The Un-carrier Further Extends its Network
and Value Leadership, Driving Industry-Best Postpaid and Broadband
Customer Growth
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Growth in Postpaid and
Broadband Customers(1)
- Postpaid net account additions of 394 thousand, best in
industry and highest in company history
- Postpaid net customer additions of 1.6 million, more than
AT&T and Verizon combined
- Postpaid phone net customer additions of 854 thousand, best in
industry and highest since merger
- Postpaid phone churn of 0.88%, only operator to improve
year-over-year
- High Speed Internet net customer additions of 578 thousand,
best in industry for fourth consecutive quarter
Strong Financial Results Drive Guidance
Raise for the Third Consecutive Quarter in 2022
- Service revenues of $15.4 billion grew 4% year-over-year,
including industry-leading Postpaid service revenue growth of
7%
- Net income of $508 million and diluted earnings per share
(“EPS”) of $0.40 decreased year-over-year primarily due to
merger-related costs and loss related to the anticipated sale of
the wireline business amounting to a combined impact of $1.8
billion, net of tax, or $1.41 per share
- Core Adjusted EBITDA(2) of $6.7 billion grew 11%
year-over-year, best growth in industry and raising guidance
- Net cash provided by operating activities of $4.4 billion grew
26% year-over-year, best growth in industry and raising
guidance
- Free Cash Flow(2) of $2.1 billion grew 32% year-over-year, best
growth in industry and raising guidance
- Repurchased 4.9 million shares of common stock in the quarter
for a total purchase price of $669 million
5G Network Delivers Differentiated
Customer Experience and Drives Overall Network
Leadership
- Further extended network leadership as the nation’s largest,
fastest, most reliable and most awarded 5G network
- Ultra Capacity 5G covers 250 million people, as many as Verizon
plans to cover more than two years from now
Significant Integration Milestone
Accomplished with Network Decommissioning Substantially
Complete
- Raising merger synergies guidance range to $5.7 billion to $5.8
billion in 2022
T-Mobile US, Inc. (NASDAQ: TMUS) reported third quarter 2022
results today, leading the industry in postpaid and broadband
customer growth and raising 2022 guidance for the third consecutive
quarter. The company’s differentiated growth strategy and
industry-best year-over-year postpaid phone churn improvement drove
the highest postpaid service revenue and cash flow growth in the
industry. The company’s sustained performance and significant
progress on integration allowed T-Mobile to receive full investment
grade ratings from all three rating agencies and board approval to
commence a share repurchase program for up to $14 billion of the
company’s common stock through September 2023.
"We’ve always said our aspiration was to be the first and only
provider to offer customers both the best network and the best
value without having to sacrifice one for the other — and based on
another set of standout customer and financial results for Q3, it's
clear we’re delivering on that promise," said Mike Sievert, CEO of
T-Mobile. "On the heels of our highest ever postpaid account net
additions and industry-leading postpaid and broadband customer
growth, we are raising guidance for the third time this year. Our
Un-carrier playbook continues to win in this ever-changing
competitive and macro-economic climate and our momentum is only
getting stronger.”
___________________________________________________________
(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 394 thousand increased
126 thousand year-over-year.
- Postpaid net customer additions of 1.6 million increased
368 thousand year-over-year.
- Postpaid phone net customer additions of 854 thousand
increased 181 thousand year-over-year, leading the industry for the
first time since Q1 2021. Postpaid phone churn of 0.88% improved by
8 basis points year-over-year.
- Prepaid net customer additions of 105 thousand increased
39 thousand year-over-year. Prepaid churn of 2.88% improved by 2
basis points year-over-year.
- High Speed Internet net customer additions of 578
thousand were a record high, and T-Mobile ended the quarter with
over 2.1 million High Speed Internet customers.
- Total net customer additions of 1.7 million increased
407 thousand year-over-year and the total customer count increased
to a record high of nearly 112 million.
Quarter
Nine Months Ended September
30,
(in thousands, except churn)
Q3 2022
Q2 2022
Q3 2021
2022
2021
Postpaid net account additions
394
380
268
1,122
873
Total net customer additions
1,732
1,802
1,325
4,914
4,038
Postpaid net customer additions
1,627
1,656
1,259
4,601
3,745
Postpaid phone net customer additions
854
723
673
2,166
2,073
Postpaid other net customer additions
(1)
773
933
586
2,435
1,672
Prepaid net customer additions (1)
105
146
66
313
293
Total customers, end of period
(1)(2)(3)
111,755
110,023
106,920
111,755
106,920
Postpaid phone churn
0.88
%
0.80
%
0.96
%
0.87
%
0.93
%
Prepaid churn
2.88
%
2.58
%
2.90
%
2.71
%
2.76
%
High Speed Internet net customer
additions
578
560
134
1,476
322
Total High Speed Internet customers, end
of period
2,122
1,544
422
2,122
422
(1)
Includes High-Speed Internet
customers.
(2)
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, we acquired
11,000 postpaid phone customers and 1,000 postpaid other customers
through our acquisition of an affiliate. In the third quarter of
2021, we acquired 716,000 postpaid phone customers and 90,000
postpaid other customers through our acquisition of the Wireless
Assets from Shenandoah Personal Communications Company LLC
(“Shentel”).
Strong Financial Results
- Total service revenues increased 4% year-over-year to
$15.4 billion, which included Postpaid service revenue growth of 7%
year-over-year driven by continued customer growth.
- Net income of $508 million and Diluted EPS of
$0.40 decreased year-over-year primarily due to the impacts in the
current quarter, net of tax, associated with merger-related costs
of $972 million, or $0.77 per share and loss related to the
anticipated sale of the wireline business of $803 million, or $0.64
per share.
- Core Adjusted EBITDA increased 11% year-over-year to
$6.7 billion primarily due to Service revenue growth and increased
synergy realization.
- Net cash provided by operating activities increased 26%
year-over-year to $4.4 billion, which included cash payments for
merger-related costs of $942 million.
- Cash purchases of property and equipment, including
capitalized interest, increased 23% year-over-year to $3.6
billion driven by the accelerated build-out of the nationwide 5G
network.
- Free Cash Flow increased 32% year-over-year to $2.1
billion, which included cash payments for merger-related costs of
$942 million.
(in millions, except EPS)
Quarter
Nine Months Ended September
30,
Q3 2022 vs.
Q2 2022
Q3 2022 vs.
Q3 2021
YTD 2022 vs.
YTD 2021
Q3 2022
Q2 2022
Q3 2021
2022
2021
Total service revenues
$
15,361
$
15,316
$
14,722
$
45,805
$
43,406
0.3
%
4.3
%
5.5
%
Postpaid service revenues
11,548
11,445
10,804
34,194
31,599
0.9
%
6.9
%
8.2
%
Total revenues
19,477
19,701
19,624
59,298
59,333
(1.1
)%
(0.7
) %
(0.1
)%
Net (loss) income
508
(108
)
691
1,113
2,602
NM
(26.5
) %
(57.2
)%
Diluted EPS
0.40
(0.09
)
0.55
0.88
2.07
NM
(27.3
) %
(57.5
)%
Adjusted EBITDA
7,039
7,004
6,811
20,993
20,622
0.5
%
3.3
%
1.8
%
Core Adjusted EBITDA
6,728
6,618
6,041
19,809
17,897
1.7
%
11.4
%
10.7
%
Net cash provided by operating
activities
4,391
4,209
3,477
12,445
10,917
4.3
%
26.3
%
14.0
%
Cash purchases of property and equipment,
including capitalized interest
3,634
3,572
2,944
10,587
9,397
1.7
%
23.4
%
12.7
%
Free Cash Flow
2,065
1,758
1,559
5,472
4,534
17.5
%
32.5
%
20.7
%
NM = Not Meaningful
5G Network Delivers Differentiated
Customer Experience and Drives Overall Network
Leadership
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 97% of Americans, reaching
more square miles than Verizon and AT&T combined, and its
super-fast Ultra Capacity 5G covers 250 million people nationwide.
Nearly 55% of T-Mobile’s postpaid customers have a 5G phone.
T-Mobile’s most awarded 5G network continues to lead the
nation:
- Ookla: In its Q3 Speedtest Global Index Market Analysis
of mobile providers, T-Mobile placed first in almost every
category:
- Winning as the fastest overall provider with the fastest
download and upload speeds, highest consistency and best overall
video score.
- For 5G specific performance, T-Mobile was ranked #1 for 5G
download speeds and 5G availability and was unsurpassed for 5G
video score and 5G consistency.
- T-Mobile’s median 5G download speeds were even faster than
Comcast, Verizon, and AT&T’s fixed broadband median download
speeds.
- Opensignal: In its 2022 5G Global Mobile Network
Experience Awards, T-Mobile won big for having the best 5G
availability and reach in the world.
- umlaut: In its latest 5G Network Performance Audit
Report, T-Mobile was once again named as the most reliable 5G
network in the country with the best coverage, stability and
speeds.
Raising 2022 Merger Synergies Guidance
on Accelerated Integration Progress
T-Mobile achieved a huge milestone with the network
decommissioning substantially complete, less than 2.5 years
post-merger closing, and more than a year ahead of the original
merger plan.
Based on the continued strength of execution, T-Mobile is
raising its merger synergies guidance range to $5.7 to $5.8 billion
in 2022, up from the previous range of $5.4 to $5.6 billion.
- Approximately $2.4 billion of selling, general and
administrative (SG&A) expense reductions
- Approximately $2.0 billion to $2.1 billion of cost of service
expense reductions achieved through network efficiencies
- Approximately $1.3 billion of savings related to avoided
network site builds
Raising 2022 Guidance
Again
- Postpaid net customer additions are expected to be between 6.2
million and 6.4 million, an increase from prior guidance of 6.0
million to 6.3 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $26.2 billion and $26.4
billion, an increase from prior guidance of $26.0 billion to $26.3
billion.
- Merger-related costs are expected to be between $4.8 billion
and $5.0 billion before taxes, an increase from prior guidance of
$4.7 billion to $5.0 billion. 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 $16.3 billion
and $16.5 billion, an increase from prior guidance of $16.0 billion
to $16.3 billion.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $13.7 billion to $13.9
billion, an increase from prior guidance of $13.5 billion to $13.7
billion, reflecting T-Mobile’s accelerated build-out of its
nationwide 5G network and purchases of High Speed Internet
routers.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $7.4 billion and $7.6 billion, an increase
from prior guidance of $7.3 billion 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)
6,000
6,300
6,200
6,400
150
Net income (1)
N/A
N/A
N/A
N/A
N/A
Core Adjusted EBITDA (2)
$
26,000
$
26,300
$
26,200
$
26,400
$
150
Merger synergies
5,400
5,600
5,700
5,800
250
Merger-related costs (3)
4,700
5,000
4,800
5,000
50
Net cash provided by operating
activities
16,000
16,300
16,300
16,500
250
Capital expenditures (4)
13,500
13,700
13,700
13,900
200
Free Cash Flow (5)
7,300
7,600
7,400
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 $1.3 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:
- T-Mobile published its second annual Corporate Responsibility
Report, sharing its progress to bridge the digital divide, provide
equitable opportunities and support a thriving planet.
- Through Project 10Million, T-Mobile has made offering reliable
and affordable connectivity to students a priority, investing $3.65
billion in services to connect more than 4.3 million students since
2020.
- T-Mobile received multiple recognitions in the third quarter,
including:
- Finalist in Fast Company’s 2022 Best Workplaces for Innovators
in both the Diversity and Sustainability categories
- Environmental Protection Agency (EPA) 2022 Green Power
Leadership award
- Leading Disability Employer by The National Organization on
Disability
- T-Mobile’s Emergency Management and Community Support teams
supported more than 10,000 people during Hurricanes Ian and Fiona
with thousands of supplies including smart phones, hot spots and
charging banks, as well as free Wi-Fi connectivity.
- As part of T-Mobile’s commitment to bring 5G to rural America
and support economic and community development, the Un-carrier has
given more than $5.5 million to date to kick-start 125 community
development projects across 37 states.
Financial Results
For more details on T-Mobile’s Q3 2022 financial results,
including the Investor Factbook with detailed financial tables,
please visit T-Mobile US, Inc.’s Investor Relations website at
https://investor.t-mobile.com.
Earnings Call
Information
Date/Time
- Thursday, October 27, 2022, 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: 866-580-3963
- International: +1 786-697-3501
- Participant Passcode: 0945508
Access via Webcast
The earnings call will be broadcast live via the Investor
Relations website at https://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
866-580-3963 (toll free) or +1 786-697-3501 (international). The
passcode required to listen to the replay is 0945508.
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
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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:
https://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 impacts 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 timing and
effects of any future acquisition, disposition, 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;
our stock repurchase program may not be fully consummated, and may
not enhance long-term stockholder value; 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
Nine Months Ended September
30,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
2021
2022
Net income (loss)
$
933
$
978
$
691
$
422
$
713
$
(108
)
$
508
$
2,602
$
1,113
Adjustments:
Interest expense, net
835
850
836
821
864
851
827
2,521
2,542
Other expense, net
125
1
60
13
11
21
3
186
35
Income tax expense (benefit)
246
277
(3
)
(193
)
218
(55
)
(57
)
520
106
Operating income
2,139
2,106
1,584
1,063
1,806
709
1,281
5,829
3,796
Depreciation and amortization
4,289
4,077
4,145
3,872
3,585
3,491
3,313
12,511
10,389
Stock-based compensation (1)
130
129
127
135
136
149
145
386
430
Merger-related costs
298
611
955
1,243
1,413
1,668
1,296
1,864
4,377
Impairment expense
—
—
—
—
—
477
—
—
477
Legal-related expenses (recoveries), net
(2)
—
—
—
—
—
400
(19
)
—
381
Loss on disposal group held for sale
—
—
—
—
—
—
1,071
—
1,071
Other, net (3)
49
(17
)
—
(11
)
10
110
(48
)
32
72
Adjusted EBITDA
6,905
6,906
6,811
6,302
6,950
7,004
7,039
20,622
20,993
Lease revenues
(1,041
)
(914
)
(770
)
(623
)
(487
)
(386
)
(311
)
(2,725
)
(1,184
)
Core Adjusted EBITDA
$
5,864
$
5,992
$
6,041
$
5,679
$
6,463
$
6,618
$
6,728
$
17,897
$
19,809
(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 (recoveries), net,
consists of the settlement of certain litigation associated with
the August 2021 cyberattack, net of insurance recoveries.
(3)
Other, net, primarily consists of certain
severance, restructuring and other expenses and income, including
gains from the sale of IP addresses, 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 represents earnings before Interest expense, net
of Interest income, Income tax expense, Depreciation and
amortization expense, stock-based compensation and certain income
and expenses not reflective of T-Mobile’s ongoing operating
performance. 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, losses on disposal
groups held for sale and certain legal-related recoveries and
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
Nine Months Ended September
30,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
2021
2022
Net cash provided by operating
activities
$
3,661
$
3,779
$
3,477
$
3,000
$
3,845
$
4,209
$
4,391
$
10,917
$
12,445
Cash purchases of property and equipment,
including capitalized interest
(3,183
)
(3,270
)
(2,944
)
(2,929
)
(3,381
)
(3,572
)
(3,634
)
(9,397
)
(10,587
)
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
1,308
3,099
3,614
Cash payments for debt prepayment or debt
extinguishment costs
(65
)
(6
)
(45
)
—
—
—
—
(116
)
—
Free Cash Flow
$
1,304
$
1,671
$
1,559
$
1,112
$
1,649
$
1,758
$
2,065
$
4,534
$
5,472
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
$
16,300
$
16,500
Cash purchases of property and equipment,
including capitalized interest
(13,700
)
(13,900
)
Proceeds related to beneficial interests
in securitization transactions (1)
4,800
5,000
Free Cash Flow
$
7,400
$
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
$
16,000
$
16,300
Cash purchases of property and equipment,
including capitalized interest
(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.
T-Mobile US, Inc. Operating
Measures (Unaudited)
The following table sets forth company operating measures ARPA
and ARPU:
(in dollars)
Quarter
Nine Months Ended September
30,
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
2021
2022
Postpaid ARPA
$
132.91
$
133.55
$
134.54
$
135.04
$
136.53
$
137.92
$
137.49
$
133.68
$
137.32
Postpaid phone ARPU
47.30
47.61
48.06
48.03
48.41
48.96
48.89
47.66
48.75
Prepaid ARPU
37.81
38.53
39.49
39.32
39.19
38.71
38.86
38.61
38.92
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/20221026006142/en/
Media Relations: mediarelations@t-mobile.com Investor Relations:
investor.relations@t-mobile.com
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