T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Customer Growth
Strong Financial Performance (all
percentages year-over-year)
Network Expansion Continues, Garners Industry
Accolades
Continued Strong Outlook for 2018
________________________________________________________________
We are not able to forecast net income on a forward-looking basis
without unreasonable efforts due to the high variability and
difficulty in predicting certain items that affect GAAP net income
including, but not limited to, income tax expense, stock-based
compensation expense and interest expense. Adjusted EBITDA should
not be used to predict net income as the difference between the
two measures is variable.
T-Mobile US, Inc. (NASDAQ: TMUS) reported record results in the second
quarter of 2018 with industry-leading branded customer growth,
record-high service revenues, record-high Q2 profitability, and
record-low postpaid phone churn. The Un-carrier has changed wireless for
good and proven that putting customers first is the best way to deliver
sustained, industry-leading results. T-Mobile continues to balance
growth and profitability – delivering records in both categories in the
second quarter of 2018.
T-Mobile once again outperformed the competition as the company
continues to optimize its offers for key segments of the market, expand
into new geographies and set the standard for customer experience. This
has resulted in growth in postpaid phone net additions both sequentially
and year-over-year as the Un-carrier again leads the industry in the
second quarter with nearly twice the aggregate postpaid phone net
additions of Verizon, AT&T, Sprint and Comcast combined and more than
three times the net additions of our next closest competitor, Comcast.
In addition, the company delivered record-low postpaid phone churn of
0.95% – the best result in company history. These results have
translated into record-high service revenues, which T-Mobile has now
grown year-over-year for 17 quarters in a row.
“T-Mobile just recorded its best Q2 in company history,” said John
Legere, CEO of T-Mobile. “That means 21 quarters with over one million
net adds, record-high service revenues, industry-leading postpaid phone
net additions, and record-low postpaid phone churn. Our business is
strong, our strategy is working and we won’t stop!”
Industry-Leading Customer Growth
T-Mobile continues to deliver industry-leading customer growth, and Q2
2018 was no different. We once again led the industry in branded
postpaid phone customer net additions, capturing about two thirds of the
segment. Customers continue to choose the Un-carrier over the
competition as we put all our energy and efforts into giving our
customers more value and treating them right.
Six Months EndedJune 30,
Strong Financial Performance
Our strong customer results translated into record financial results.
T-Mobile again posted record-high service revenues, and Q2 marks the
17th quarter in a row where we led the industry in year-over-year
service revenue percentage growth. In addition, the company posted
strong net income and record Adjusted EBITDA.
Six Months EndedJune 30,
Q2 2018vs.Q1 2018
Q2 2018vs.Q2 2017
YTD 2018vs.YTD 2017
Network Expansion Continues, Garners Industry
Accolades
T-Mobile continues to increase and expand the speed and capacity of our
network to better serve our customers. Our advancements in network
technology and our spectrum resources ensure we can continue to increase
the capabilities of our network as the industry moves towards 5G.
Highlights from Q2 2018 included:
Continued Strong 2018 Outlook
In 2018, we expect postpaid net customer additions between 3.0 and 3.6
million, an increase from the prior target range of 2.6 to 3.3 million.
Net income is not available on a forward-looking basis.
Adjusted EBITDA is expected to be between $11.5 and $11.9 billion, an
increase from the prior target range of $11.4 to $11.8 billion. Our
Adjusted EBITDA target includes leasing revenues of $0.6 to $0.7
billion, unchanged from the prior guidance. Including the estimated
impact of the new revenue standard, Adjusted EBITDA is expected to
increase by an additional $0.2 to $0.5 billion for a total guidance
range of $11.7 to $12.4 billion.
For full-year 2018, we continue to expect branded postpaid phone ARPU to
be generally stable compared to full-year 2017, excluding the impact
from the new revenue standard.
Cash purchases of property and equipment, excluding capitalized
interest, are expected to be between $4.9 and $5.3 billion, unchanged
from the prior target range, but are now expected to come in at the high
end of the range. This includes expenditures for 5G deployment.
The adoption of the new cash flow accounting standard resulted in a
reclassification of cash flows related to our deferred purchase price
from securitization transactions from operating activities to investing
activities. In addition, cash flows related to debt prepayment and
extinguishment costs were reclassified from operating activities to
financing activities. In Q1 2018, we redefined Free Cash Flow to reflect
the above changes in classification and present cash flows on a
consistent basis for investor transparency. Please see the
reconciliation of non-GAAP measures in this earnings release for details
on the revised definition, which was applied retroactively to 2017.
The three-year CAGR guidance (2016 – 2019) for net cash provided by
operating activities and Free Cash Flow is unchanged at 7% – 12% and 46%
– 48%, respectively.
In 2018, we continue to expect the following impacts from the adoption
of the new revenue standard:
Financial Results
For more details on T-Mobile’s Q2 2018 financial results, including the
Investor Factbook with detailed financial tables and reconciliations of
certain historical non-GAAP measures disclosed in this release to the
most comparable measures under GAAP, please visit T-Mobile US, Inc.’s
Investor Relations website at http://investor.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, press releases, SEC filings and public conference calls and
webcasts. We also intend to use the @TMobileIR Twitter account (https://twitter.com/TMobileIR)
and the @JohnLegere Twitter (https://twitter.com/JohnLegere),
Facebook and Periscope accounts, which Mr. Legere also uses as a means
for personal communications and observations, as means of disclosing
information about the Company and its services and for complying with
its disclosure obligations under Regulation FD. 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.
As America’s Un-carrier, T-Mobile US, Inc. (NASDAQ: TMUS) is redefining
the way consumers and businesses buy wireless services through leading
product and service innovation. Our advanced nationwide 4G LTE network
delivers outstanding wireless experiences to approximately 76 million
customers who are unwilling to compromise on quality and value. Based in
Bellevue, Washington, T-Mobile US provides services through its
subsidiaries and operates its flagship brands, T-Mobile and MetroPCS.
For more information, please visit http://www.t-mobile.com
or join the conversation on Twitter using $TMUS.
Q2 2018 Earnings Call, Livestream and Webcast
Access Information
Access via Phone (audio only):
Please plan on accessing the earnings call ten minutes prior to the
scheduled start time.
Access via Social Media:
The @TMobileIR Twitter account will live-tweet the earnings call.
Submit Questions via Text, Twitter, or Facebook:
Access via Webcast:
The earnings call will be broadcast live via our Investor Relations
website at http://investor.t-mobile.com.
A replay of the earnings call will be available for two weeks starting
shortly after the call concludes and can be accessed by dialing
888-203-1112 (toll free) or +1 719-457-0820 (international). The
passcode required to listen to the replay is 7079522.
To automatically receive T-Mobile financial news by e-mail, please visit
the T-Mobile Investor Relations website, http://investor.t-mobile.com,
and subscribe to E-mail Alerts.
Forward-Looking Statements
This news release includes “forward-looking statements” within the
meaning of the U.S. federal securities laws. Any statements made herein
that are not statements of historical fact, including statements
about T-Mobile US, Inc.’s plans, outlook, beliefs, opinions,
projections, guidance, strategy, store openings, position within the
industry relative to its competitors, deployment of spectrum and
expected network modernization and other advancements, are
forward-looking statements. Generally, forward-looking statements may be
identified by words such as “anticipate,” “expect,” “suggests,” “plan,”
“project,” “believe,” “intend,” “estimates,” “targets,” “views,” “may,”
“will,” “forecast,” “outlook,” and other similar expressions. The
forward-looking statements speak only as of the date made, are based on
current assumptions and expectations, and involve a number of risks and
uncertainties. 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: the
failure to obtain, or delays in obtaining, required regulatory approvals
for the proposed transaction with Sprint, and the risk that such
approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of the
proposed transaction with Sprint Corporation (“Sprint”), or the failure
to satisfy any of the other conditions to the proposed transaction with
Sprint on a timely basis or at all; the occurrence of events that may
give rise to a right of one or both of the parties to terminate the
Business Combination Agreement with Sprint; adverse effects on the
market price of our or Sprint’s common stock and on our or Sprint’s
operating results because of a failure to complete the proposed
transaction in the anticipated timeframe or at all; inability to obtain
the financing contemplated to be obtained in connection with the
proposed transaction on the expected terms or timing or at all; the
ability of us, Sprint and the combined company to make payments on debt
or to repay existing or future indebtedness when due or to comply with
the covenants contained therein; adverse changes in the ratings of our
or Sprint’s debt securities or adverse conditions in the credit markets;
negative effects of the announcement, pendency or consummation of the
proposed transaction on the market price of our or Sprint’s common stock
and on our or Sprint’s operating results, including as a result of
changes in key customer, supplier, employee or other business
relationships; significant costs related to the proposed transaction,
including financing costs, and unknown liabilities; failure to realize
the expected benefits and synergies of the proposed transaction in the
expected timeframes or at all; costs or difficulties related to the
integration of Sprint’s network and operations into our network and
operations; the risk of litigation or regulatory actions related to the
proposed transaction; the inability of us, Sprint or the combined
company to retain and hire key personnel; the risk that certain
contractual restrictions contained in the Business Combination Agreement
during the pendency of the proposed transaction could adversely affect
our or Sprint’s ability to pursue business opportunities or strategic
transactions; effects of changes in the regulatory environment in which
we and Sprint operate; adverse economic or political conditions in the
U.S. and international markets; competition, industry consolidation, and
changes in the market for wireless services could negatively affect our
ability to attract and retain customers; the effects of any future
merger, investment, or acquisition involving us, as well as the effects
of mergers, investments, or acquisitions in the technology, media and
telecommunications industry; challenges in implementing our business
strategies or funding our operations, including payment for additional
spectrum or network upgrades; the possibility that we may be unable to
renew our spectrum licenses on attractive terms or acquire new spectrum
licenses at reasonable costs and terms; difficulties in managing growth
in wireless data services, including network quality; material changes
in available technology and the effects of such changes, including
product substitutions and deployment costs and performance; the timing,
scope and financial impact of our deployment of advanced network and
business technologies; the impact on our networks and business from
major technology equipment failures; breaches of our and/or our
third-party vendors’ networks, information technology and data security;
natural disasters, terrorist attacks or similar incidents; unfavorable
outcomes of existing or future litigation; any changes in the regulatory
environments in which we operate, including any increase in restrictions
on the ability to operate our networks; any disruption or failure of our
third parties’ or key suppliers’ provisioning of products or services;
material adverse changes in labor matters, including labor campaigns,
negotiations or additional organizing activity, and any resulting
financial, operational and/or reputational impact; the ability to make
payments on our debt or to repay our existing indebtedness when due or
to comply with the covenants contained therein; adverse change in the
ratings of our debt securities or adverse conditions in the credit
markets; changes in accounting assumptions that regulatory agencies,
including the Securities and Exchange Commission (“SEC”), may require,
which could result in an impact on earnings; changes in tax laws,
regulations and existing standards and the resolution of disputes with
any taxing jurisdictions; the possibility that the reset process under
our trademark license with Deutsche Telekom AG results in changes to the
royalty rates for our trademarks; and other risks described in our
filings with the SEC. You should not place undue reliance on these
forward-looking statements. We do not undertake to update
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
T-Mobile US, Inc.Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures(Unaudited)
This Press Release includes non-GAAP financial measures. The non-GAAP
financial measures should be considered in addition to, but not as a
substitute for, the information provided in accordance with GAAP.
Reconciliations for the non-GAAP financial measures to the most directly
comparable GAAP financial measures are provided below. T-Mobile is not
able to forecast net income on a forward-looking basis without
unreasonable efforts due to the high variability and difficulty in
predicting certain items that affect GAAP net income including, but not
limited to, income tax expense, stock-based compensation expense and
interest expense. Adjusted EBITDA should not be used to predict net
income as the difference between the two measures is variable.
Adjusted EBITDA is reconciled to net income as follows:
Six Months EndedJune 30,
Adjusted EBITDA – Earnings before Interest expense, net of Interest
income, Income tax expense, depreciation and amortization expense,
non-cash stock-based compensation and certain expenses not reflective of
T-Mobile’s ongoing operating performance. Adjusted EBITDA margin
represents Adjusted EBITDA divided by service revenues. Adjusted EBITDA
is a non-GAAP financial measure utilized by T-Mobile’s management to
monitor the financial performance of our operations. T-Mobile uses
Adjusted EBITDA internally as a metric to evaluate and compensate its
personnel and management for their performance, and as a benchmark to
evaluate T-Mobile’s operating performance in comparison to its
competitors. Management believes analysts and investors use Adjusted
EBITDA as a supplemental measure to evaluate overall operating
performance and facilitate comparisons with other wireless
communications companies because it is 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, non-cash stock-based compensation, network
decommissioning costs and costs related to the proposed Sprint
transaction, as they are not indicative of T-Mobile’s ongoing operating
performance, as well as certain other nonrecurring income and expenses.
Adjusted EBITDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for income from operations,
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)
Net debt (excluding Tower obligations) to last twelve months Net income
and Adjusted EBITDA ratios are calculated as follows:
Net debt – Short-term debt, short-term debt to affiliates, long-term
debt (excluding tower obligations), and long-term debt to affiliates,
less cash and cash equivalents.
Free Cash Flow(1) is calculated as follows:
Six Months EndedJune 30,
Free Cash Flow – Net cash provided by operating activities less cash
purchases of property and equipment, including proceeds related to
beneficial interests in securitization transactions and less cash
payments for debt prepayment of debt extinguishment costs. Free Cash
Flow is utilized by T-Mobile’s management, investors, and analysts to
evaluate cash available to pay debt and provide further investment in
the business.
T-Mobile US, Inc.Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures (continued)(Unaudited)
Free Cash Flow(1) three-year CAGR is calculated as follows:
T-Mobile US, Inc.Reconciliation of Operating Measures to
Service Revenues(Unaudited)
The following tables illustrate the calculation of our operating
measures ARPU and Average Billings Per User (ABPU) and reconcile these
measures to the related service revenues:
Six Months EndedJune 30,
Average Revenue Per User (ARPU) – Average monthly service revenues
earned from customers. Service revenues for the specified period divided
by the average customers during the period, further divided by the
number of months in the period.
Branded postpaid phone ARPU excludes mobile broadband and DIGITS
customers and related revenues.
Average Billings per User (ABPU) – Average monthly branded postpaid
service revenues earned from customers plus monthly equipment
installment plan (EIP) billings and lease revenues divided by the
average branded postpaid customers during the period, further divided by
the number of months in the period. T-Mobile believes branded postpaid
ABPU is indicative of estimated cash collections, including device
financing payments, from T-Mobile’s postpaid customers each month.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005978/en/