The Un-carrier’s Differentiated Growth
Strategy Drives Industry-Best Growth of 6.4 Million Postpaid
Customers and Establishes T-Mobile as America’s Fastest Growing
Broadband Provider
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading and Record High
Postpaid and Broadband Customer Growth in 2022
- Postpaid net account additions of 314 thousand in Q4 2022 — 1.4
million in 2022, record high(1)
- Postpaid net customer additions of 1.8 million in Q4 2022 — 6.4
million in 2022, exceeded guidance
- Postpaid phone net customer additions of 927 thousand in Q4
2022 — 3.1 million in 2022, only operator to grow
year-over-year(1)
- Postpaid phone churn of 0.92% in Q4 2022 — 0.88% in 2022,
record low, only operator to improve
- High Speed Internet net customer additions of 524 thousand in
Q4 2022 — 2.0 million in 2022, industry-best
Differentiated Growth Model Unlocks
Strong Financial Results and Accelerates Shareholder Returns in
2022
- Service revenues of $15.5 billion in Q4 2022 — $61.3 billion in
2022, record high
- Postpaid service revenues of $11.7 billion in Q4 2022 — $45.9
billion in 2022, industry-leading growth of 8%
- Net income of $1.5 billion in Q4 2022 — $2.6 billion in 2022,
which included merger-related costs, decreased 14%
- Core Adjusted EBITDA(2) of $6.6 billion in Q4 2022 — $26.4
billion in 2022, industry-leading growth of 12% and at high end of
guidance
- Net cash provided by operating activities of $4.3 billion in Q4
2022 — $16.8 billion in 2022, industry-leading growth of 21%,
exceeded guidance
- Free Cash Flow(2) of $2.2 billion in Q4 2022 — $7.7 billion in
2022, industry-leading growth of 36%, exceeded guidance
- Repurchased 21.4 million shares of common stock in 2022 for
$3.0 billion
Independent Third Party Experts Crown
T-Mobile the New Overall Network Leader While Extending 5G
Lead
- T-Mobile’s overall network performance swept the competition
for the first time according to Ookla
Doing Good — The Un-carrier Way —
Ranked Top 20 on America’s Most JUST Companies in
2023
- Committed to net-zero target by 2040, first in US wireless
industry, and signed The Climate Pledge
- Project 10Million connected more than 5.3 million students,
more than halfway toward achieving its goal
Strong 2023 Outlook Driven by Continued
Profitable Customer Growth and Merger Synergies
- Core Adjusted EBITDA(2) is expected to grow 10% at
mid-point
- Net cash provided by operating activities is expected to grow
8% at mid-point and Free Cash Flow(2) is expected to grow
approximately 75% at mid-point
T-Mobile US, Inc. (NASDAQ: TMUS) reported fourth quarter and
full-year 2022 results today, delivering industry-leading postpaid
service revenue and cash flow growth in 2022, enabling the
Un-carrier to begin shareholder returns earlier than planned.
T-Mobile further extended its fame for value while translating its
5G lead into overall network leadership for the first time,
resulting in the company’s lowest ever annual postpaid phone churn
along with industry-best and record high postpaid account, postpaid
customer and broadband customer growth in 2022.
“With record postpaid account and customer net adds that
translated into industry-leading postpaid service revenue and cash
flow growth, T-Mobile absolutely smashed 2022 by once again
focusing on putting customers first,” said Mike Sievert, CEO of
T-Mobile. “In true Un-carrier fashion, we have no plans to slow
down in 2023. Now that we are being recognized as not only the 5G
leader but the clear overall network leader in the U.S., our
differentiated and sustainable growth strategy is opening up even
bigger pathways for our future!”
___________________________________________________________
(1)
AT&T Inc. historically does
not disclose postpaid net account additions. Comcast and Charter do
not disclose postpaid phone net additions.
(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 and Record High
Postpaid Account, Postpaid Customer and Broadband Growth in
2022(1)
- Postpaid net account additions were 314 thousand in Q4
2022 and reached a record 1.4 million for 2022.
- Postpaid net customer additions were 1.8 million in Q4
2022 and reached a record 6.4 million for 2022, above the high end
of the company’s most recently increased annual guidance range of
6.2 to 6.4 million.
- Postpaid phone net customer additions were 927 thousand
in Q4 2022 and 3.1 million for 2022. Postpaid phone churn in Q4
2022 of 0.92% improved 18 basis points year-over-year, and 2022
churn of 0.88% improved 10 basis points year-over-year.
- Prepaid net customer additions were 25 thousand in Q4
2022 and 338 thousand for 2022. Prepaid churn was 2.93% in Q4 2022,
and 2022 churn of 2.77% was the lowest in company history.
- High Speed Internet net customer additions were 524
thousand in Q4 2022 and 2.0 million for 2022. T-Mobile ended the
year with 2.6 million High Speed Internet customers.
- Total net customer additions were 1.8 million in Q4 2022
and reached a record 6.8 million for 2022. The total customer count
increased to a record high of 113.6 million.
Quarter
Year Ended December
31,
(in thousands, except churn)
Q4 2022
Q3 2022
Q4 2021
2022
2021
Postpaid net account additions
314
394
315
1,436
1,188
Total net customer additions
1,843
1,732
1,799
6,757
5,837
Postpaid net customer additions
1,818
1,627
1,750
6,419
5,495
Postpaid phone net customer additions
927
854
844
3,093
2,917
Postpaid other net customer additions
(2)
891
773
906
3,326
2,578
Prepaid net customer additions (2)
25
105
49
338
342
Total customers, end of period
(2)(3)(4)
113,598
111,755
108,719
113,598
108,719
Postpaid phone churn
0.92
%
0.88
%
1.10
%
0.88
%
0.98
%
Prepaid churn
2.93
%
2.88
%
3.01
%
2.77
%
2.83
%
High Speed Internet net customer
additions
524
578
224
2,000
546
Total High Speed Internet customers, end
of period
2,646
2,122
646
2,646
646
(1)
AT&T Inc. historically does
not disclose postpaid net account additions. Comcast and Charter do
not disclose postpaid phone net additions.
(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 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.
(4)
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
$15.5 billion in Q4 2022 and 5% year-over-year to $61.3 billion in
2022, which included Postpaid service revenue growth of 7%
year-over-year in Q4 2022 and 8% growth year-over-year in
2022.
- Net income increased 250% year-over-year to $1.5 billion
in Q4 2022 and decreased 14% year-over-year to $2.6 billion in
2022, which included, net of tax, merger-related costs of $3.7
billion and loss associated with the anticipated sale of the
wireline business of $815 million. Diluted EPS increased
year-over-year to $1.18 per share in Q4 2022 and decreased
year-over-year to $2.06 per share in 2022.
- Core Adjusted EBITDA increased 16% year-over-year to
$6.6 billion in Q4 2022 and increased 12% year-over-year to $26.4
billion in 2022, primarily due to Service revenue growth and
increased synergy realization.
- Net cash provided by operating activities increased 45%
year-over-year to $4.3 billion in Q4 2022 and increased 21%
year-over-year to $16.8 billion in 2022, which included cash
payments for merger-related costs of $622 million in Q4 2022 and
$3.4 billion in 2022.
- Cash purchases of property and equipment, including
capitalized interest, increased 16% year-over-year to $3.4
billion in Q4 2022 and increased 13% year-over-year to $14.0
billion in 2022 driven by the accelerated build-out of the
nationwide 5G network.
- Free Cash Flow increased 96% year-over-year to $2.2
billion in Q4 2022 and increased 36% year-over-year to $7.7 billion
in 2022, which included cash payments for merger-related costs of
$622 million in Q4 2022 and $3.4 billion in 2022.
- Common stock repurchases of 16.5 million shares for $2.3
billion in Q4 2022 and 21.4 million shares for $3.0 billion in
2022, with remaining authorization of up to $11.0 billion through
the end of September 2023.
Quarter
Year Ended December
31,
Q4 2022 vs. Q3
2022
Q4 2022 vs. Q4
2021
YTD 2022 vs. YTD
2021
(in millions, except EPS)
Q4 2022
Q3 2022
Q4 2021
2022
2021
Total service revenues
$
15,518
$
15,361
$
14,963
$
61,323
$
58,369
1.0
%
3.7
%
5.1
%
Postpaid service revenues
11,725
11,548
10,963
45,919
42,562
1.5
%
7.0
%
7.9
%
Total revenues
20,273
19,477
20,785
79,571
80,118
4.1
%
(2.5
)%
(0.7
)%
Net income
1,477
508
422
2,590
3,024
190.7
%
250.0
%
(14.4
)%
Diluted EPS
1.18
0.40
0.34
2.06
2.41
195.0
%
247.1
%
(14.5
)%
Adjusted EBITDA
6,828
7,039
6,302
27,821
26,924
(3.0
)%
8.3
%
3.3
%
Core Adjusted EBITDA
6,582
6,728
5,679
26,391
23,576
(2.2
)%
15.9
%
11.9
%
Net cash provided by operating
activities
4,336
4,391
3,000
16,781
13,917
(1.3
)%
44.5
%
20.6
%
Cash purchases of property and equipment,
including capitalized interest
3,383
3,634
2,929
13,970
12,326
(6.9
)%
15.5
%
13.3
%
Free Cash Flow
2,184
2,065
1,112
7,656
5,646
5.8
%
96.4
%
35.6
%
Independent Third Party Experts Crown
T-Mobile the New Overall Network Leader While Extending 5G
Lead
T-Mobile is the leader in 5G with the country’s largest,
fastest, most reliable and most awarded 5G network. The company’s
5G network covers 325 million people (98% of Americans), and its
super-fast Ultra Capacity 5G covers 265 million people nationwide.
Approximately 60% of T-Mobile’s postpaid customers have a 5G phone
and approximately two-thirds of all traffic is on 5G.
Furthermore, the Un-carrier’s 5G network leadership is
translating into overall network leadership as noted by multiple
third parties. For the first time, T-Mobile takes the crown as the
overall network leader in America:
- Ookla: In its Q4 Speedtest Global Index Market Analysis
of mobile providers, T-Mobile’s overall network performance swept
the competition and placed first in all categories while its 5G
network repeated major wins:
- Overall Network Performance: Fastest mobile operator in the US,
lowest multi-server latency, most consistent network, best place to
stream video
- 5G Network Performance: Best 5G network performance and most
consistent 5G experience
- Opensignal: T-Mobile secured major wins on overall
network, winning seven of eight awards across experience (including
video, games, voice and speeds) and consistency.
- 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.
Accelerated Integration Progress
Positions T-Mobile to Approach Full Run-Rate Merger Synergies in
2023
T-Mobile achieved a huge milestone by substantially completing
the network decommissioning in Q3 2022, less than 2.5 years
post-merger closing, and more than a year ahead of the original
merger plan. The company expects to substantially complete its
integration by the end of 2023.
T-Mobile realized approximately $6.0 billion in Merger synergies
in 2022, with $2.5 billion of selling, general and administrative
(SG&A) expense reductions and $2.2 billion of cost of services
expense reductions, which increased cash flows while funding growth
initiatives and network build, and $1.3 billion in avoided network
build costs.
The company incurred Merger-related costs of $592 million in Q4
2022 and $5.0 billion in 2022. Net of taxes, Merger-related costs
were $444 million, or $0.36 per share, in Q4 2022 and $3.7 billion,
or $2.97 per share, in 2022. Cash payments for merger-related costs
were $622 million in Q4 2022 and $3.4 billion in 2022.
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:
- The Un-carrier recently announced its most ambitious
sustainability goal yet — to achieve net-zero emissions across the
company’s entire carbon footprint by 2040, making T-Mobile the
first U.S. wireless carrier to set a net-zero target that has been
validated by the Science Based Targets initiative.
- T-Mobile has also signed The Climate Pledge, joining other
leading companies who vow to reach net-zero carbon emissions by
2040
- Since launching Project 10Million in 2020, T-Mobile has focused
on bringing critical connectivity to underserved students
nationwide. Through the end of 2022, T-Mobile has provided $4.8
billion in services to connect more than 5.3 million students
across the US.
- T-Mobile received multiple recognitions in the fourth quarter:
- JUST Capital ranked T-Mobile #20 on its 2023 Rankings of
America’s Most JUST Companies, including #1 in the
telecommunications industry for environment, in recognition of its
ongoing progress and commitment to driving responsible business
practices and positive environmental and social impact
- Received 2022 Military Spouse Employment and Mentoring award
from Hiring Our Heroes
- Featured in Seramount’s 2022 Inclusion Index for progress on
creating inclusive workplaces
Strong 2023 Outlook Driven by Continued
Profitable Customer Growth and Merger Synergies
- Postpaid net customer additions are expected to be between 5.0
million and 5.5 million, expected to lead the industry for the 9th
consecutive year.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $28.7 billion and $29.2
billion, up 10% year-over-year at the mid-point.
- Merger synergies are expected to be between $7.2 billion and
$7.5 billion, including $2.5 billion to $2.7 billion of SG&A
expense reductions, $3.1 billion to $3.2 billion of cost of service
expense reductions and approximately $1.6 billion in avoided
network build costs.
- Merger-related costs are expected to be approximately $1.0
billion before taxes. These costs are excluded from Core Adjusted
EBITDA but will impact Net income, Net cash provided by operating
activities and Free Cash Flow.
- Net cash provided by operating activities, including payments
for Merger-related costs, is expected to be between $17.8 billion
and $18.3 billion, up 8% year-over-year at the mid-point.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $9.4 billion and $9.7
billion.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $13.1 billion and $13.6 billion, up
approximately 75% year-over-year at the mid-point. Free Cash Flow
guidance does not assume any material net cash inflows from
securitization.
(in millions, except Postpaid net
customer additions)
FY 2023 Guidance
Postpaid net customer additions
(thousands)
5,000
5,500
Net income (1)
N/A
N/A
Core Adjusted EBITDA (2)
$
28,700
$
29,200
Merger synergies
$
7,200
$
7,500
Merger-related costs (3)
~$1,000
Net cash provided by operating
activities
$
17,800
$
18,300
Capital expenditures (4)
$
9,400
$
9,700
Free Cash Flow (5)
$
13,100
$
13,600
(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 $300 million for 2023.
(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
2023.
Financial Results
For more details on T-Mobile’s Q4 2022 and full-year 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
- Wednesday, February 1, 2023, at 8:00 a.m. (ET)
Access via Phone (audio only)
Please plan on accessing the call 10 minutes prior to the
scheduled start time.
- US/Canada: 877-390-2342
- International: +1 309-216-6532
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
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 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: competition, industry consolidation and changes in the
market for wireless communication 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 (“Shentel”) 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 disruption, impacts of current
geopolitical instability caused by the war in Ukraine; 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,
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, 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 2022 Stock Repurchase Program may not
be fully consummated, our share repurchase program may not enhance
long-term stockholder value 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
Year Ended December
31,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
2021
2022
Net income (loss)
$
933
$
978
$
691
$
422
$
713
$
(108
)
$
508
$
1,477
$
3,024
$
2,590
Adjustments:
Interest expense, net
835
850
836
821
864
851
827
822
3,342
3,364
Other expense (income), net
125
1
60
13
11
21
3
(2
)
199
33
Income tax expense (benefit)
246
277
(3
)
(193
)
218
(55
)
(57
)
450
327
556
Operating income
2,139
2,106
1,584
1,063
1,806
709
1,281
2,747
6,892
6,543
Depreciation and amortization
4,289
4,077
4,145
3,872
3,585
3,491
3,313
3,262
16,383
13,651
Stock-based compensation (1)
130
129
127
135
136
149
145
146
521
576
Merger-related costs
298
611
955
1,243
1,413
1,668
1,296
592
3,107
4,969
Impairment expense
—
—
—
—
—
477
—
—
—
477
Legal-related expenses (recoveries), net
(2)
—
—
—
—
—
400
(19
)
10
—
391
Loss on disposal group held for sale
—
—
—
—
—
—
1,071
16
—
1,087
Other, net (3)
49
(17
)
—
(11
)
10
110
(48
)
55
21
127
Adjusted EBITDA
6,905
6,906
6,811
6,302
6,950
7,004
7,039
6,828
26,924
27,821
Lease revenues
(1,041
)
(914
)
(770
)
(623
)
(487
)
(386
)
(311
)
(246
)
(3,348
)
(1,430
)
Core Adjusted EBITDA
$
5,864
$
5,992
$
6,041
$
5,679
$
6,463
$
6,618
$
6,728
$
6,582
$
23,576
$
26,391
(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 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, losses on disposal
groups 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)
Free Cash Flow is calculated as follows:
Quarter
Year Ended December
31,
(in millions)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
2021
2022
Net cash provided by operating
activities
$
3,661
$
3,779
$
3,477
$
3,000
$
3,845
$
4,209
$
4,391
$
4,336
$
13,917
$
16,781
Cash purchases of property and equipment,
including capitalized interest
(3,183
)
(3,270
)
(2,944
)
(2,929
)
(3,381
)
(3,572
)
(3,634
)
(3,383
)
(12,326
)
(13,970
)
Proceeds from sales of tower sites
—
31
—
9
—
—
—
9
40
9
Proceeds related to beneficial interests
in securitization transactions
891
1,137
1,071
1,032
1,185
1,121
1,308
1,222
4,131
4,836
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
$
2,184
$
5,646
$
7,656
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, repurchase shares and provide further
investment in the business.
The guidance range for Free Cash Flow is calculated as
follows:
FY 2023
(in millions)
Guidance Range
Net cash provided by operating
activities
$
17,800
$
18,300
Cash purchases of property and equipment,
including capitalized interest
(9,400
)
(9,700
)
Proceeds related to beneficial interests
in securitization transactions (1)
4,700
5,000
Free Cash Flow
$
13,100
$
13,600
(1)
Free Cash Flow guidance does not assume
any material net cash inflows from securitization in 2023.
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 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
2021
2022
Postpaid ARPA
$
132.91
$
133.55
$
134.54
$
135.04
$
136.53
$
137.92
$
137.49
$
137.78
$
134.03
$
137.43
Postpaid phone ARPU
47.30
47.61
48.06
48.03
48.41
48.96
48.89
48.86
47.75
48.78
Prepaid ARPU
37.81
38.53
39.49
39.32
39.19
38.71
38.86
38.29
38.79
38.76
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/20230131006180/en/
Media Relations: mediarelations@t-mobile.com Investor Relations:
investor.relations@t-mobile.com
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