Raises 2021 Guidance for the Third
Consecutive Quarter
T-Mobile US, Inc. (NASDAQ: TMUS):
Consistent and Profitable Customer
Growth
- Postpaid net additions of 1.3 million, best in industry and
raising 2021 guidance
- Postpaid phone net additions of 673 thousand, 2.1 million
year-to-date increased 50% year-over-year
- Postpaid account net additions of 268 thousand, best in
industry
Strong Financial Results Drive 2021
Guidance Raise for the Third Consecutive Quarter
- Record-high Service revenues of $14.7 billion grew more than 4%
year-over-year, including industry-leading Postpaid service
revenues growth of 6% year-over-year
- Strong Net income of $691 million and diluted earnings per
share (“EPS”) of $0.55 included higher merger-related costs
year-over-year, and Adjusted EBITDA(1) was $6.8 billion
- Record-high Core Adjusted EBITDA(1) of $6.0 billion, best
growth in industry and raising 2021 guidance
- Net cash provided by operating activities of $3.5 billion
increased 25% year-over-year, raising 2021 guidance
- Free Cash Flow(1) of $1.6 billion increased more than 4x
year-over-year, best growth in industry and raising 2021
guidance
America’s Largest, Fastest and Most
Reliable 5G Network Further Extends its Lead
- Extended Range 5G covers 308 million people and 1.7 million
square miles — most available 5G network in the world(2)
- Ultra Capacity 5G covers 190 million people and can deliver
speeds of 400 Mbps or more, on track to cover 200 million people
nationwide by end of year(3)
- A dozen independent third-party network benchmarking reports
show T-Mobile customers consistently get award-winning 5G,
including the fastest average speeds, broadest coverage and most
reliable 5G
Network Integration Progress Fuels
Higher Merger Synergies
- Approximately 90% of Sprint customer traffic is now carried on
the T-Mobile network
- Approximately 53% of Sprint customers have been fully
transitioned to the T-Mobile network
- Raising 2021 merger synergies guidance for the third
consecutive quarter
T-Mobile US, Inc. (NASDAQ: TMUS) reported third quarter 2021
results today, delivering industry-leading Postpaid service
revenues and customer growth, and raising 2021 guidance across the
board. T-Mobile’s growth and synergy-backed model enabled the
company to convert record service revenues into industry-leading
cash flow growth.
“Another quarter of amazing results shows that customers love
T-Mobile’s unique combination of the best value, best network and
best experience,” said Mike Sievert, CEO of T-Mobile. “With our
Magenta business firing on all cylinders and our Sprint integration
ahead of schedule, we are well positioned for the future — and
poised to continue winning with assets and a formula for growth
that is differentiated from the other wireless players. We just
keep exceeding our own targets on growth, profit and synergies —
and we have no plans to slow down now.”
_________________________
(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.
(2)
OpenSignal Awards - 5G Global Mobile
Network Experience Awards 2021 based on independent analysis of
mobile measurements recorded during the period January 1 - June 29,
2021. © 2021 OpenSignal Limited.
(3)
Based on T-Mobile’s analysis of internal
and third party data.
Consistent and Profitable Customer
Growth
- Net customer additions were 1.3 million in Q3 2021 and
the total customer count increased to a record-high of 106.9
million.
- Postpaid net customer additions of 1.3 million led the
industry for the 15th consecutive quarter in Q3 2021.
- Postpaid phone net customer additions were 673 thousand
in Q3 2021 and 2.1 million year-to-date, an increase of 50%
year-over-year. Postpaid phone churn was 0.96% in Q3 2021.
- Postpaid other net customer additions were 586 thousand
in Q3 2021, including record-high home internet net additions.
- Postpaid account net additions of 268 thousand doubled
year-over-year in Q3 2021 and reached 874 thousand year-to-date,
continuing to lead the industry.
- Prepaid net customer additions of 66 thousand increased
year-over-year in Q3 2021 and prepaid churn of 2.90% 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 retroactively adjusted and reflect
standalone T-Mobile.
Quarter
Nine Months Ended
September 30,
(in thousands, except churn)
Q3 2021
Q2 2021
Q3 2020
2021
2020
Total net customer additions
1,325
1,352
2,035
4,038
3,929
Postpaid net customer additions
1,259
1,276
1,979
3,745
3,868
Postpaid phone net customer additions
673
627
689
2,073
1,394
Postpaid other net customer additions
586
649
1,290
1,672
2,474
Prepaid net customer additions
66
76
56
293
61
Total customers, end of period (1)
106,920
104,789
100,362
106,920
100,362
Postpaid phone churn
0.96
%
0.87
%
0.90
%
0.93
%
0.85
%
Prepaid churn
2.90
%
2.62
%
2.86
%
2.76
%
3.07
%
(1)
Includes 806,000 postpaid customers
acquired from the Shentel acquisition as of July 1, 2021, which
were not included in net additions.
Strong Financial Results Drive 2021
Guidance Raise for the Third Consecutive Quarter
- Total revenues increased 2% year-over-year to $19.6
billion and total service revenues increased 4%
year-over-year to $14.7 billion in Q3 2021, driven by continued
customer growth.
- Net income decreased year-over-year to $691 million in
Q3 2021, primarily due to merger-related costs of $707 million.
Diluted earnings per share (EPS) decreased year-over-year to
$0.55 in Q3 2021, primarily due to merger-related costs, net of
taxes, of $0.56 per share.
- Adjusted EBITDA was $6.8 billion and Core Adjusted
EBITDA increased to a record-high of $6.0 billion in Q3 2021,
primarily due to continued service revenue growth and synergy
realization.
- Net cash provided by operating activities increased 25%
year-over-year to $3.5 billion in Q3 2021, which included cash
payments for merger-related costs of $617 million.
- Cash purchases of property and equipment including
capitalized interest was $2.9 billion in Q3 2021.
- Free Cash Flow increased more than 4x year-over-year to
$1.6 billion in Q3 2021, which included cash payments for
merger-related costs of $617 million.
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 retroactively adjusted and reflect
standalone T-Mobile.
(in millions, except EPS)
Quarter
Nine Months Ended
September 30,
Q3 2021
vs.
Q2 2021
Q3 2021
vs.
Q3 2020
YTD 2021
vs.
YTD 2020
Q3 2021
Q2 2021
Q3 2020
2021
2020
Total service revenues
$
14,722
$
14,492
$
14,139
$
43,406
$
36,215
1.6
%
4.1
%
19.9
%
Total revenues
19,624
19,950
19,272
59,333
48,056
(1.6
)
%
1.8
%
23.5
%
Net income
691
978
1,253
2,602
2,314
(29.3
)
%
(44.9
)
%
12.4
%
Diluted EPS
0.55
0.78
1.00
2.07
2.06
(29.5
)
%
(45.0
)
%
0.5
%
Adjusted EBITDA
6,811
6,906
7,129
20,622
17,811
(1.4
)
%
(4.5
)
%
15.8
%
Core Adjusted EBITDA
6,041
5,992
5,779
17,897
14,875
0.8
%
4.5
%
20.3
%
Net cash provided by operating
activities
3,477
3,779
2,772
10,917
5,166
(8.0
)
%
25.4
%
111.3
%
Cash purchases of property and equipment,
including capitalized interest
2,944
3,270
3,217
9,397
7,227
(10.0
)
%
(8.5
)
%
30.0
%
Free Cash Flow
1,559
1,671
352
4,534
182
(6.7
)
%
342.9
%
NM
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
1,559
1,671
352
4,534
2,525
(6.7
)
%
342.9
%
79.6
%
NM - Not Meaningful
America’s Largest, Fastest and Most
Reliable 5G Network Further Extends its Lead
T-Mobile continues to further extend its network leadership,
covering 308 million people with Extended Range 5G. Ultra Capacity
5G is expanding at an incredible pace, covering 190 million people,
and can deliver speeds approximately 10x faster than LTE.
A dozen independent third-party network benchmarking reports
continue to recognize T-Mobile as the 5G leader, including:
- OpenSignal: T-Mobile’s 5G is 2x faster than AT&T and
Verizon and has the highest 5G availability globally with average
speeds that have increased 36% since last quarter
- Ookla: T-Mobile is ranked first or tied for first across
all network performance categories measured
- umlaut: T-Mobile is ranked #1 for the third time in a
row for 5G speed, coverage and reliability, as well as overall 5G
performance, taking top honors in every 5G measure
- PC Mag: T-Mobile has a commanding lead in 5G, delivering
the fastest 5G speeds in the US
Network Integration Progress Fuels
Higher Merger Synergies
T-Mobile continued to make meaningful progress on integration
activities, ending the quarter with approximately 90% of Sprint
customer traffic now carried on the T-Mobile network and
approximately 53% of Sprint customers fully transitioned to the
T-Mobile network.
Based on the continued strength of execution, the company is
raising its merger synergies guidance range to $3.2 billion to $3.5
billion in 2021, up from the previous range of $2.9 billion to $3.2
billion.
- Approximately $1.6 billion to $1.75 billion of sales, general,
and administrative (SG&A) synergies achieved through SG&A
expense reductions
- Approximately $600 million to $750 million of network synergies
achieved through cost of service expense reductions
- Approximately $1.0 billion of network synergies related to
avoided costs from new site builds
Raising 2021 Outlook Across the Board
for the Third Consecutive Quarter
- Postpaid net customer additions are expected to be between 5.1
million and 5.3 million, an increase from prior guidance of 5.0
million to 5.3 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $23.4 billion and $23.5
billion, an increase from prior guidance of $23.0 billion to $23.3
billion.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $12.1 billion to $12.3
billion, an increase from the prior guidance of $12.0 billion to
$12.3 billion.
- Merger-related costs are expected to be between $2.8 billion
and $3.0 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 $13.9 billion
and $14.0 billion, an increase from prior guidance of $13.6 billion
to $13.9 billion.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $5.5 billion and $5.6 billion, an increase
from prior guidance of $5.2 billion to $5.5 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)
5,000
5,300
5,100
5,300
50
Net income (1)
N/A
N/A
N/A
N/A
N/A
Core Adjusted EBITDA (2)
$
23,000
$
23,300
$
23,400
$
23,500
$300
Merger synergies
2,900
3,200
3,200
3,500
300
Merger-related costs (3)
2,700
3,000
2,800
3,000
50
Net cash provided by operating
activities
13,600
13,900
13,900
14,000
200
Capital expenditures (4)
12,000
12,300
12,100
12,300
50
Free Cash Flow (5)
5,200
5,500
5,500
5,600
200
(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 between $3.3 billion and $3.5
billion for 2021.
(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 2021.
Financial Results
For more details on T-Mobile’s Q3 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, November 2, 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: 800-367-2403
- International: +1 334-777-6978
- Participant Passcode: 6019757
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 6019757.
Submit Questions via Twitter
Send a tweet to @TMobileIR or @MikeSievert using $TMUS
Contact Information
- Media Relations: mediarelations@t-mobile.com
- Investor Relations: investor.relations@t-mobile.com
T-Mobile Social Media
Investors and others should note that we announce material
financial and operational information to our investors using our
investor relations website (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 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 attacks, such as the criminal
cyberattack we became aware of in August 2021; 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, 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, including proceedings and inquiries relating to the
criminal cyberattack we became aware of in August 2021; 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 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 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 either of these 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 prior to April 1, 2020 have not been restated
and reflect standalone T-Mobile.
Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net
income as follows:
Quarter
Nine Months Ended
September 30,
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
2020
2021
Net income
$
951
$
110
$
1,253
$
750
$
933
$
978
$
691
$
2,314
$
2,602
Adjustments:
Income from discontinued operations, net
of tax
—
(320
)
—
—
—
—
—
(320
)
—
Income (loss) from continuing
operations
951
(210
)
1,253
750
933
978
691
1,994
2,602
Interest expense
185
776
765
757
792
820
780
1,726
2,392
Interest expense to affiliates
99
63
44
41
46
32
58
206
136
Interest income
(12
)
(6
)
(3
)
(8
)
(3
)
(2
)
(2
)
(21
)
(7
)
Other expense, net
10
195
99
101
125
1
60
304
186
Income tax expense
306
2
407
71
246
277
(3
)
715
520
Operating income
1,539
820
2,565
1,712
2,139
2,106
1,584
4,924
5,829
Depreciation and amortization
1,718
4,064
4,150
4,219
4,289
4,077
4,145
9,932
12,511
Operating income from discontinued
operations (1)
—
432
—
—
—
—
—
432
—
Stock-based compensation (2)
123
139
125
129
130
129
127
387
386
Merger-related costs
143
798
288
686
298
611
955
1,229
1,864
COVID-19-related costs (3)
117
341
—
—
—
—
—
458
—
Impairment expense
—
418
—
—
—
—
—
418
—
Other, net (4)
25
5
1
—
49
(17
)
—
31
32
Adjusted EBITDA
3,665
7,017
7,129
6,746
6,905
6,906
6,811
17,811
20,622
Lease revenues
(165
)
(1,421
)
(1,350
)
(1,245
)
(1,041
)
(914
)
(770
)
(2,936
)
(2,725
)
Core Adjusted EBITDA
$
3,500
$
5,596
$
5,779
$
5,501
$
5,864
$
5,992
$
6,041
$
14,875
$
17,897
(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-related costs were not
significant for Q3 2020, Q4 2020, Q1 2021, Q2 2021 and Q3 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 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, 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 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
Nine Months Ended
September 30,
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
2020
2021
Net cash provided by operating
activities
$
1,617
$
777
$
2,772
$
3,474
$
3,661
$
3,779
$
3,477
$
5,166
$
10,917
Cash purchases of property and
equipment
(1,753
)
(2,257
)
(3,217
)
(3,807
)
(3,183
)
(3,270
)
(2,944
)
(7,227
)
(9,397
)
Proceeds from sales of tower sites
—
—
—
—
—
31
—
—
31
Proceeds related to beneficial interests
in securitization transactions
868
602
855
809
891
1,137
1,071
2,325
3,099
Cash payments for debt prepayment or debt
extinguishment costs
—
(24
)
(58
)
—
(65
)
(6
)
(45
)
(82
)
(116
)
Free Cash Flow
732
(902
)
352
476
1,304
1,671
1,559
182
4,534
Gross cash paid for the settlement of
interest rate swaps
—
2,343
—
—
—
—
—
2,343
—
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
$
732
$
1,441
$
352
$
476
$
1,304
$
1,671
$
1,559
$
2,525
$
4,534
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 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
$
13,900
$
14,000
Cash purchases of property and
equipment
(12,100
)
(12,300
)
Proceeds related to beneficial interests
in securitization transactions (1)
3,800
4,000
Cash payments for debt prepayment or debt
extinguishment costs
(100
)
(100
)
Free Cash Flow
$
5,500
$
5,600
(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
$
13,600
$
13,900
Cash purchases of property and
equipment
(12,000
)
(12,300
)
Proceeds related to beneficial interests
in securitization transactions (1)
3,700
4,000
Cash payments for debt prepayment or debt
extinguishment costs
(100
)
(100
)
Free Cash Flow
$
5,200
$
5,500
(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
Nine Months Ended
September 30,
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
2020
2021
Calculation of Postpaid ARPA
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
$
10,492
$
10,804
$
26,055
$
31,599
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
26,188
26,766
22,054
26,264
Postpaid ARPA
$
129.47
$
130.57
$
133.03
$
133.08
$
132.91
$
133.55
$
134.54
$
131.27
$
133.68
Calculation of Postpaid Phone
ARPU
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
$
10,492
$
10,804
$
26,055
$
31,599
Less: Postpaid other revenues
(310
)
(618
)
(677
)
(762
)
(820
)
(825
)
(852
)
(1,605
)
(2,497
)
Postpaid phone service revenues
5,577
9,341
9,532
9,489
9,483
9,667
9,952
24,450
29,102
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
67,680
69,033
56,971
67,848
Postpaid phone ARPU
$
45.80
$
47.99
$
48.55
$
47.86
$
47.30
$
47.61
$
48.06
$
47.69
$
47.66
Calculation of Prepaid ARPU
Prepaid service revenues
$
2,373
$
2,311
$
2,383
$
2,354
$
2,351
$
2,427
$
2,481
$
7,067
$
7,259
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
20,994
20,936
20,591
20,886
Prepaid ARPU
$
38.11
$
37.80
$
38.49
$
38.08
$
37.81
$
38.53
$
39.49
$
38.13
$
38.61
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
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/20211102006257/en/
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