T-Mobile US, Inc.
CEO : Mr. G. Michael Sievert
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | -2.6% YoY | 225.6% | -2260.3% | 2023-07-27 |
Mike Sievert says,
Q2 2023 Performance Highlights:
- T-Mobile delivered its highest Q2 postpaid phone net adds in eight years with 1.6 million additions.
- T-Mobile reported the lowest postpaid phone churn in the industry for the first time in its history at just 0.77%.
- T-Mobile’s industry-leading customer growth translated into industry-leading service revenue growth and core adjusted EBITDA growth.
- Free cash flow grew by more than 60% year-over-year.
- T-Mobile extended its leadership in overall and 5G network performance according to third-party reports.
Network and Value Proposition:
- T-Mobile defended and extended its leadership in network performance, with median download speeds more than double its closest competitor.
- T-Mobile’s dedicated 5G spectrum assets and technology leadership give it a significant advantage in 5G reach and overall network performance.
- T-Mobile’s new un-carrier move, Phone Freedom, and go 5G plus rate plan have been well-received, with Go5G Plus becoming the most popular plan.
- T-Mobile’s value proposition is attracting customers from competitors, with improved porting ratios against every competitor, including cable providers.
Growth Opportunities:
- T-Mobile’s growth strategy is fueled by underpenetrated markets and unique growth opportunities.
- In underpenetrated markets, T-Mobile is capturing a significant share of switchers, with a win share in the upper 30s.
- T-Mobile’s network strides are gaining recognition in the top 100 markets, with increasing share of switchers.
- T-Mobile added 509,000 high-speed Internet customers, continuing to grow gross adds every quarter since launch.
Sprint Merger Integration:
- T-Mobile is substantially complete with the billing migration and retail rationalization of the Sprint merger, ahead of the year-end target.
- The integration has unlocked synergies and allowed for industry-leading growth and record low churn.
Guidance and Financial Highlights:
- T-Mobile raised its guidance for the year, reflecting industry-leading customer and financial growth.
- T-Mobile’s profitable growth strategy translates into the highest core adjusted EBITDA growth and year-to-date cash flow conversion in the industry.
Peter Osvaldik says,
Postpaid Service Revenue Growth
- TMUS experienced the best postpaid service revenue growth in the industry, up over 5% year-over-year.
- This growth was driven by increases in both postpaid accounts and postpaid Average Revenue Per Account (ARPA).
Financial Performance
- TMUS achieved an 11% year-over-year increase in core adjusted EBITDA.
- The core adjusted EBITDA margin grew by over 300 basis points year-over-year.
- Free cash flow was up 64% year-over-year, with the highest free cash flow to service revenue margin relative to peers.
Share Buybacks
- TMUS repurchased 25.2 million shares for $3.5 billion in Q2.
- As of July 21, the cumulative total of shares repurchased was 83.5 million for $11.8 billion.
Increased Guidance for 2023
- Total postpaid net customer additions are now expected to be between 5.6 million and 5.9 million.
- Core adjusted EBITDA is expected to be between $28.9 billion and $29.2 billion, up 10% year-over-year at the midpoint.
- Merger synergies are expected to be approximately $7.5 billion in 2023, achieving the full run rate synergy target a year ahead of schedule.
- Merger related costs are expected to be approximately $1 billion before taxes, with cash merger related costs of $1.6 billion to $2 billion for 2023.
- Net cash provided by operating activities, including merger related costs, is expected to be in the range of $18 billion to $18.3 billion.
Q & A sessions,
Stock Buyback and Cash Flow Development
- T-Mobile is buying back its own stock at a pace through pre-designed 10b5-1 programs to meet the authorization of a $14 billion program that takes them through September.
- The company is on track to achieve a 75% year-over-year cash flow growth this year.
- Based on the cash flow development, T-Mobile expects to achieve its original thesis of around $60 billion through 2025.
Spectrum Acquisition and Fixed Wireless Access
- T-Mobile puts any acquired spectrum to work right away for the benefit of the American consumer.
- The company is ambitiously deploying the 2.5 gigahertz that resulted from the merger to build the best 5G network in history.
- T-Mobile is always on the hunt for ways to add capacity to its network, which allows them to continue to take share and grow, as well as pursue fixed wireless access.
- T-Mobile currently serves about 50 million homes with its fixed wireless access model, and plans to reach approximately 7 to 8 million households using excess capacity.
- The company is studying other ways to grow the fixed wireless access business, including millimeter wave, mid-band spectrum, and non-standard-based solutions.
Competition with Cable Providers
- T-Mobile has been seeing improvements in its port ratios with cable providers for nine quarters in a row.
- In Q2, T-Mobile produced the highest postpaid phone net additions in eight years and had the lowest churn rate in its history and the industry.
- Cable providers, including T-Mobile, have been affected by a dynamic that has impacted others in the industry, but T-Mobile’s results have not been affected.
Digital Transformation and Customer Experience
- T-Mobile is focused on improving its digital capabilities, especially in terms of self-service for customers.
- The company is rapidly applying AI technologies and machine learning to speed up processes and serve customers better.
- T-Mobile sees potential in emerging technologies to meet customers’ demands for fast, transparent, and simple transactions, while also realizing efficiencies over time.
Summary
T-Mobile is actively buying back its own stock and expects to achieve a 75% year-over-year cash flow growth this year. The company is ambitiously deploying acquired spectrum to build the best 5G network and is exploring ways to expand its fixed wireless access business beyond its initial single-digit penetration. T-Mobile’s port ratios with cable providers have been improving, and the company’s results have not been significantly affected by competition from cable providers. The company is focused on improving its digital capabilities to meet customers’ demands for fast and simple transactions, while also seizing new opportunities to realize efficiencies in light of increased competition.
No bad stock 