T‑Mobile Delivers Industry‑Leading Customer and Cash Flow Growth in Q3 2022 and Raises 2022 Guidance for the Third Consecutive Quarter
Via T-Mobile US
Oct 27, 2022
Industry-Leading Growth in Postpaid and Broadband Customers(1)
- Postpaid net account additions of 394 thousand, best in industry and highest in company history
- Postpaid net customer additions of 1.6 million, more than AT&T and Verizon combined
- Postpaid phone net customer additions of 854 thousand, best in industry and highest since merger
- Postpaid phone churn of 0.88%, only operator to improve year-over-year
- High Speed Internet net customer additions of 578 thousand, best in industry for fourth consecutive quarter
Strong Financial Results Drive Guidance Raise for the Third Consecutive Quarter in 2022
- Service revenues of $15.4 billion grew 4% year-over-year, including industry-leading Postpaid service revenue growth of 7%
- Net income of $508 million and diluted earnings per share (“EPS”) of $0.40 decreased year-over-year primarily due to merger-related costs and loss related to the anticipated sale of the wireline business amounting to a combined impact of $1.8 billion, net of tax, or $1.41 per share
- Core Adjusted EBITDA(2) of $6.7 billion grew 11% year-over-year, best growth in industry and raising guidance
- Net cash provided by operating activities of $4.4 billion grew 26% year-over-year, best growth in industry and raising guidance
- Free Cash Flow(2) of $2.1 billion grew 32% year-over-year, best growth in industry and raising guidance
- Repurchased 4.9 million shares of common stock in the quarter for a total purchase price of $669 million
5G Network Delivers Differentiated Customer Experience and Drives Overall Network Leadership
- Further extended network leadership as the nation’s largest, fastest, most reliable and most awarded 5G network
- Ultra Capacity 5G covers 250 million people, as many as Verizon plans to cover more than two years from now
Significant Integration Milestone Accomplished with Network Decommissioning Substantially Complete
- Raising merger synergies guidance range to $5.7 billion to $5.8 billion in 2022
Bellevue, WA — October 27, 2022 — T-Mobile US, Inc. (NASDAQ: TMUS) reported third quarter 2022 results today, leading the industry in postpaid and broadband customer growth and raising 2022 guidance for the third consecutive quarter. The company’s differentiated growth strategy and industry-best year-over-year postpaid phone churn improvement drove the highest postpaid service revenue and cash flow growth in the industry. The company’s sustained performance and significant progress on integration allowed T-Mobile to receive full investment grade ratings from all three rating agencies and board approval to commence a share repurchase program for up to $14 billion of the company’s common stock through September 2023.
"We’ve always said our aspiration was to be the first and only provider to offer customers both the best network and the best value without having to sacrifice one for the other — and based on another set of standout customer and financial results for Q3, it's clear we’re delivering on that promise," said Mike Sievert, CEO of T-Mobile. "On the heels of our highest ever postpaid account net additions and industry-leading postpaid and broadband customer growth, we are raising guidance for the third time this year. Our Un-carrier playbook continues to win in this ever-changing competitive and macro-economic climate and our momentum is only getting stronger.”
Industry-Leading Growth in Postpaid and Broadband Customers
- Postpaid net account additions of 394 thousand increased 126 thousand year-over-year.
- Postpaid net customer additions of 1.6 million increased 368 thousand year-over-year.
- Postpaid phone net customer additions of 854 thousand increased 181 thousand year-over-year, leading the industry for the first time since Q1 2021. Postpaid phone churn of 0.88% improved by 8 basis points year-over-year.
- Prepaid net customer additions of 105 thousand increased 39 thousand year-over-year. Prepaid churn of 2.88% improved by 2 basis points year-over-year.
- High Speed Internet net customer additions of 578 thousand were a record high, and T-Mobile ended the quarter with over 2.1 million High Speed Internet customers.
- Total net customer additions of 1.7 million increased 407 thousand year-over-year and the total customer count increased to a record high of nearly 112 million.
Strong Financial Results
- Total service revenues increased 4% year-over-year to $15.4 billion, which included Postpaid service revenue growth of 7% year-over-year driven by continued customer growth.
- Net income of $508 million and Diluted EPS of $0.40 decreased year-over-year primarily due to the impacts in the current quarter, net of tax, associated with merger-related costs of $972 million, or $0.77 per share and loss related to the anticipated sale of the wireline business of $803 million, or $0.64 per share.
- Core Adjusted EBITDA increased 11% year-over-year to $6.7 billion primarily due to Service revenue growth and increased synergy realization.
- Net cash provided by operating activities increased 26% year-over-year to $4.4 billion, which included cash payments for merger-related costs of $942 million.
- Cash purchases of property and equipment, including capitalized interest, increased 23% year-over-year to $3.6 billion driven by the accelerated build-out of the nationwide 5G network.
- Free Cash Flow increased 32% year-over-year to $2.1 billion, which included cash payments for merger-related costs of $942 million.
5G Network Delivers Differentiated Customer Experience and Drives Overall Network Leadership
T-Mobile is the leader in 5G with the country’s largest, fastest, most reliable and most awarded 5G network. The Un-carrier’s Extended Range 5G covers 97% of Americans, reaching more square miles than Verizon and AT&T combined, and its super-fast Ultra Capacity 5G covers 250 million people nationwide. Nearly 55% of T-Mobile’s postpaid customers have a 5G phone.
T-Mobile’s most awarded 5G network continues to lead the nation:
- Ookla: In its Q3 Speedtest Global Index Market Analysis of mobile providers, T-Mobile placed first in almost every category:
- Winning as the fastest overall provider with the fastest download and upload speeds, highest consistency and best overall video score.
- For 5G specific performance, T-Mobile was ranked #1 for 5G download speeds and 5G availability and was unsurpassed for 5G video score and 5G consistency.
- T-Mobile’s median 5G download speeds were even faster than Comcast, Verizon, and AT&T’s fixed broadband median download speeds.
- Opensignal: In its 2022 5G Global Mobile Network Experience Awards, T-Mobile won big for having the best 5G availability and reach in the world.
- umlaut: In its latest 5G Network Performance Audit Report, T-Mobile was once again named as the most reliable 5G network in the country with the best coverage, stability and speeds.
Raising 2022 Merger Synergies Guidance on Accelerated Integration Progress
T-Mobile achieved a huge milestone with the network decommissioning substantially complete, less than 2.5 years post-merger closing, and more than a year ahead of the original merger plan.
Based on the continued strength of execution, T-Mobile is raising its merger synergies guidance range to $5.7 billion to $5.8 billion in 2022, up from the previous range of $5.4 billion to $5.6 billion.
- Approximately $2.4 billion of selling, general and administrative (SG&A) expense reductions
- Approximately $2.0 billion to $2.1 billion of cost of service expense reductions achieved through network efficiencies
- Approximately $1.3 billion of savings related to avoided network site builds
Raising 2022 Guidance Again
- Postpaid net customer additions are expected to be between 6.2 million and 6.4 million, an increase from prior guidance of 6.0 million to 6.3 million.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease revenues, is expected to be between $26.2 billion and $26.4 billion, an increase from prior guidance of $26.0 billion to $26.3 billion.
- Merger-related costs are expected to be between $4.8 billion and $5.0 billion before taxes, an increase from prior guidance of $4.7 billion to $5.0 billion. These costs are excluded from Core Adjusted EBITDA but will impact Net income, Net cash provided from operating activities and Free Cash Flow.
- Net cash provided by operating activities, including payments for Merger-related costs, is expected to be between $16.3 billion and $16.5 billion, an increase from prior guidance of $16.0 billion to $16.3 billion.
- Cash purchases of property and equipment, including capitalized interest, are expected to be between $13.7 billion to $13.9 billion, an increase from prior guidance of $13.5 billion to $13.7 billion, reflecting T-Mobile’s accelerated build-out of its nationwide 5G network and purchases of High Speed Internet routers.
- Free Cash Flow, including payments for Merger-related costs, is expected to be between $7.4 billion and $7.6 billion, an increase from prior guidance of $7.3 billion to $7.6 billion. Free Cash Flow guidance does not assume any material net cash inflows from securitization.
Doing Better by Doing Good — the Un-carrier Way
T-Mobile continues to stay true to its commitment to use its network, scale and resources for good, building a more connected, equitable and sustainable future. Most recently:
- T-Mobile published its second annual Corporate Responsibility Report, sharing its progress to bridge the digital divide, provide equitable opportunities and support a thriving planet.
- Through Project 10Million, T-Mobile has made offering reliable and affordable connectivity to students a priority, investing $3.65 billion in services to connect more than 4.3 million students since 2020.
- T-Mobile received multiple recognitions in the third quarter, including:
- Finalist in Fast Company’s 2022 Best Workplaces for Innovators in both the Diversity and Sustainability categories
- Environmental Protection Agency (EPA) 2022 Green Power Leadership award
- Leading Disability Employer by The National Organization on Disability
- T-Mobile’s Emergency Management and Community Support teams supported more than 10,000 people during Hurricanes Ian and Fiona with thousands of supplies including smart phones, hot spots and charging banks, as well as free Wi-Fi connectivity.
- As part of T-Mobile’s commitment to bring 5G to rural America and support economic and community development, the Un-carrier has given more than $5.5 million to date to kick-start 125 community development projects across 37 states.
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