Growth Investments in Q4 Resulted in
Industry Leading Customer Growth Across the Board in the Quarter
and Set the Company Up for Continued Profitable Growth in 2024 and
Beyond
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Customer Growth Fueled
by Best Network and Value Combination(1)
- Postpaid net account additions of 299 thousand in Q4 2023 — 1.3
million in 2023, industry best
- Postpaid net customer additions of 1.6 million in Q4 2023 — 5.7
million in 2023, industry best
- Postpaid phone net customer additions of 934 thousand in Q4
2023 — 3.1 million in 2023, industry best
- Postpaid phone churn of 0.96% in Q4 2023 — 0.87% in 2023,
lowest in company history
- High Speed Internet net customer additions of 541 thousand in
Q4 2023 — 2.1 million in 2023, industry best
Translating Customer Growth Into
Industry-Leading Financial Growth
- Service revenues of $16.0 billion in Q4 2023 — $63.2 billion in
2023, industry-leading growth of 3%
- Postpaid service revenues of $12.5 billion in Q4 2023 — $48.7
billion in 2023, industry-leading growth of 6%
- Net income of $2.0 billion in Q4 2023 — $8.3 billion in 2023,
industry-leading growth of 221%
- Diluted earnings per share (“EPS”) of $1.67 in Q4 2023 — $6.93
in 2023, industry-leading growth of 236%
- Core Adjusted EBITDA(2) of $7.2 billion in Q4 2023 — $29.1
billion in 2023, industry-leading growth of 10%
- Net cash provided by operating activities of $4.9 billion in Q4
2023 — $18.6 billion in 2023, industry-leading growth of 11%
- Adjusted Free Cash Flow(2) of $4.3 billion in Q4 2023 — $13.6
billion in 2023, industry-leading growth of 77%
- Returned $14.0 billion to stockholders in 2023, including
repurchases of $13.2 billion of common stock and first quarterly
dividend payment of $747 million
T-Mobile Continues Reign as Overall
Network Leader with Largest 5G Footprint Covering 98% of
Americans
- 300 million people covered by Ultra Capacity 5G and more 5G
square miles than AT&T and Verizon combined
- Clean sweep across every category for overall network
performance from Ookla and Opensignal
Strong Outlook for 2024
- Core Adjusted EBITDA(2) is expected to grow approximately 9% at
the mid-point
- Net cash provided by operating activities is expected to grow
approximately 18% at the mid-point and Adjusted Free Cash Flow(2)
is expected to grow approximately 22% at the mid-point
T-Mobile US, Inc. (NASDAQ: TMUS) reported fourth quarter and
full-year 2023 results today, delivering industry-best growth in
service revenues, profitability and cash flow in 2023, enabling the
Un-carrier to continue executing its best-in-class capital return
program delivering $14.0 billion to stockholders in 2023. The
company also effectively completed its historic merger integration,
and cemented itself as the nationwide overall network leader.
Combined with its established value leadership, the company
delivered best-in-class customer growth in 2023, including the
highest postpaid phone gross additions and the lowest annual churn
rate in company history.
“This was a historic year for T-Mobile, with record outcomes
across nearly every metric and industry-leading customer results –
including our highest share of postpaid phone net adds since the
merger and best-in-class growth in service revenues, profitability
and cash flow – all while effectively completing the largest, most
successful telecom integration in the world,” said Mike Sievert,
CEO of T-Mobile. “What’s really exciting is that while we’ve
delivered fantastic results, we’ve also got room to run. Thanks to
the unmatched value and network leadership that we’ve built, we’re
entering a phase of enormous value creation with a plan to deliver
sustained customer and financial growth leadership. This is just
the beginning of the next chapter for the Un-carrier.”
____________________
(1)
AT&T Inc. historically does
not disclose postpaid net account additions. Comcast and Charter do
not disclose postpaid phone net customer additions.
Industry-leading claims are based on consensus expectations if
results are not yet reported.
(2)
Core Adjusted EBITDA and Adjusted
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. Starting in Q1 2023, we renamed Free Cash Flow
to Adjusted Free Cash Flow. This change in name did not result in
any change to the definition or calculation of this non-GAAP
financial measure.
Industry-Leading Customer Growth Fueled
by Best Network and Value Combination(1)
- Postpaid net account additions were 299 thousand in Q4
2023 and 1.3 million in 2023.
- Postpaid net customer additions were 1.6 million in Q4
2023 and 5.7 million in 2023.
- Postpaid phone net customer additions were 934 thousand
in Q4 2023 and 3.1 million in 2023. Postpaid phone churn was 0.96%
in Q4 2023 and 0.87% in 2023.
- Prepaid net customer additions were 53 thousand in Q4
2023 and 282 thousand in 2023. Prepaid churn was 2.86% in Q4 2023
and 2023 churn of 2.76% was the lowest in company history.
- High Speed Internet net customer additions were 541
thousand in Q4 2023 and 2.1 million in 2023, the highest in company
history. T-Mobile ended the year with 4.8 million High Speed
Internet customers.
- Total net customer additions were 1.6 million in Q4 2023
and 5.9 million in 2023. Total customer connections increased to a
record high of 119.7 million.
Quarter
Year Ended December
31,
(in thousands, except churn)
Q4 2023
Q3 2023
Q4 2022
2023
2022
Postpaid net account additions
299
386
314
1,271
1,436
Total net customer additions
1,623
1,305
1,843
5,932
6,757
Postpaid net customer additions
1,570
1,226
1,818
5,650
6,419
Postpaid phone net customer additions
934
850
927
3,082
3,093
Postpaid other net customer additions
(2)
636
376
891
2,568
3,326
Prepaid net customer additions (2)
53
79
25
282
338
Total customers, end of period (2)(3)
119,700
117,907
113,598
119,700
113,598
Postpaid phone churn
0.96
%
0.87
%
0.92
%
0.87
%
0.88
%
Prepaid churn
2.86
%
2.81
%
2.93
%
2.76
%
2.77
%
High Speed Internet net customer
additions
541
557
524
2,130
2,000
Total High Speed Internet customers, end
of period
4,776
4,235
2,646
4,776
2,646
(1)
AT&T Inc. historically does
not disclose postpaid net account additions. Comcast and Charter do
not disclose postpaid phone net customer additions.
Industry-leading claims are based on consensus expectations if
results are not yet reported.
(2)
Includes High Speed Internet
customers.
(3)
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 the fourth
quarter of 2023, we recognized an additional base adjustment to
increase postpaid phone customers by 20,000 and increase postpaid
other customers by 150,000 due to fewer customers than expected
whose service was deactivated as a result of the network shutdowns.
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.
Translating Customer Growth Into
Industry-Leading Financial Growth(1)
- Total service revenues increased 3% year-over-year to
$16.0 billion in Q4 2023 and 3% year-over-year to $63.2 billion in
2023, which included Postpaid service revenue growth of 6%
year-over-year in Q4 2023 and 6% growth year-over-year in
2023.
- Net income increased 36% year-over-year to $2.0 billion
in Q4 2023 and increased 221% year-over-year to $8.3 billion in
2023, which included Merger-related costs, net of tax, of $775
million. Diluted EPS increased year-over-year to $1.67 per
share in Q4 2023 and increased year-over-year to $6.93 per share in
2023. Diluted EPS also reflected the impact of 48.8 million shares
issued to SoftBank Group in Q4 2023.
- Core Adjusted EBITDA increased 9% year-over-year to $7.2
billion in Q4 2023 and increased 10% year-over-year to $29.1
billion in 2023.
- Net cash provided by operating activities increased 12%
year-over-year to $4.9 billion in Q4 2023 and increased 11%
year-over-year to $18.6 billion in 2023, which included cash
payments for Merger-related costs of $416 million in Q4 2023 and
$2.0 billion in 2023.
- Cash purchases of property and equipment, including
capitalized interest, decreased 53% year-over-year to $1.6
billion in Q4 2023 and decreased 30% year-over-year to $9.8 billion
in 2023.
- Adjusted Free Cash Flow increased 97% year-over-year to
$4.3 billion in Q4 2023 and increased 77% year-over-year to $13.6
billion in 2023, which included cash payments for Merger-related
costs of $416 million in Q4 2023 and $2.0 billion in 2023.
- Stockholder Returns included 15.5 million shares of
common stock repurchased for $2.2 billion in Q4 2023, and 92.9
million shares repurchased for $13.2 billion in 2023, with 114.3
million cumulative shares repurchased for $16.2 billion as of
December 31, 2023. The remaining authorization for stock
repurchases and dividends through December 2024 is $16.0 billion,
including the next quarterly cash dividend, which will be payable
on March 14, 2024.
Quarter
Year Ended December
31,
Q4 2023
vs.
Q3 2023
Q4 2023
vs.
Q4 2022
YTD 2023
vs.
YTD 2022
(in millions, except EPS)
Q4 2023
Q3 2023
Q4 2022
2023
2022
Total service revenues
$
16,043
$
15,914
$
15,518
$
63,241
$
61,323
0.8
%
3.4
%
3.1
%
Postpaid service revenues
12,472
12,288
11,725
48,692
45,919
1.5
%
6.4
%
6.0
%
Total revenues
20,478
19,252
20,273
78,558
79,571
6.4
%
1.0
%
(1.3
)%
Net income
2,014
2,142
1,477
8,317
2,590
(6.0
)%
36.4
%
221.1
%
Diluted EPS
1.67
1.82
1.18
6.93
2.06
(8.2
)%
41.5
%
236.4
%
Adjusted EBITDA
7,224
7,600
6,828
29,428
27,821
(4.9
)%
5.8
%
5.8
%
Core Adjusted EBITDA
7,181
7,547
6,582
29,116
26,391
(4.8
)%
9.1
%
10.3
%
Net cash provided by operating
activities
4,859
5,294
4,336
18,559
16,781
(8.2
)%
12.1
%
10.6
%
Cash purchases of property and equipment,
including capitalized interest
1,587
2,424
3,383
9,801
13,970
(34.5
)%
(53.1
)%
(29.8
)%
Adjusted Free Cash Flow
4,305
4,003
2,184
13,586
7,656
7.5
%
97.1
%
77.5
%
(1)
Industry-leading claims are based
on consensus expectations if results are not yet reported.
T-Mobile Continues Reign as Overall
Network Leader with Largest 5G Footprint Covering 98% of
Americans
T-Mobile’s Ultra Capacity 5G network covers more than 300
million people, over three times the square miles of AT&T and
two times Verizon. Total 5G covers more than 330 million people and
more square miles than AT&T and Verizon combined.
T-Mobile’s 5G leadership has translated into overall network
leadership, while 5G is increasingly becoming the overall network
experience for customers. The Un-carrier continues its third-party
report winning streak for overall network and 5G performance:
- Ookla: In its latest Speedtest Global Index Market
Analysis, T-Mobile beat the competition, winning every single
category for overall network in every quarter of 2023, including
fastest provider, lowest latency, most consistent and best mobile
video. The Company also remained undefeated for 5G performance for
the sixth quarter in a row, including fastest 5G performance and 5G
consistency.
- Opensignal: In its latest Global Mobile Network
Experience Report, T-Mobile ranked first for all overall network
experience metrics including download and upload speed experience,
along with consistent quality, video, live video and games
experience. The Un-carrier also ranked first in several 5G
categories including 5G download speeds, 5G coverage experience,
and 5G availability.
Note: See 5G device, coverage, & access details at
T-Mobile.com. Fastest: Based on median, overall combined speeds
according to analysis by Ookla® of Speedtest Intelligence® data
download speeds for Q4 2023. Ookla trademarks used under license
and reprinted with permission. Opensignal Awards: USA: Mobile
Network Experience Report January 2024, based on independent
analysis of mobile measurements recorded during the period
September 16 - December 14, 2023. © 2024 Opensignal Limited.
Strong Outlook for 2024
- Postpaid net customer additions are expected to be between 5.0
million and 5.5 million, expected to lead the industry for the 10th
consecutive year.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $31.3 billion and $31.9
billion, up 9% year-over-year at the midpoint.
- Net cash provided by operating activities, including payments
for Merger-related costs, is expected to be between $21.5 billion
and $22.3 billion, up 18% at the mid-point.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $8.6 billion and $9.4
billion.
- Adjusted Free Cash Flow, including payments for Merger-related
costs, is expected to be between $16.3 billion and $16.9 billion,
up approximately 22% year-over-year at the mid-point. Adjusted Free
Cash Flow guidance does not assume any material net cash inflows
from securitization.
(in millions, except Postpaid net
customer additions and Effective tax rate)
FY 2024 Guidance
Postpaid net customer additions
(thousands)
5,000
5,500
Net income (1)
N/A
N/A
Effective tax rate
24
%
26
%
Core Adjusted EBITDA (2)
$
31,300
$
31,900
Net cash provided by operating
activities
21,500
22,300
Capital expenditures (3)
8,600
9,400
Adjusted Free Cash Flow (4)
16,300
16,900
(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 of
approximately $100 million for 2024.
(3)
Capital expenditures means cash
purchases of property and equipment, including capitalized
interest.
(4)
Adjusted Free Cash Flow guidance
does not assume any material net cash inflows from securitization
in 2024.
Doing Good — The Un-carrier Way —
Industry Leader in Building a More Connected and Sustainable
Future
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:
- Since launching Project 10Million in 2020, T-Mobile has focused
on bringing critical connectivity to underserved students
nationwide. Through the end of 2023, T-Mobile has provided $6.4
billion in services to connect nearly 6 million students across the
United States through this project and other education
initiatives.
- The company partnered with Welcome.US to provide service
through Metro by T-Mobile to refugees entering the U.S. as part of
a multi-year commitment of 200,000 lines.
- T-Mobile was the first U.S. wireless carrier to set a net-zero
emissions target that has been validated by the Science Based
Targets initiative — with a goal to achieve net-zero emissions
across the company’s entire footprint by 2040.
Financial Results
For more details on T-Mobile’s Q4 2023 and full-year 2023
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, January 25, 2024, at 4:30 p.m. (ET)
Pre-registration link for dial-in access
Participants can pre-register for the conference call here in
order to receive dial-in information.
Access via Phone (audio only)
Please plan on accessing the call 10 minutes prior to the
scheduled start time.
- Toll Free: 1-888-222-5806
- International: 1-412-902-6516
Access via Webcast
The earnings call will be broadcasted live and can be replayed
via the Investor Relations website at
https://investor.t-mobile.com.
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 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:
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 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: competition, industry consolidation and changes in the
market for wireless communications services and other forms of
connectivity; criminal cyberattacks, disruption, data loss or other
security breaches; 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 difficulties in
maintaining multiple billing systems following the Merger (as
defined below) and any unanticipated difficulties, disruption, or
significant delays in our long-term strategy to convert Sprint’s
legacy customers onto T-Mobile’s billing platforms; 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 and Swiftel Communications, Inc.), including customer accounts,
inventory, contracts, intellectual property and certain other
specified assets, and the assumption of certain related liabilities
(collectively, the “Prepaid Transaction”), the complaint and
proposed final judgment 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 over multiple years; adverse economic, political or
market conditions in the U.S. and international markets, including
changes resulting from increases in inflation or interest rates,
supply chain disruptions, and impacts of geopolitical instability,
such as the Ukraine-Russia war and Israel-Hamas war; our inability
to manage the ongoing commercial 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, divestiture, 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 inability to fully realize the
synergy benefits from 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 time frame; 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, 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 regulatory or legal
proceedings; our offering of regulated financial services products
and exposure to a wide variety of state and federal regulations;
new or amended tax laws or regulations or administrative
interpretations and judicial decisions affecting the scope or
application of tax laws or regulations; our wireless licenses,
including those controlled through leasing agreements, are subject
to renewal and may be revoked; our exclusive forum provision as
provided in our Certificate of Incorporation; interests of DT, our
controlling stockholder, which 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 dollar amount authorized for our 2023-2024 Stockholder
Return Program may not be fully utilized, and our share repurchases
and dividend payments pursuant thereto may fail to have the desired
impact on stockholder value 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”).
For our environmental, climate, or other “Environmental, Social,
and Governance (ESG)” targets, goals and commitments outlined in
this communication, we face additional risks and uncertainties,
including unexpected delays, difficulties, and expenses in
executing against such targets, goals and commitments, 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 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.
In addition, some of the statements contained in this
communication may rely on third-party information and projections
that management believes to be reputable; however, we do not
independently verify or audit this information. This communication
also 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 communication 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 communication in relation to those statements. Website
references throughout this communication are provided for
convenience only, and the content on the referenced websites is not
incorporated by reference into this communication.
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
Year Ended December
31,
(in millions)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
2022
2023
Net income (loss)
$
713
$
(108
)
$
508
$
1,477
$
1,940
$
2,221
$
2,142
$
2,014
$
2,590
$
8,317
Adjustments:
Interest expense, net
864
851
827
822
835
861
790
849
3,364
3,335
Other expense (income), net
11
21
3
(2
)
(9
)
(6
)
(41
)
(12
)
33
(68
)
Income tax (benefit) expense
218
(55
)
(57
)
450
631
717
705
629
556
2,682
Operating income
1,806
709
1,281
2,747
3,397
3,793
3,596
3,480
6,543
14,266
Depreciation and amortization
3,585
3,491
3,313
3,262
3,203
3,110
3,187
3,318
13,651
12,818
Stock-based compensation (1)
136
149
145
146
173
155
152
164
576
644
Merger-related costs
1,413
1,668
1,296
592
358
276
152
248
4,969
1,034
Impairment expense
—
477
—
—
—
—
—
—
477
—
Legal-related expenses (recoveries), net
(2)
—
400
(19
)
10
(43
)
—
—
1
391
(42
)
Loss (gain) on disposal group held for
sale
—
—
1,071
16
(42
)
17
—
—
1,087
(25
)
Other, net (3)
10
110
(48
)
55
153
54
513
13
127
733
Adjusted EBITDA
6,950
7,004
7,039
6,828
7,199
7,405
7,600
7,224
27,821
29,428
Lease revenues
(487
)
(386
)
(311
)
(246
)
(147
)
(69
)
(53
)
(43
)
(1,430
)
(312
)
Core Adjusted EBITDA
$
6,463
$
6,618
$
6,728
$
6,582
$
7,052
$
7,336
$
7,547
$
7,181
$
26,391
$
29,116
(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 and severance and
related costs associated with the August 2023 workforce reduction,
not directly attributable to the Merger, which are not reflective
of T-Mobile’s core business activities (“special items”) 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, 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 Core 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 to 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, loss and gain on
disposal group held for sale and certain legal-related recoveries
and expenses, as well as other special income and expenses which
are not reflective of T-Mobile’s core business activities.
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)
Adjusted Free Cash Flow is calculated as follows:
Quarter
Year Ended December
31,
(in millions, except
percentages)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
2022
2023
Net cash provided by operating
activities
$
3,845
$
4,209
$
4,391
$
4,336
$
4,051
$
4,355
$
5,294
$
4,859
$
16,781
$
18,559
Cash purchases of property and equipment,
including capitalized interest
(3,381
)
(3,572
)
(3,634
)
(3,383
)
(3,001
)
(2,789
)
(2,424
)
(1,587
)
(13,970
)
(9,801
)
Proceeds from sales of tower sites
—
—
—
9
6
2
2
2
9
12
Proceeds related to beneficial interests
in securitization transactions
1,185
1,121
1,308
1,222
1,345
1,309
1,131
1,031
4,836
4,816
Adjusted Free Cash Flow
$
1,649
$
1,758
$
2,065
$
2,184
$
2,401
$
2,877
$
4,003
$
4,305
$
7,656
$
13,586
Net cash provided by operating activities
margin (Net cash provided by operating activities divided by
Service revenues)
25.4
%
27.5
%
28.6
%
27.9
%
26.1
%
27.7
%
33.3
%
30.3
%
27.4
%
29.3
%
Adjusted Free Cash Flow margin (Adjusted
Free Cash Flow divided by Service revenues)
10.9
%
11.5
%
13.4
%
14.1
%
15.4
%
18.3
%
25.2
%
26.8
%
12.5
%
21.5
%
Adjusted Free Cash Flow - Net cash provided by operating
activities less Cash purchases of property and equipment, plus
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. Adjusted
Free Cash Flow is utilized by T-Mobile’s management, investors and
analysts to evaluate cash available to pay debt, repurchase shares,
pay dividends and provide further investment in the business.
Starting in Q1 2023, we renamed Free Cash Flow to Adjusted Free
Cash Flow. This change in name did not result in any change to the
definition or calculation of this non-GAAP measure.
Adjusted Free Cash Flow margin - Adjusted Free Cash Flow divided
by Service revenues. Adjusted Free Cash Flow Margin is utilized by
T-Mobile’s management, investors, and analysts to evaluate the
company’s ability to convert service revenue efficiently into cash
available to pay debt, repurchase shares and provide further
investment in the business.
The guidance range for Adjusted Free Cash Flow is calculated as
follows:
FY 2024
(in millions)
Guidance Range
Net cash provided by operating
activities
$
21,500
$
22,300
Cash purchases of property and equipment,
including capitalized interest
(8,600
)
(9,400
)
Proceeds related to beneficial interests
in securitization transactions (1)
3,400
4,000
Adjusted Free Cash Flow
$
16,300
$
16,900
(1)
Adjusted Free Cash Flow guidance
does not assume any material net cash inflows from securitization
in 2024.
T-Mobile US, Inc. Operating
Measures (Unaudited)
The following table sets forth company operating measures ARPA
and ARPU:
Quarter
Year Ended December
31,
(in dollars)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
2022
2023
Postpaid ARPA
$
136.53
$
137.92
$
137.49
$
137.78
$
138.04
$
138.94
$
139.83
$
140.23
$
137.43
$
139.27
Postpaid phone ARPU
48.41
48.96
48.89
48.86
48.63
48.84
48.93
48.91
48.78
48.83
Prepaid ARPU
39.19
38.71
38.86
38.29
37.98
37.98
38.18
37.55
38.76
37.92
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/20240124965392/en/
Media Relations: mediarelations@t-mobile.com Investor Relations:
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