T-Mobile delivers industry-leading growth in postpaid service revenues, postpaid customers and cash flow in Q3

BELLEVUE, Wash. -- 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 GAAPfinancial 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.

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.

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.
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