T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Customer
Growth
- Total net additions of 1.4 million, best in industry
- Postpaid net additions of 1.2 million, best in industry and
raising 2021 guidance
- Postpaid phone net additions of 773 thousand, best in
industry
Strong Financial Results Drive Guidance
Raise
- Total revenues of $19.8 billion and service revenues of $14.2
billion
- Net income of $933 million, diluted earnings per share (“EPS”)
of $0.74 and Adjusted EBITDA(1) of $6.9 billion
- Core Adjusted EBITDA(1) of $5.9 billion, raising 2021
guidance
- Net cash provided by operating activities of $3.7 billion and
Free Cash Flow(1) of $1.3 billion, raising 2021 guidance
Raising 2021 Merger Synergies Guidance
on Continued Integration Progress
- Expect Merger synergies of $2.8 billion to $3.1 billion
- Approximately 50 percent of Sprint customer traffic is now
carried on the T-Mobile network, 2x more than last quarter
- Approximately 20 percent of Sprint customers have been moved to
the T-Mobile network
America’s Largest, Fastest and Most
Reliable 5G Network Extends its Lead
- Extended Range 5G covers 295 million people across 1.6 million
square miles, 4x more than Verizon and 2x more than AT&T
- Ultra Capacity 5G covers 140 million people and on track to
cover 200 million people nationwide by the end of 2021
- Majority of independent third-party network benchmarking
reports show T-Mobile as the clear leader in 5G speed and
availability
- Network perception catching up to reality with a nearly 120
percent increase in consumers who view T-Mobile as “The 5G Company”
since Q3 2019
T-Mobile US, Inc. (NASDAQ: TMUS) reported first quarter 2021
results today, highlighted by industry-leading total net additions,
postpaid net additions, and postpaid phone net additions. The
company also reported strong financial results and raised 2021
guidance as its synergy-backed model simultaneously delivers
customer growth and profitability.
“T-Mobile puts customers at the center of everything we do by
giving them the best network, value and experience all at once –
and this quarter’s stellar, industry-leading results prove that
they’re noticing,” said Mike Sievert, CEO of T-Mobile. “We just
keep pushing further ahead of the competition. Our network
leadership is fueling customer momentum, delivering merger
synergies and expanding our addressable markets for growth. We have
so much confidence that we are raising 2021 guidance just one
quarter into the year. Our mission is to be the very best at
connecting customers to their world and we’re delivering on
it.”
(1)
Adjusted EBITDA, Core Adjusted EBITDA and
Free Cash Flow 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 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. Adjusted
EBITDA and Core Adjusted EBITDA should not be used to predict Net
income as the difference between either of the two measures and Net
Income is variable.
Industry-Leading Customer
Growth
- Net customer additions of 1.4 million in Q1 2021 were
the best in the industry and the total customer count increased to
a record-high of 103.4 million.
- Postpaid net customer additions of 1.2 million in Q1
2021 were the best in the industry and eclipsed the 1 million mark
for the 4th consecutive quarter.
- Postpaid phone net customer additions of 773 thousand in
Q1 2021 were the best in the industry and postpaid phone churn was
0.98%.
- Postpaid other net customer additions of 437 thousand in
Q1 2021 were industry-leading for the 4th consecutive quarter.
- Prepaid net customer additions of 151 thousand in Q1
2021 were the highest in three years and record-low prepaid churn
of 2.78% continued to lead the industry.
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
(in thousands, except churn)
Q1 2021
Q4 2020
Q1 2020
Net customer additions
1,361
1,702
649
Postpaid net customer additions
1,210
1,618
777
Postpaid phone net customer additions
773
824
452
Postpaid other net customer additions
437
794
325
Prepaid net customer additions
(losses)
151
84
(128)
Total customers, end of period
103,437
102,064
68,543
Postpaid phone churn
0.98
%
1.03
%
0.86
%
Prepaid churn
2.78
%
2.92
%
3.52
%
Strong Financial Results
- Total revenues increased year-over-year to $19.8 billion
and total service revenues increased year-over-year to $14.2
billion in Q1 2021, driven by the Sprint Merger and continued
customer growth.
- Net income was relatively flat year-over-year at $933
million in Q1 2021, as higher revenues were offset by expense
increases as a result of the Sprint Merger, including
Merger-related costs. Diluted earnings per share (EPS)
decreased year-over-year to $0.74 in Q1 2021, primarily due to a
higher number of outstanding shares as a result of the Sprint
Merger.
- Adjusted EBITDA increased year-over-year to $6.9 billion
and Core Adjusted EBITDA increased to $5.9 billion in Q1
2021, 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 $3.7 billion in Q1 2021. Free Cash Flow
increased year-over-year to $1.3 billion in Q1 2021, as an increase
in net cash provided by operating activities was partially offset
by higher cash purchases of property and equipment.
- Cash purchases of property and equipment including
capitalized interest increased year-over-year to $3.2 billion in Q1
2021, 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
Q1 2021
Q4 2020
Q1 2020
Total service revenues
$
14,192
$
14,180
$
8,846
Total revenues
19,759
20,341
11,113
Net income
933
750
951
EPS
0.74
0.60
1.10
Adjusted EBITDA
6,905
6,746
3,665
Core Adjusted EBITDA
5,864
5,501
3,500
Net cash provided by operating
activities
3,661
3,474
1,617
Cash purchases of property and equipment,
including capitalized interest
3,183
3,807
1,753
Free Cash Flow
1,304
476
732
Raising 2021 Merger Synergies Guidance
on Continued Integration Progress
T-Mobile made meaningful progress on integration activities,
ending the quarter with approximately 20 percent of Sprint
customers moved to the T-Mobile network and approximately 50
percent of Sprint customer traffic now carried on the T-Mobile
network, twice as much as last quarter. The company also began
mapping Sprint customers to T-Mobile rate plans, bringing customers
one step closer to the full Un-carrier experience and setting up a
streamlined billing system transition in the future.
Based on the continued strength of its execution, the company
expects Merger synergies to be $2.8 billion to $3.1 billion in
2021, more than doubling the $1.3 billion delivered in 2020 and an
increase from its prior guidance of $2.7 billion to 3.0
billion.
- Approximately $1.35 billion to $1.5 billion of sales, general,
and administrative (SG&A) synergies achieved through SG&A
expense reductions
- Approximately $450 million to $600 million of network synergies
achieved through cost of service expense reductions
- Approximately $1 billion of network synergies related to
avoided costs from new site builds
As announced at its recent Analyst Day, T-Mobile expects the
total net present value of Merger synergies to be more than $70
billion – up more than 60 percent from the original Merger guidance
of $43 billion – as the company is unlocking synergies bigger and
faster than expected and achieving a lower weighted average cost of
capital. The company expects total run rate cost synergies to reach
approximately $7.5 billion per year – up 25 percent from the
original Merger guidance of $6 billion – largely driven by greater
efficiencies in site costs and marketing expenses, along with
additional information technology savings.
America’s Largest, Fastest and Most
Reliable 5G Network Extends its Lead
After blanketing the country in 5G, T-Mobile continues to layer
on the capacity and speed as Ultra Capacity 5G lights up in more
places across the country. T-Mobile’s Extended Range 5G covers 295
million people across 1.6 million square miles, 4x more than
Verizon and 2x more than AT&T. And the Un-carrier’s super-fast
Ultra Capacity 5G already covers 140 million people with plans to
extend this deployment nationwide, covering 200 million people by
the end of 2021. Ultra Capacity 5G can deliver game-changing
performance with broad coverage and fast speeds.
The majority of independent third-party network benchmarking
reports are now showing there’s one clear leader in 5G speed and
availability — and it’s T-Mobile.
- Recent data from Ookla, a leader in mobile network testing and
data analysis, shows T-Mobile customers get the fastest 5G speeds
and a 5G signal more often than customers on any other
network.
- Recent tests by research firm umlaut rank T-Mobile first in 5G
overall and show T-Mobile customers get the most reliable 5G in the
U.S., the most 5G coverage and the highest 5G speed score. The
Un-carrier is the only wireless provider in the U.S. with all three
5G wins — speed, coverage and reliability.
- Independent data from Opensignal, based on real world customer
usage from millions of device measurements, show T-Mobile customers
get the fastest 5G download speeds, fastest 5G upload speeds, and a
5G signal more often than anyone else. And T-Mobile 5G download
speeds jumped a whopping 23 percent since the beginning of the year
while others stayed virtually unchanged, widening the gap to
competitors as T-Mobile now has nearly 50 percent faster speeds
than Verizon and 30 percent faster speeds than AT&T.
Network perception is also rapidly catching up to the reality
that T-Mobile is the clear 5G leader, as the percentage of
consumers who say T-Mobile is “The 5G Company” has increased nearly
120 percent over the last year and a half. With 5G now being one of
the most important aspects of what customers say they are looking
for in their next wireless provider, this provides additional
tailwinds for T-Mobile to continue its industry-leading growth.
Raising 2021 Outlook
- Postpaid net customer additions are expected to be between 4.4
million and 4.9 million, an increase from prior guidance of 4.0
million to 4.7 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $22.8 billion and $23.2
billion, an increase from prior guidance of $22.6 billion to $23.1
billion.
- Cash purchases of property and equipment, including capitalized
interest are expected to be at the high end of the prior guidance
range of $11.7 billion to $12.0 billion.
- Merger-related costs are expected to be between $2.7 billion
and $3.0 billion before taxes, an increase from prior guidance of
$2.5 billion to $3.0 billion as the company executes faster on
merger integration. These costs are excluded from Core 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 between $13.2 billion
and $13.6 billion, an increase from prior guidance of $13.0 billion
to $13.5 billion.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $5.1 billion and $5.5 billion, an increase
from prior guidance of $4.9 billion to $5.4 billion. Free Cash Flow
guidance does not assume any material net cash inflows from
securitization.
Previous
Current
Change (Mid-point)
Postpaid net customer additions
4.0
4.7
4.4
4.9
0.3
Net income (1)
N/A
N/A
N/A
N/A
N/A
Core Adjusted EBITDA (2)
$
22,600
$
23,100
$
22,800
$
23,200
$
150
Capital expenditures (3)
$
11,700
$
12,000
$
11,700
$
12,000
$
—
Merger-related costs (4)
$
2,500
$
3,000
$
2,700
$
3,000
$
100
Net cash provided by operating
activities
$
13,000
$
13,500
$
13,200
$
13,600
$
150
Free Cash Flow (5)
$
4,900
$
5,400
$
5,100
$
5,500
$
150
(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 should not be used to predict Net income as
the difference between this measure and Net income is variable.
(2)
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 ranges assume a continued
reduction in lease revenues to $3.7 to $3.9 billion for 2021.
(3)
Capital expenditures means cash purchases
of property and equipment, including capitalized interest.
(4)
Merger-related costs are excluded from
Core 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.
Financial Results
For more details on T-Mobile’s Q1 2021 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
- Tuesday, May 4, 2021 at 4:30 p.m. (EDT)
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: 6013858
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 6013858.
Submit Questions via Twitter
Send a tweet to @TMobileIR or @MikeSievert using $TMUS
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: natural disasters, public
health crises, including the COVID-19 pandemic (the “Pandemic”),
terrorist attacks or similar incidents; adverse economic, political
or market conditions in the U.S. and international markets,
including those caused by the Pandemic; competition, industry
consolidation and changes in the market condition for wireless
services; data loss or other security breaches; the scarcity and
cost of additional wireless spectrum, and regulations relating to
spectrum use; our inability to retain or motivate key personnel,
hire qualified personnel or maintain our corporate culture; our
inability to take advantage of technological developments on a
timely basis; system failures and business disruptions, allowing
for unauthorized use of or interference with our network and other
systems; 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 (as defined below), including the
acquisition by DISH Network Corporation (“DISH”) of the prepaid
wireless business operated under the Boost Mobile and Sprint
prepaid brands (excluding the Assurance brand Lifeline customers
and the prepaid wireless customers of Shenandoah Personal
Communications Company LLC (“Shentel”) and Swiftel Communications,
Inc.), including customer accounts, inventory, contracts,
intellectual property and certain other specified assets (the
“Prepaid Business”), and the assumption of certain related
liabilities (the “Prepaid Transaction”), the complaint and proposed
final judgment (the “Consent Decree”) agreed to by us, Deutsche
Telekom AG (“DT”), Sprint Corporation (“Sprint”), SoftBank Group
Corp. (“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
Federal Communications Commission (“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 (collectively, the
“Government Commitments”), and the challenges in satisfying the
Government Commitments in the required time frames and the
significant cumulative cost incurred in tracking, monitoring and
complying with them; our inability to manage the ongoing commercial
and transition services arrangements that we entered into with DISH
in connection with the Prepaid Transaction, which we completed on
July 1, 2020 (collectively, the “Divestiture Transaction”), and
known or unknown liabilities arising in connection therewith; the
effects of any future acquisition, investment, or merger involving
us; any disruption or failure of our third parties (including key
suppliers) to provide products or services for the operation of our
business; the occurrence of high fraud rates or volumes related to
device financing, customer payment cards, third-party dealers,
employees, subscriptions, identities or account takeover fraud; our
substantial level of indebtedness and our inability to service our
debt obligations in accordance with their terms or to comply with
the restrictive covenants contained therein; adverse changes in the
ratings of our debt securities or adverse conditions in the credit
markets; the risk of future material weaknesses we may identify
while we work to integrate and align policies, principles and
practices of the two companies following the Merger (as defined
below), or any other failure by us to maintain effective internal
controls, and the resulting significant costs and reputational
damage; any changes in regulations or in the regulatory framework
under which we operate; laws and regulations relating to the
handling of privacy and data protection; unfavorable outcomes of
existing or future legal proceedings; our offering of regulated
financial services products and exposure to a wide variety of state
and federal regulations; new or amended tax laws or regulations or
administrative interpretations and judicial decisions affecting the
scope or application of tax laws or regulations; the possibility
that we may be unable to renew our spectrum leases on attractive
terms or the possible revocation of our existing licenses in the
event that we violate applicable laws; interests of our significant
stockholders that may differ from the interests of other
stockholders; future sales of our common stock by DT and SoftBank
and our inability to attract additional equity financing outside
the United States due to foreign ownership limitations by the FCC;
the volatility of our stock price and our lack of plan to pay cash
dividends in the foreseeable future; failure to realize the
expected benefits and synergies of the merger (the “Merger”) with
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 or in the amounts
anticipated; any delay and costs of, or difficulties in,
integrating our business and Sprint’s business and operations, and
unexpected additional operating costs, customer loss and business
disruption, including maintaining relationships with employees,
customers, suppliers or vendors; unanticipated difficulties,
disruption, or significant delays in our long-term strategy to
migrate Sprint’s legacy customers onto T-Mobile’s existing billing
platforms; and changes to existing or the issuance of new
accounting standards by the Financial Accounting Standards Board or
other regulatory agencies. 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. Adjusted
EBITDA and Core 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 and Core Adjusted EBITDA are reconciled to Net
income as follows:
Quarter
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Net income
$
951
$
110
$
1,253
$
750
$
933
Adjustments:
Income from discontinued operations, net
of tax
—
(320
)
—
—
—
Income from continuing operations
951
(210
)
1,253
750
933
Interest expense
185
776
765
757
792
Interest expense to affiliates
99
63
44
41
46
Interest income
(12
)
(6
)
(3
)
(8
)
(3
)
Other expense, net
10
195
99
101
125
Income tax expense
306
2
407
71
246
Operating income
1,539
820
2,565
1,712
2,139
Depreciation and amortization
1,718
4,064
4,150
4,219
4,289
Operating income from discontinued
operations (1)
—
432
—
—
—
Stock-based compensation (2)
123
139
125
129
130
Merger-related costs
143
798
288
686
298
COVID-19-related costs (3)
117
341
—
—
—
Impairment expense
—
418
—
—
—
Other, net (4)
25
5
1
—
49
Adjusted EBITDA
3,665
7,017
7,129
6,746
6,905
Lease revenues
(165
)
(1,421
)
(1,350
)
(1,245
)
(1,041
)
Core Adjusted EBITDA
$
3,500
$
5,596
$
5,779
$
5,501
$
5,864
(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 and Q1 2021.
(4)
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 or are not reflective
of T-Mobile’s ongoing operating performance, and are therefore
excluded in Adjusted EBITDA and Core Adjusted EBITDA.
Adjusted EBITDA - Earnings before Interest expense, net of
Interest income, Income tax expense, Depreciation and amortization
expense, 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,
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
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Net cash provided by operating
activities
$
1,617
$
777
$
2,772
$
3,474
$
3,661
Cash purchases of property and
equipment
(1,753
)
(2,257
)
(3,217
)
(3,807
)
(3,183
)
Proceeds related to beneficial interests
in securitization transactions
868
602
855
809
891
Cash payments for debt prepayment or debt
extinguishment costs
—
(24
)
(58
)
—
(65
)
Free Cash Flow
732
(902
)
352
476
1,304
Gross cash paid for the settlement of
interest rate swaps
—
2,343
—
—
—
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
$
732
$
1,441
$
352
$
476
$
1,304
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
$
13,200
$
13,600
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
$
5,100
$
5,500
(1) Free Cash Flow guidance does not
assume any material net cash inflows from securitization in
2021.
Our previous guidance range for Free Cash Flow was calculated as
follows:
FY 2021
(in millions)
Previous 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
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Calculation of Postpaid ARPA
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
Divided by: Average number of postpaid
accounts (in thousands) and number of months in period
15,155
25,424
25,582
25,677
25,840
Postpaid ARPA
$
129.47
$
130.57
$
133.03
$
133.08
$
132.91
Calculation of Postpaid Phone
ARPU
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
Less: Postpaid other revenues
(310
)
(618
)
(677
)
(762
)
(820
)
Postpaid phone service revenues
5,577
9,341
9,532
9,489
9,483
Divided by: Average number of postpaid
phone customers (in thousands) and number of months in period
40,585
64,889
65,437
66,084
66,834
Postpaid phone ARPU
$
45.80
$
47.99
$
48.55
$
47.86
$
47.30
Calculation of Prepaid ARPU
Prepaid service revenues
$
2,373
$
2,311
$
2,383
$
2,354
$
2,351
Divided by: Average number of prepaid
customers (in thousands) and number of months in period
20,759
20,380
20,632
20,605
20,728
Prepaid ARPU
$
38.11
$
37.80
$
38.49
$
38.08
$
37.81
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
version on businesswire.com: https://www.businesswire.com/news/home/20210504006147/en/
Media Relations: mediarelations@t-mobile.com Investor Relations:
investor.relations@t-mobile.com
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