The Un-carrier Leads the Industry in
Postpaid and Broadband Customer Growth
Fueled by Network and Value
Leadership
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Growth in Postpaid and
Broadband Customers(1)
- Postpaid net account additions of 380 thousand, best in
industry and highest in company history
- Postpaid net customer additions of 1.7 million, more than
AT&T and Verizon combined and highest Q2 ever
- Postpaid phone net customer additions of 723 thousand,
including lower churn than Verizon for first time ever
- High Speed Internet net customer additions of 560 thousand,
best in industry for third consecutive quarter
Strong Financial Results Drive 2022
Guidance Raise Across the Board
- Service revenues of $15.3 billion grew 6% year-over-year,
including industry-leading Postpaid service revenue growth of 9%
and best postpaid phone ARPU growth in more than 5 years
- Net loss of $108 million and diluted (loss) per share (“EPS”)
of $(0.09) decreased year-over-year due to merger-related costs and
other special expense items amounting to $1.9 billion, net of tax,
or $1.52 per share
- Core Adjusted EBITDA(2) of $6.6 billion grew 10%
year-over-year, best growth in industry and raising guidance
- Net cash provided by operating activities of $4.2 billion grew
11% year-over-year, best growth in industry and raising
guidance
- Free Cash Flow(2) of $1.8 billion grew 5% year-over-year, best
growth in industry and raising guidance
- Unprecedented Pace of 5G Network Build
Delivers Differentiated Customer Experience
- Extended Range 5G covers 320 million people, or 97% of
Americans
- Ultra Capacity 5G covers 235 million people and approximately
87% of T-Mobile customers
- 50% of postpaid customers are now using a 5G phone, and 5G
devices account for 55% of all network traffic
Commenced Sprint Network Shutdown and
Will Substantially Complete Decommissioning by End of
Q3
- Raising merger synergies guidance range to $5.4 to $5.6 billion
in 2022
T-Mobile US, Inc. (NASDAQ: TMUS) reported second quarter 2022
results today, leading the industry with record postpaid account
and broadband customer growth driven by its unmatched combination
of value and quality. T-Mobile raises guidance across the board as
its synergy-backed model and differentiated growth strategy
continue to deliver the highest growth in postpaid service revenue
and cash flows in the industry.
“Our relentless focus on putting customers first delivered yet
another outstanding quarter for T-Mobile with industry-leading
postpaid and broadband customer growth, including our highest ever
postpaid account adds in company history,” said Mike Sievert, CEO
of T-Mobile. “This momentum fueled our growth strategy and allowed
us to raise guidance across the board yet again -- further proof
that our commitment to addressing customer pain points in this
challenging macro-economic environment is working.”
___________________________________________________________
(1)
AT&T Inc. historically does
not disclose postpaid net account additions. Industry-leading
claims based on consensus expectations if results not yet
reported.
(2)
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 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.
Industry-Leading Growth in Postpaid and
Broadband Customers
- Postpaid net account additions of 380 thousand increased
32 thousand year-over-year.
- Postpaid net customer additions of 1.7 million increased
380 thousand year-over-year.
- Postpaid phone net customer additions of 723 thousand
increased 96 thousand year-over-year, including higher gross
additions and industry-leading churn improvement. Postpaid phone
churn of 0.80% improved 7 basis points year-over-year and 13 basis
points sequentially.
- Prepaid net customer additions of 146 thousand increased
70 thousand year-over-year. Prepaid churn of 2.58% was the lowest
in company history and improved by 4 basis points
year-over-year.
- High Speed Internet net customer additions of 560
thousand were a record-high, and T-Mobile ended the quarter with
more than 1.5 million High Speed Internet customers.
- Total net customer additions of 1.8 million increased
450 thousand year-over-year and the total customer count increased
to a record-high of 110 million.
Quarter
Six Months Ended June
30,
(in thousands, except churn)
Q2 2022
Q1 2022
Q2 2021
2022
2021
Postpaid net account additions
380
348
348
728
605
Total net customer additions
1,802
1,380
1,352
3,182
2,713
Postpaid net customer additions
1,656
1,318
1,276
2,974
2,486
Postpaid phone net customer additions
723
589
627
1,312
1,400
Postpaid other net customer additions
(1)
933
729
649
1,662
1,086
Prepaid net customer additions (1)
146
62
76
208
227
Total customers, end of period
(1)(2)(3)
110,023
109,541
104,789
110,023
104,789
Postpaid phone churn
0.80
%
0.93
%
0.87
%
0.86
%
0.92
%
Prepaid churn
2.58
%
2.67
%
2.62
%
2.62
%
2.70
%
High Speed Internet net customer
additions
560
338
95
898
188
Total High Speed Internet customers, end
of period
1,544
984
288
1,544
288
(1)
Includes high-speed internet
customers.
(2)
The total base adjustment in the
second quarter of 2022 was a reduction of 1,320,000 total
customers. Customers impacted by the decommissioning of the legacy
Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded
from our customer base resulting in the removal of 212,000 postpaid
phone customers and 349,000 postpaid other customers in the first
quarter of 2022 and 284,000 postpaid phone customers, 946,000
postpaid other customers and 28,000 prepaid customers in the second
quarter of 2022. In connection with our acquisition of companies,
we included a base adjustment in the first quarter of 2022 to
increase postpaid phone customers by 17,000 and reduce postpaid
other customers by 14,000. Certain customers now serviced through
reseller contracts were removed from our reported postpaid customer
base, resulting in the removal of 42,000 postpaid phone customers
and 20,000 postpaid other customers in the second quarter of
2022.
(3)
In the first quarter of 2021,
T-Mobile acquired 11,000 postpaid phone customers and 1,000
postpaid other customers through the acquisition of an
affiliate.
Strong Financial Results
- Total service revenues increased 6% year-over-year to
$15.3 billion, which included Postpaid service revenue growth of 9%
year-over-year driven by continued customer account and ARPA
growth.
- Net loss of $108 million and Diluted EPS of
$(0.09) decreased year-over-year due to the impacts in the current
quarter, net of tax, associated with merger-related costs of $1.3
billion, or $1.00 per share, impairment expense related to wireline
assets of $358 million, or $0.29 per share, and legal-related
expenses including from the impact of the settlement of certain
litigation associated with the August 2021 cyberattack of $300
million, or $0.23 per share.
- Core Adjusted EBITDA increased 10% year-over-year to
$6.6 billion primarily due to Service revenue growth and increased
synergy realization.
- Net cash provided by operating activities increased 11%
year-over-year to $4.2 billion, which included cash payments for
merger-related costs of $907 million.
- Cash purchases of property and equipment, including
capitalized interest increased 9% year-over-year to $3.6
billion driven by the accelerated build-out of the nationwide 5G
network.
- Free Cash Flow increased 5% year-over-year to $1.8
billion, which included cash payments for merger-related costs of
$907 million.
(in millions, except EPS)
Quarter
Six Months Ended June
30,
Q2 2022 vs.
Q1 2022
Q2 2022 vs.
Q2 2021
YTD 2022 vs.
YTD 2021
Q2 2022
Q1 2022
Q2 2021
2022
2021
Total service revenues
$
15,316
$
15,128
$
14,492
$
30,444
$
28,684
1.2
%
5.7
%
6.1
%
Postpaid service revenues
11,445
11,201
10,492
22,646
20,795
2.2
%
9.1
%
8.9
%
Total revenues
19,701
20,120
19,950
39,821
39,709
(2.1
) %
(1.2
) %
0.3
%
Net (loss) income
(108
)
713
978
605
1,911
NM
NM
NM
Diluted EPS
(0.09
)
0.57
0.78
0.48
1.52
NM
NM
NM
Adjusted EBITDA
7,004
6,950
6,906
13,954
13,811
0.8
%
1.4
%
1.0
%
Core Adjusted EBITDA
6,618
6,463
5,992
13,081
11,856
2.4
%
10.4
%
10.3
%
Net cash provided by operating
activities
4,209
3,845
3,779
8,054
7,440
9.5
%
11.4
%
8.3
%
Cash purchases of property and equipment,
including capitalized interest
3,572
3,381
3,270
6,953
6,453
5.6
%
9.2
%
7.7
%
Free Cash Flow
1,758
1,649
1,671
3,407
2,975
6.6
%
5.2
%
14.5
%
NM = Not Meaningful
Un-carrier Tackles More Pain Points
When Customers Need it Most
The Un-carrier announced several moves to help tackle pain
points for mobile and broadband customers that have only been
exacerbated by the current macroeconomic environment:
- Price Lock: While AT&T and Verizon responded to
inflation with recent price hikes, T-Mobile is standing by its
existing commitment to customers who switch to T-Mobile to ensure
rate plan prices aren’t raised even as costs for everything else
increase
- Internet Freedom: T-Mobile launched a customer-first
disruption to broadband for consumers and businesses and expanded
T-Mobile Business Internet nationwide, making it easy for broadband
customers to break up with Big Internet, lock in their price with
massive savings, and finally feel appreciated
- Coverage Beyond: T-Mobile provides coverage and keeps
customers connected across the US, in the air, and with high speed
data in 210+ countries and destinations, plus exclusive travel
benefits and discounts
Unprecedented Pace of 5G Network Build
Delivers Differentiated Customer Experience
T-Mobile is the leader in 5G with the country’s largest,
fastest, most reliable and most awarded 5G network. The
Un-carrier’s Extended Range 5G covers nearly everyone in the
country – 320 million people, delivering more geographic coverage
than Verizon and AT&T combined. 235 million people nationwide
are covered with super-fast Ultra Capacity 5G, and T-Mobile expects
to cover 260 million in 2022 and 300 million next year.
With more than 20 reports from third-party industry experts in
the last two years, T-Mobile continues to live up to its hype as
the most awarded 5G and overall network in the nation:
- Ookla: In its Q2 Speedtest Global Index Market Analysis,
T-Mobile took the top spot for overall speed, lowest latency,
highest consistency and overall video score. The report also ranked
the Un-carrier’s 5G network first for download speed, availability
and consistency
- Opensignal: In its latest USA 5G Experience Report,
T-Mobile received top marks for fastest 5G download speed and 5G
upload speed along with the best 5G availability and 5G reach
nationwide. Opensignal also noted that T-Mobile’s download speed is
not only getting faster but is widening its gap versus the
competition, while customers are seeing over 3x the 5G availability
of Verizon and 2x AT&T
- umlaut: In its latest nationwide study, T-Mobile is
ranked #1 for the most reliable 5G network, most 5G coverage and
highest active 5G download and upload speeds
Raising 2022 Merger Synergies Guidance
on Accelerated Integration Progress
T-Mobile achieved a significant milestone with the commencement
of the Sprint network shutdown. Nearly two thirds of the 35,000
targeted sites have been decommissioned at the end of Q2, and the
company will substantially complete decommissioning by the end of
Q3.
- Based on the continued strength of execution, T-Mobile is
raising its merger synergies guidance range to $5.4 to $5.6 billion
in 2022, up from the previous range of $5.2 to $5.4 billion.
- Approximately $2.3 billion to $2.4 billion of selling, general
and administrative (SG&A) expense reductions
- Approximately $1.8 billion to $1.9 billion of network synergies
achieved through cost of service expense reductions
- Approximately $1.3 billion of network synergies related to
avoided site builds
Raising 2022 Guidance Across the
Board
- Postpaid net customer additions are expected to be between 6.0
million and 6.3 million, an increase from prior guidance of 5.3 to
5.8 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $26.0 billion and $26.3
billion, an increase from prior guidance of $25.8 to $26.2
billion.
- Merger-related costs are expected to be between $4.7 billion
and $5.0 billion before taxes. These costs are excluded from Core
Adjusted EBITDA but will impact Net income, Net cash provided from
operating activities and Free Cash Flow.
- Net cash provided by operating activities, including payments
for Merger-related costs, is expected to be between $16.0 billion
and $16.3 billion, an increase from prior guidance of $15.7 to
$16.1 billion.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $13.5 billion to $13.7
billion, an increase from the prior guidance of $13.2 to $13.5
billion as T-Mobile continues its accelerated build-out of its
nationwide 5G network.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $7.3 billion and $7.6 billion, an increase
from prior guidance of $7.2 to $7.6 billion. Free Cash Flow
guidance does not assume any material net cash inflows from
securitization.
(in millions, except Postpaid net
customer additions)
Previous
Current
Change (Mid-point)
Postpaid net customer additions
(thousands)
5,300
5,800
6,000
6,300
600
Net income (1)
N/A
N/A
N/A
N/A
N/A
Core Adjusted EBITDA (2)
$
25,800
$
26,200
$
26,000
$
26,300
$
150
Merger synergies
5,200
5,400
5,400
5,600
200
Merger-related costs (3)
4,500
5,000
4,700
5,000
100
Net cash provided by operating
activities
15,700
16,100
16,000
16,300
250
Capital expenditures (4)
13,200
13,500
13,500
13,700
250
Free Cash Flow (5)
7,200
7,600
7,300
7,600
50
(1)
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 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 company operations,
excluding the impact of lease revenues from related device
financing programs. Guidance ranges assume lease revenues to be
between $1.2 billion and $1.4 billion for 2022.
(3)
Merger-related costs are excluded from
Core Adjusted EBITDA but will impact Net income, Net cash provided
by operating activities and Free Cash Flow.
(4)
Capital expenditures means cash purchases
of property and equipment, including capitalized interest.
(5)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2022.
Doing Better by Doing Good - the
Un-carrier Way
T-Mobile continues to stay true to its commitment to use its
network, scale and resources for good, building a more connected,
equitable and sustainable future. Most recently:
- Since 2020, T-Mobile has connected over 4.3 million students
across its education initiatives. And as the third year of Project
10Million approaches, the Un-carrier’s $10.7 billion initiative
focused on providing students free internet connectivity is
continuing to look for ways to reach more students
- T-Mobile and Big Brothers Big Sisters of America recently
announced a new partnership that makes access to T-Mobile’s Project
10Million even easier
- T-Mobile continues to lead the US wireless industry in green
power usage and now ranks #3 on the EPA’s Green Power Partnership
National Top 100 list (behind Microsoft and Google and ahead of
AT&T at #8 and Verizon who isn’t on the list)
- T-Mobile was recently named Disability:IN’s Employer of the
Year and was included on the Top Companies Disability Equality
Index for the sixth year in a row
Financial Results
For more details on T-Mobile’s Q2 2022 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
- Wednesday, July 27, 2022 at 8:00 a.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: +1 856-344-9215
- Participant Passcode: 9665247
Access via Webcast
The earnings call will be broadcast live via the 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 9665247.
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 (https://investor.t-mobile.com),
newsroom website (https://t-mobile.com/news), press releases, SEC
filings and public conference calls and webcasts. We also intend to
use certain social media accounts as a 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), the @MikeSievert Twitter
account (https://twitter.com/MikeSievert), which Mr. Sievert also
uses as a means for personal communications and observations, and
the @TMobileCFO Twitter Account (https://twitter.com/tmobilecfo),
and our CFO’s LinkedIn account
(https://www.linkedin.com/in/peter-osvaldik-3887394), both of which
Mr. Osvaldik also uses as a means for personal communication 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 that may cause actual results to differ
materially from the forward-looking statements, including
unexpected delays, difficulties, and expenses in executing against
our environmental, climate, or other “Environmental, Social, and
Governance (ESG)” targets, goals and commitments outlined in this
document, including, but not limited to, our efforts to reduce our
greenhouse gas emissions, as well as changes in laws or regulations
affecting us, such as changes in cybersecurity, data privacy,
environmental, safety and health laws, and other risks as disclosed
in our most recent annual report on Form 10-K, 10-Q and other
filings with the Securities and Exchange Commission (the “SEC”).
Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. T-Mobile
does not undertake, and expressly disclaims any duty, to update any
statements contained herein, whether as a result of new
information, new developments, or otherwise, except to the extent
that disclosure may be required by law. In addition, some of the
statements contained in this document may rely on third-party
information and projections that management believes to be
reputable; however, T-Mobile does not independently verify or audit
this information.
This document contains ESG-related statements based on
hypothetical scenarios and assumptions as well as estimates that
are subject to a high level of uncertainty, and these statements
should not necessarily be viewed as being representative of current
or actual risk or performance, or forecasts of expected risk or
performance. In addition, historical, current, and forward-looking
environmental and social-related statements may be based on
standards for measuring progress that are still developing, and
internal controls and processes that continue to evolve.
Forward-looking and other statements in this document may also
address our corporate responsibility and sustainability progress,
plans, and goals, and the inclusion of such statements is not an
indication that these contents are necessarily material for the
purposes of complying with or reporting pursuant to the U.S.
federal securities laws and regulations, even if we use the word
“material” or “materiality” in this document in relation to those
statements. Website references throughout this document are
provided for convenience only, and the content on the referenced
websites is not incorporated by reference into this document.
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
adverse impact caused by the COVID-19 pandemic; competition,
industry consolidation and changes in the market for wireless
services; disruption, data loss or other security breaches, such as
the criminal cyberattack we became aware of in August 2021; our
inability to take advantage of technological developments on a
timely basis; our inability to retain or motivate key personnel,
hire qualified personnel or maintain our corporate culture; system
failures and business disruptions, allowing for unauthorized use of
or interference with our network and other systems; the scarcity
and cost of additional wireless spectrum, and regulations relating
to spectrum use; 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 (collectively, the “Prepaid Transaction”), the
complaint and proposed final judgment (the “Consent Decree”) agreed
to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known
as Sprint LLC (“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 costs incurred in
tracking and monitoring compliance; adverse economic, political or
market conditions in the U.S. and international markets, including
those caused by the COVID-19 pandemic; our inability to manage the
ongoing commercial and transition services arrangements entered
into in connection with the Prepaid 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; 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; changes
in the credit market conditions, credit rating downgrades or an
inability to access debt markets; restrictive covenants including
the agreements governing our indebtedness and other financings; the
risk of future material weaknesses we may identify while we
continue to work to integrate the two companies following the
Transactions, 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 and increased costs from existing or future
legal proceedings, including these proceedings and inquiries
relating to the criminal cyberattack we became aware of in August
2021; 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; 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; our exclusive
forum provision as provided in our Certificate of Incorporation;
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; failure to realize the expected benefits
and synergies of 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 time
frames 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 disruptions, including challenges in 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 other risks as disclosed
in our most recent annual report on Form 10-K, 10-Q and other
filings with the SEC. 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
and Interest expense. Adjusted EBITDA and Core Adjusted EBITDA
should not be used to predict Net income as the difference between
either of these measures and Net income is variable.
Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net
income (loss) as follows:
Quarter
Six Months Ended June
30,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
2021
2022
Net income (loss)
$
933
$
978
$
691
$
422
$
713
$
(108
)
$
1,911
$
605
Adjustments:
Interest expense, net
835
850
836
821
864
851
1,685
1,715
Other expense, net
125
1
60
13
11
21
126
32
Income tax expense (benefit)
246
277
(3
)
(193
)
218
(55
)
523
163
Operating income
2,139
2,106
1,584
1,063
1,806
709
4,245
2,515
Depreciation and amortization
4,289
4,077
4,145
3,872
3,585
3,491
8,366
7,076
Stock-based compensation (1)
130
129
127
135
136
149
259
285
Merger-related costs
298
611
955
1,243
1,413
1,668
909
3,081
Impairment expense
—
—
—
—
—
477
—
477
Legal-related expenses (2)
—
—
—
—
—
400
—
400
Other, net (3)
49
(17
)
—
(11
)
10
110
32
120
Adjusted EBITDA
6,905
6,906
6,811
6,302
6,950
7,004
13,811
13,954
Lease revenues
(1,041
)
(914
)
(770
)
(623
)
(487
)
(386
)
(1,955
)
(873
)
Core Adjusted EBITDA
$
5,864
$
5,992
$
6,041
$
5,679
$
6,463
$
6,618
$
11,856
$
13,081
(1)
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.
(2)
Legal-related expenses consist of the
settlement of certain litigation associated with the August 2021
cyberattack.
(3)
Other, net, primarily consists of certain
severance, restructuring and other expenses and income not directly
attributable to the Merger, which would not be expected to reoccur
or are not reflective of T-Mobile’s ongoing operating performance,
and are, therefore, excluded from 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, impairment expense and certain legal-related
expenses, as they are not indicative of T-Mobile’s ongoing
operating performance, as well as certain 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 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 is calculated as follows:
Quarter
Six Months Ended June
30,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
2021
2022
Net cash provided by operating
activities
$
3,661
$
3,779
$
3,477
$
3,000
$
3,845
$
4,209
$
7,440
$
8,054
Cash purchases of property and
equipment
(3,183
)
(3,270
)
(2,944
)
(2,929
)
(3,381
)
(3,572
)
(6,453
)
(6,953
)
Proceeds from sales of tower sites
—
31
—
9
—
—
31
—
Proceeds related to beneficial interests
in securitization transactions
891
1,137
1,071
1,032
1,185
1,121
2,028
2,306
Cash payments for debt prepayment or debt
extinguishment costs
(65
)
(6
)
(45
)
—
—
—
(71
)
—
Free Cash Flow
$
1,304
$
1,671
$
1,559
$
1,112
$
1,649
$
1,758
$
2,975
$
3,407
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 or debt extinguishment costs. 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.
The current guidance range for Free Cash Flow is calculated as
follows:
FY 2022
(in millions)
Guidance Range
Net cash provided by operating
activities
$
16,000
$
16,300
Cash purchases of property and
equipment
(13,500
)
(13,700
)
Proceeds related to beneficial interests
in securitization transactions (1)
4,800
5,000
Free Cash Flow
$
7,300
$
7,600
(1)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2022.
The previous guidance range for Free Cash Flow was calculated as
follows:
FY 2022
(in millions)
Guidance Range
Net cash provided by operating
activities
$
15,700
$
16,100
Cash purchases of property and
equipment
(13,200
)
(13,500
)
Proceeds related to beneficial interests
in securitization transactions (1)
4,700
5,000
Free Cash Flow
$
7,200
$
7,600
(1)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2022.
T-Mobile US, Inc.
Operating Measures
(Unaudited)
The following table sets forth company
operating measures ARPA and ARPU:
(in dollars)
Quarter
Six Months Ended June
30,
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
2021
2022
Postpaid ARPA
$
132.91
$
133.55
$
134.54
$
135.04
$
136.53
$
137.92
$
133.23
$
137.23
Postpaid phone ARPU
47.30
47.61
48.06
48.03
48.41
48.96
47.45
48.69
Prepaid ARPU
37.81
38.53
39.49
39.32
39.19
38.71
38.17
38.95
Postpaid Average Revenue Per Account (Postpaid 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
revenue 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/20220726006152/en/
- Media Relations: mediarelations@t-mobile.com
- Investor Relations: investor.relations@t-mobile.com
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