Industry-Leading Customer
Growth
- Total net additions of 1.7 million in Q4 2020, best in industry
— 5.6 million in full-year 2020, best in industry and highest in
four years
- Postpaid net additions of 1.6 million in Q4 2020, best in
industry — 5.5 million in full-year 2020, best in industry and most
in company history
- Postpaid phone net additions of 824 thousand in Q4 2020, best
in industry — 2.2 million in full-year 2020, best in industry
Strong Financial Results
- Total revenues of $20.3 billion in Q4 2020 — $68.4 billion in
full-year 2020
- Net income of $750 million in Q4 2020 — $3.1 billion in
full-year 2020
- Adjusted EBITDA(1) of $6.7 billion in Q4 2020 — $24.6 billion
in full-year 2020
- Net cash provided by operating activities of $3.5 billion in Q4
2020 — $8.6 billion in full-year 2020
- Free Cash Flow, excluding gross payments for the settlement of
interest rate swaps(1) of $476 million in Q4 2020 — $3.0 billion in
full-year 2020
Merger Synergies and Customer
Migrations Ahead of Schedule
- Delivered $1.3 billion of synergies in full-year 2020,
exceeding guidance
- 25 percent of Sprint postpaid customer traffic has already been
moved over to the T-Mobile network and more than 4 million customer
network migrations have been completed
Largest 5G Network in America is Now
the Fastest Too
- Extended Range 5G covers 280 million people across 1.6 million
square miles, nearly 4x more than Verizon and nearly 2.5x more than
AT&T
- Ultra Capacity 5G covers 106 million people, over 50x more than
Verizon's 5G Ultra Wideband, and expect to cover 200 million people
nationwide by the end of 2021
- Fastest 5G speeds based on recent data from Opensignal and
umlaut (formerly P3)
Strong 2021 Outlook and Analyst Day
Coming After Auction 107
- Expect growth in postpaid customers, Core Adjusted EBITDA(1),
net cash provided by operating activities, and Free Cash Flow(1) in
2021
- Updated merger synergies, medium and long-term guidance, and a
strategic overview of the business to be provided at Analyst Day
following the expected end of the FCC quiet period for Auction
107
T-Mobile US, Inc. (NASDAQ: TMUS) reported fourth quarter and
full-year 2020 results today, highlighted by industry-leading total
net additions, postpaid net additions and postpaid phone net
additions for both the fourth quarter and full-year 2020. The
company also reported strong financial results that met or exceeded
all guidance as it leverages a synergy-backed model to
simultaneously deliver customer growth and profitability.
“These results show that we’re pulling way ahead of the pack on
what matters - overall 5G network performance - and executing to
stay ahead,” said Mike Sievert, CEO of T-Mobile. “And customers are
noticing. 2020 was quite simply our best year yet, with our highest
EVER total postpaid net additions of 5.5 million. Our team
delivered – leading the industry on customer growth, while being
the ONLY major player to grow profitability as well, with our
synergy-backed business model. The best team, the best assets, the
best 5G network. We’re positioned to create enormous value. I like
the hand we’re holding!”
(1)
Adjusted EBITDA, Core Adjusted EBITDA and
Free Cash Flow, excluding gross payments for the settlement of
interest rate swaps, are non-GAAP financial measures. These
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 these non-GAAP financial measures to
the most directly comparable GAAP financial measures, to the extent
applicable, are provided in the Reconciliation of Non-GAAP
Financial Measures to GAAP Financial Measures tables. We are 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 Net income including, but not
limited to, Income tax expense, stock-based compensation expense
and Interest expense. Core Adjusted EBITDA should not be used to
predict Net income as the difference between the two measures is
variable.
Industry-Leading Customer
Growth
- Net customer additions were 1.7 million in Q4 2020, the
24th consecutive quarter of industry-leading performance in this
category. Net customer additions were 5.6 million in full-year
2020, the best in the industry and highest in four years. The total
customer count increased to a record-high of 102.1 million.
- Postpaid net customer additions were 1.6 million in Q4
2020, the 12th consecutive quarter of industry-leading performance
in this category. Postpaid net customer additions were 5.5 million
in full-year 2020, the best in the industry and the most in company
history.
- Postpaid phone net customer additions were 824 thousand
in Q4 2020, best in the industry and the 28th consecutive quarter
of leading the national carriers, and 2.2 million in full-year
2020. Postpaid phone churn was 1.03% in Q4 2020 and 0.90% in
full-year 2020.
- Postpaid other net customer additionswere 794 thousand
in Q4 2020, leading the industry for the 3rd consecutive quarter.
Postpaid other net customer additions were 3.3 million in full-year
2020, best in the industry and the most in company history.
- Prepaid net customer additions were 84 thousand in Q4
2020, leading the national carriers, and 145 thousand in full-year
2020. Prepaid churn was 2.92% in Q4 2020 and 3.03% in full-year
2020.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results have not been restated and reflect standalone
T-Mobile.
Quarter
Year Ended December
31,
(in thousands, except churn)
Q4 2020
Q3 2020
Q4 2019
2020
2019
Net customer additions
1,702
2,035
1,391
5,631
4,854
Postpaid net customer additions
1,618
1,979
1,314
5,486
4,515
Postpaid phone net customer additions
824
689
1,001
2,218
3,121
Postpaid other customer additions
794
1,290
313
3,268
1,394
Prepaid net customer additions
84
56
77
145
339
Total customers, end of period
102,064
100,362
67,894
102,064
67,894
Postpaid phone churn
1.03
%
0.90
%
1.01
%
0.90
%
0.89
%
Prepaid churn
2.92
%
2.86
%
3.97
%
3.03
%
3.82
%
Strong Financial Results
- Total revenues increased year-over-year to $20.3 billion
in Q4 2020 and $68.4 billion in full-year 2020, and total service
revenues increased year-over-year to $14.2 billion in Q4 2020 and
$50.4 billion in full-year 2020, driven by the Sprint merger and
continued customer growth.
- Net income was essentially flat year-over-year at $750
million in Q4 2020 and decreased year-over-year to $3.1 billion in
full-year 2020, as expense increases as a result of the Sprint
merger, including merger-related costs, were partially offset by
higher revenues. Merger-related costs were $686 million before
taxes in Q4 2020 and $1.9 billion before taxes in full-year 2020.
Diluted earnings per share (EPS) decreased year-over-year to $0.60
in Q4 2020 and $2.65 in full-year 2020 due to lower net income and
a higher number of outstanding shares as a result of the Sprint
merger.
- Adjusted EBITDA increased year-over-year to $6.7 billion
in Q4 2020 and $24.6 billion in full-year 2020, primarily due to
the Sprint merger, including the related synergy capture, and
continued customer growth.
- Net cash provided by operating activities increased
year-over-year to $3.5 billion in Q4 2020 and $8.6 billion in
full-year 2020. Free Cash Flow, excluding gross payments for the
settlement of interest rate swaps, decreased year-over-year to $476
million in Q4 2020 and $3.0 billion in full-year 2020, as higher
cash purchases of property and equipment were partially offset by
increased net cash provided by operating activities.
- Cash purchases of property and equipment including
capitalized interest increased year-over-year to $3.8 billion in Q4
2020 and $11.0 billion in full-year 2020, primarily due to the
continued 5G network build-out and network integration activities
related to the Sprint merger.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results have not been restated and reflect standalone
T-Mobile.
(in millions, except EPS)
Quarter
Year Ended December
31,
Q4 2020
Q3 2020
Q4 2019
2020
2019
Total service revenues
$
14,180
$
14,139
$
8,850
$
50,395
$
34,500
Total revenues
20,341
19,272
11,878
68,397
44,998
Net income
750
1,253
751
3,064
3,468
EPS
0.60
1.00
0.87
2.65
4.02
Adjusted EBITDA
6,746
7,129
3,242
24,557
13,383
Net cash provided by operating
activities
3,474
2,772
1,537
8,640
6,824
Cash purchases of property and equipment,
including capitalized interest
3,807
3,217
1,157
11,034
6,391
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
476
352
1,398
3,001
4,319
Merger Synergies and Customer
Migrations Ahead of Schedule T-Mobile remains highly
confident in its ability to deliver the Sprint merger synergies and
achieve the annualized savings from a combination of expense
reductions and cost avoidance. The company delivered $1.3 billion
of synergies in full-year 2020, exceeding its guidance from last
quarter:
- Approximately $700 million of network synergies with about two
thirds coming from avoided new site builds and the remainder from
early site decommissioning.
- More than $600 million of sales, marketing, and administrative
synergies primarily from accelerated rationalization of retail
stores, marketing consolidation and organizational redesign.
The network team is quickly adding 5G and LTE capacity to the
T-Mobile network. Customer network migrations began in the fourth
quarter and more than 4 million have been completed, moving the
company one step closer to full decommissioning and shut down of
the Sprint network. Additionally, 25 percent of Sprint postpaid
customer traffic has already been moved to the T-Mobile network,
inclusive of customer network migrations and Sprint customers with
compatible devices that can roam on the T-Mobile network.
Largest 5G Network in America is Now
the Fastest Too T-Mobile is America’s network leader,
delivering the fastest 5G speeds in more places. With the first and
largest nationwide 5G network, T-Mobile’s Extended Range 5G covers
280 million people across 1.6 million square miles – offering
nearly 4x more geographic coverage than Verizon and nearly 2.5x
more than AT&T.
With Sprint now part of T-Mobile, the Un-carrier is widening its
lead, using dedicated spectrum to bring customers download speeds
of around 300 Mbps and peak speeds up to 1 Gbps on compatible 5G
devices. T-Mobile is upgrading cell sites with high-performance
Ultra Capacity 5G to cover not just parts of some cities, but
entire metropolitan areas. The Un-carrier's Ultra Capacity 5G
already reaches 2,400 cities and towns and covers 106 million
people, over 50x more than Verizon covers with Ultra Wideband, and
is expected to reach 200 million people nationwide by the end of
2021.
New independent data from Opensignal, based on customer usage
from billions of device measurements, shows T-Mobile customers now
get the fastest 5G download speeds, fastest 5G upload speeds, and a
5G signal more often than anyone else. Additionally, extensive
mobile testing from research firm umlaut (formerly P3) across
multiple major markets including Chicago, Houston, New York City
and Washington DC also shows T-Mobile leading in 5G speeds.
Strong 2021 Outlook and Analyst Day
Coming After Auction 107
- Postpaid net customer additions are expected to be between 4.0
million and 4.7 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be in the range of $22.6 billion to $23.1
billion, with Adjusted EBITDA of $26.5 billion to $27.0 billion and
lease revenues of $3.8 billion to $4.0 billion.
- Cash purchases of property and equipment, including capitalized
interest are expected to be between $11.7 billion and $12.0
billion.
- Merger-related costs are expected to be $2.5 billion to $3.0
billion before taxes. These costs are excluded from Core Adjusted
EBITDA and Adjusted EBITDA but will impact Net income and cash
flows.
- Net cash provided by operating activities, including payments
for Merger-related costs, is expected to be in the range of $13.0
billion to $13.5 billion.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be in the range of $4.9 billion to $5.4 billion. Free
Cash Flow guidance does not assume any material net cash inflows
from securitization.
FY 2021 Guidance
Postpaid net customer additions
4.0
4.7
Net income (1)
N/A
N/A
Core Adjusted EBITDA (2)
$
22,600
$
23,100
Adjusted EBITDA
$
26,500
$
27,000
Lease revenues
$
3,800
$
4,000
Capital expenditures (3)
$
11,700
$
12,000
Merger-related costs (4)
$
2,500
$
3,000
Net cash provided by operating
activities
$
13,000
$
13,500
Free Cash Flow (5)
$
4,900
$
5,400
(1)
We are 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.
Core Adjusted EBITDA and Adjusted EBITDA should not be used to
predict Net income as the difference between these measures and Net
income is variable.
(2)
We will provide guidance for Core Adjusted
EBITDA beginning with fiscal year 2021. Management uses Core
Adjusted EBITDA as a measure to monitor the financial performance
of our operations, excluding the impact of lease revenues from our
related device financing programs. Our guidance range is calculated
using the midpoint of the guidance range for lease revenues of $3.9
billion.
(3)
Capital expenditures means cash purchases
of property and equipment, including capitalized interest.
(4)
Merger-related costs are excluded from
Core Adjusted EBITDA and Adjusted EBITDA but will impact Net income
and cash flows.
(5)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2021.
T-Mobile continues to plan on hosting a live webcast of its
Analyst Day presentation following the expected end of the FCC
quiet period for Auction 107. The presentation will include updated
merger synergies, medium and long-term guidance, a strategic
overview of the business and other updates from members of
T-Mobile’s senior leadership team. More details related to the
exact date and accessing the event will be shared at a later
time.
Financial Results For more
details on T-Mobile’s Q4 2020 financial results, including the
Investor Factbook with detailed financial tables, please visit
T-Mobile US, Inc.’s Investor Relations website at http://investor.t-mobile.com.
Earnings Call Information
Date/Time
- Thursday, February 4, 2021 at 4:30 p.m. (ET)
Access via Phone (audio only) Please plan on accessing
the call 10 minutes prior to the scheduled start time.
- US/Canada: 866-575-6534
- International: +1 786-460-7205
- Participant Passcode: 1183288
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 +1-719-457-0820 (international). The
passcode required to listen to the replay is 1183288.
Submit Questions via Twitter Send a tweet to @TMobileIR
or @MikeSievert using $TMUS
Contact Information
- Media Relations: mediarelations@t-mobile.com
- Investor Relations: investor.relations@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 certain social
media accounts as means of disclosing information about us and our
services and for complying with our disclosure obligations under
Regulation FD (the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the
@MikeSievert Twitter (https://twitter.com/MikeSievert) account, which
Mr. Sievert also uses as a means for personal communications and
observations). 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.
T-Mobile US, Inc. (NASDAQ: TMUS) is America’s supercharged
Un-carrier, delivering an advanced 4G LTE and transformative
nationwide 5G network that will offer reliable connectivity for
all. T-Mobile’s customers benefit from its unmatched combination of
value and quality, unwavering obsession with offering them the best
possible service experience and undisputable drive for disruption
that creates competition and innovation in wireless and beyond.
Based in Bellevue, Wash., T-Mobile provides services through its
subsidiaries and operates its flagship brands, T-Mobile and Metro
by T-Mobile. For more information please visit: http://www.t-mobile.com.
Forward-Looking Statements
This communication includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact, including
information concerning T-Mobile US, Inc.’s future results of
operations, are forward-looking statements. These forward-looking
statements are generally identified by the words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “could” or
similar expressions. Forward-looking statements are based on
current expectations and assumptions, which are subject to risks
and uncertainties and may cause actual results to differ materially
from the forward-looking statements. 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: the failure to realize the expected
benefits and synergies of the merger with Sprint Corporation
(“Sprint”), pursuant to the Business Combination Agreement with
Sprint and the other parties named therein (as amended, the
“Business Combination Agreement”), and the other transactions
contemplated by the Business Combination Agreement (collectively,
the “Transactions”) in the expected timeframes, in part or at all;
adverse economic, political or market conditions in the U.S. and
international markets, including those caused by the coronavirus
disease 2019 (“COVID-19”) pandemic, and the impact that any of the
foregoing may have on us and our customers and other stakeholders;
costs of or difficulties in integrating Sprint’s network and
operations into our network and operations, including intellectual
property and communications systems, administrative and information
technology infrastructure and accounting, financial reporting and
internal control systems; changes in key customers, suppliers,
employees or other business relationships as a result of the
consummation of the Transactions; the risk that our business,
investor confidence in our financial results and stock price may be
adversely affected if our internal controls are not effective; the
risk of future material weaknesses resulting from the differences
between T-Mobile’s and Sprint’s internal controls environments as
we work to integrate and align policies and practices; the impacts
of the actions we have taken and conditions we have agreed to in
connection with the regulatory proceedings and approvals of the
Transactions including the acquisition of Sprint’s prepaid wireless
business by DISH Network Corporation (“DISH”) (excluding the
Assurance brand Lifeline customers and the prepaid wireless
customers of Shenandoah Telecommunications Company and Swiftel
Communications, Inc.), including customer accounts, inventory,
contracts, intellectual property and certain other specified assets
(the “Prepaid Transaction”), the complaint and proposed final
judgment agreed to by us, DT, Sprint, SoftBank and DISH with the
U.S. District Court for the District of Columbia, which was
approved by the Court on April 1, 2020, the proposed commitments
filed with the Secretary of the FCC, which we announced on May 20,
2019, certain national security commitments and undertakings, and
any other commitments or undertakings entered into, including but
not limited to those we have made to certain states and
nongovernmental organizations; the ongoing commercial and
transition services arrangements that we entered into with DISH in
connection with such Prepaid Transaction, which we completed on
July 1, 2020; the assumption of significant liabilities, including
the liabilities of Sprint in connection with, and significant
costs, including financing costs, related to the Transactions; our
ability to make payments on debt or to repay existing or future
indebtedness when due or to comply with the covenants contained
therein; adverse changes in the ratings of our debt securities or
adverse conditions in the credit markets; natural disasters, public
health crises, including the COVID-19 pandemic, terrorist attacks
or similar incidents; competition, industry consolidation and
changes in the market for wireless services, which 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; breaches of our
and/or our third-party vendors' networks, information technology
and data security, resulting in unauthorized access to customer
confidential information; the inability to implement and maintain
effective cybersecurity measures over critical business systems;
challenges in implementing our business strategies or funding our
operations, including payment for additional spectrum or network
upgrades; the impact on our networks and business from major system
and network failures; 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 occurrence of high fraud
rates related to device financing, customer credit cards, dealers,
subscriptions or account take over fraud; our inability to retain
and hire key personnel; any changes in the regulatory environments
in which we operate, including any increase in restrictions on the
ability to operate our networks and changes in data privacy laws;
unfavorable outcomes of existing or future litigation or regulatory
actions, including litigation or regulatory actions related to the
Transactions; the possibility that we may be unable to adequately
protect our intellectual property rights or be accused of
infringing the intellectual property rights of others; changes in
tax laws, regulations and existing standards and the resolution of
disputes with any taxing jurisdictions; the possibility that we may
be unable to renew our spectrum leases on attractive terms or
acquire new spectrum licenses or leases at reasonable costs and
terms; any disruption or failure of third parties (including key
suppliers) to provide 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; changes in accounting
assumptions that regulatory agencies, including the U.S. Securities
and Exchange Commission, may require, which could result in an
impact on earnings; and interests of our significant stockholders
that may differ from the interests of other stockholders. Given
these risks and uncertainties, readers are cautioned not to place
undue reliance on such forward-looking statements. We undertake no
obligation to revise or publicly release the results of any
revision to these forward-looking statements, except as required by
law.
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. Core
Adjusted EBITDA and Adjusted EBITDA should not be used to predict
Net income as the difference between those measures and Net income
is variable.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results have not been restated and reflect standalone
T-Mobile.
Adjusted EBITDA is reconciled to Net income as follows:
Quarter
Year Ended December
31,
(in millions)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
2019
2020
Net income
$
908
$
939
$
870
$
751
$
951
$
110
$
1,253
$
750
$
3,468
$
3,064
Adjustments:
Income from discontinued operations, net
of tax
—
—
—
—
—
(320)
—
—
—
(320)
Income from continuing operations
908
939
870
751
951
(210)
1,253
750
3,468
2,744
Interest expense
179
182
184
182
185
776
765
757
727
2,483
Interest expense to affiliates
109
101
100
98
99
63
44
41
408
247
Interest income
(8)
(4)
(5)
(7)
(12)
(6)
(3)
(8)
(24)
(29)
Other expense, net
(7)
22
(3)
(4)
10
195
99
101
8
405
Income tax expense
295
301
325
214
306
2
407
71
1,135
786
Operating income
1,476
1,541
1,471
1,234
1,539
820
2,565
1,712
5,722
6,636
Depreciation and amortization
1,600
1,585
1,655
1,776
1,718
4,064
4,150
4,219
6,616
14,151
Operating income from discontinued
operations (1)
—
—
—
—
—
432
—
—
—
432
Stock-based compensation (2)
93
111
108
111
123
139
125
129
423
516
Merger-related costs
113
222
159
126
143
798
288
686
620
1,915
COVID-19-related costs (3)
—
—
—
—
117
341
—
—
—
458
Impairment expense
—
—
—
—
—
418
—
—
—
418
Other, net (4)
2
2
3
(5)
25
5
1
—
2
31
Adjusted EBITDA
$
3,284
$
3,461
$
3,396
$
3,242
$
3,665
$
7,017
$
7,129
$
6,746
$
13,383
$
24,557
(1)
Following the Prepaid Transaction,
starting on July 1, 2020, we provide MVNO services to DISH. We have
included the operating income from discontinued operations, for
periods prior to the Prepaid Transaction, in our determination of
Adjusted EBITDA to reflect EBITDA contributions of the Prepaid
Business that has been replaced by the MVNO Agreement beginning on
July 1, 2020 in order to enable management, analysts and investors
to better assess ongoing operating performance and trends.
(2)
Stock-based compensation includes payroll
tax impacts and may not agree to stock-based compensation expense
in the consolidated financial statements. Additionally, certain
stock-based compensation expenses associated with the Sprint merger
have been included in Merger-related costs.
(3)
Supplemental employee payroll, third-party
commissions and cleaning-related COVID-19 costs were not
significant for Q3 and Q4 2020.
(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 or are not reflective
of T-Mobile’s ongoing operating performance, 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, such as
Merger-related costs, COVID-19-related costs and Impairment
expense. Core Adjusted EBITDA represents Adjusted EBITDA less lease
revenues. Core Adjusted EBITDA and Adjusted EBITDA are non-GAAP
financial measures utilized by T-Mobile’s management to monitor the
financial performance of our operations. T-Mobile uses Core
Adjusted EBITDA and Adjusted EBITDA as benchmarks to evaluate
T-Mobile’s operating performance in comparison to its competitors.
T-Mobile also uses Adjusted EBITDA internally as a measure to
evaluate and compensate its personnel and management for their
performance. Management believes analysts and investors use Core
Adjusted EBITDA and Adjusted EBITDA as supplemental measures to
evaluate overall operating performance and facilitate comparisons
with other wireless communications companies because they are
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, Merger-related costs including
network decommissioning costs, incremental costs directly
attributable to COVID-19 and impairment expense, as they are not
indicative of T-Mobile’s ongoing operating performance, as well as
certain other nonrecurring income and expenses. Management believes
analysts and investors use Core Adjusted EBITDA because it
normalizes for the transition in the company’s device financing
strategy, by excluding the impact of lease revenues from Adjusted
EBITDA, to align with the related depreciation expense on leased
devices, which is excluded from the definition of Adjusted EBITDA.
Core Adjusted EBITDA and Adjusted EBITDA have limitations as
analytical tools 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”).
T-Mobile US, Inc. Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures
(continued) (Unaudited)
Free Cash Flow and Free Cash Flow, excluding gross payments for
the settlement of interest rate swaps, are calculated as
follows:
Quarter
Year Ended December
31,
(in millions)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
2019
2020
Net cash provided by operating
activities
$
1,392
$
2,147
$
1,748
$
1,537
$
1,617
$
777
$
2,772
$
3,474
$
6,824
$
8,640
Cash purchases of property and
equipment
(1,931)
(1,789)
(1,514)
(1,157)
(1,753)
(2,257)
(3,217)
(3,807)
(6,391)
(11,034)
Proceeds related to beneficial interests
in securitization transactions
1,157
839
900
980
868
602
855
809
3,876
3,134
Proceeds from sales of tower sites
—
—
—
38
—
—
—
—
38
—
Cash payments for debt prepayment or debt
extinguishment costs
—
(28)
—
—
—
(24)
(58)
—
(28)
(82)
Free Cash Flow
618
1,169
1,134
1,398
732
(902)
352
476
4,319
658
Gross cash paid for the settlement of
interest rate swaps
—
—
—
—
—
2,343
—
—
—
2,343
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
$
618
$
1,169
$
1,134
$
1,398
$
732
$
1,441
$
352
$
476
$
4,319
$
3,001
Free Cash Flow - Net cash provided by operating activities less
Cash purchases of property and equipment, including Proceeds from
sales of tower sites and Proceeds related to beneficial interests
in securitization transactions and less Cash payments for debt
prepayment of debt extinguishment costs. Free Cash Flow and Free
Cash Flow, excluding gross payments for the settlement of interest
rate swaps, are utilized by T-Mobile’s management, investors, and
analysts to evaluate cash available to pay debt and provide further
investment in the business.
Our current guidance range for Free Cash Flow is calculated as
follows:
FY 2021
(in millions)
Current Guidance Range
Net cash provided by operating
activities
$
13,000
$
13,500
Cash purchases of property and
equipment
(11,700)
(12,000)
Proceeds related to beneficial interests
in securitization transactions (1)
3,700
3,900
Cash payments for debt prepayment or debt
extinguishment costs
(100)
—
Free Cash Flow
$
4,900
$
5,400
(1)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2021.
T-Mobile US, Inc. Calculation of
Operating Measures (Unaudited)
The following table illustrates the calculation of our operating
measures ARPA and ARPU from the related service revenues:
(in millions, except average number of
accounts and customers, ARPA and ARPU)
Quarter
Year Ended December
31,
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
2019
2020
Calculation of Postpaid ARPA
Postpaid service revenues
$
5,493
$
5,613
$
5,746
$
5,821
$
5,887
$
9,959
$
10,209
$
10,251
$
22,673
$
36,306
Divided by: Average number of postpaid
accounts (in thousands) and number of months in period
14,108
14,354
14,602
14,881
15,155
25,424
25,582
25,677
14,486
22,959
Postpaid ARPA
$
129.77
$
130.36
$
131.15
$
130.39
$
129.47
$
130.57
$
133.03
$
133.08
$
130.43
$
131.78
Calculation of Postpaid Phone
ARPU
Postpaid service revenues
$
5,493
$
5,613
$
5,746
$
5,821
$
5,887
$
9,959
$
10,209
$
10,251
$
22,673
$
36,306
Less: Postpaid other revenues
(310)
(326)
(346)
(362)
(310)
(618)
(677)
(762)
(1,344)
(2,367)
Postpaid phone service revenues
5,183
5,287
5,400
5,459
5,577
9,341
9,532
9,489
21,329
33,939
Divided by: Average number of postpaid
phone customers (in thousands) and number of months in period
37,504
38,226
38,944
39,736
40,585
64,889
65,437
66,084
38,602
59,249
Postpaid phone ARPU
$
46.07
$
46.10
$
46.22
$
45.79
$
45.80
$
47.99
$
48.55
$
47.86
$
46.04
$
47.74
Calculation of Prepaid ARPU
Prepaid service revenues
$
2,386
$
2,379
$
2,385
$
2,393
$
2,373
$
2,311
$
2,383
$
2,354
$
9,543
$
9,421
Divided by: Average number of prepaid
customers (in thousands) and number of months in period
21,122
21,169
20,837
20,691
20,759
20,380
20,632
20,605
20,955
20,594
Prepaid ARPU
$
37.65
$
37.46
$
38.16
$
38.54
$
38.11
$
37.80
$
38.49
$
38.08
$
37.95
$
38.12
Postpaid Average Revenue Per Account (ARPA) - Average monthly
postpaid service revenue earned per account. Postpaid service
revenues for the specified period divided by the average number of
postpaid accounts during the period, further divided by the number
of months in the period.
Average Revenue Per User (ARPU) - Average monthly Service
revenues earned per customer. Service revenues for the specified
period divided by the average number of customers during the
period, further divided by the number of months in the period.
Postpaid phone ARPU excludes postpaid other customers and
related revenues.
View source
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Investor Relations investor.relations@t-mobile.com
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