.63 $ 37.92 $ 38.69 (1) Branded
postpaid phone ARPU includes the reclassification of 43,000 DIGITS
average customers and related revenue to the "Branded postpaid
other customers" category for the second quarter of 2017.
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 and DIGITS
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180208005447/en/
Press Contact:T-Mobile US, Inc.Media
Relationsmediarelations@t-mobile.comhttp://newsroom.t-mobile.comorInvestor
Relations Contact:T-Mobile US, Inc.Nils Paellmann, 877-281-TMUS
or
212-358-3210investor.relations@t-mobile.comhttp://investor.t-mobile.com
T Mobile US (NASDAQ:TMUS)
Historical Stock Chart
From Aug 2024 to Sep 2024
T Mobile US (NASDAQ:TMUS)
Historical Stock Chart
From Sep 2023 to Sep 2024