T‑Mobile delivers industry‑leading growth in Q1 2022

T-Mobile US, Inc.reported first quarter 2022 results delivering industry-leading growth in postpaid and broadband customers driven by its unparalleled 5G network and best value combination. T-Mobile had the highest postpaid service revenue and cash flow growth in the industry enabled by its synergy-backed model and diverse growth strategy and raises full-year 2022 guidance across the board.

“T-Mobile continues to be the growth leader in this industry, with another beat and raise quarter that delivered front-of-the-pack postpaid, new account, and broadband customer results,” said Mike Sievert, CEO of T-Mobile. “Only the Un-carrier’s unparalleled network leadership in the 5G era has enabled us to give customers the best network and best value without compromise, and effectively solve one of the most prevalent pain points in the wireless industry. And we are accomplishing this while advancing our integration and delivering bigger synergies faster than expected. I’m excited to carry our momentum forward through the rest of the year.”

• AT&T Inc. historically does not disclose postpaid net account additions. Industry-leading claims based on consensus expectations if results not yet reported.
• 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 either of the two measures and Net income is variable.

Industry-Leading Growth in Postpaid and Broadband Customers

• Postpaid net account additions of 348 thousand increased 91 thousand year-over-year.
• Postpaid net customer additions of 1.3 million increased 108 thousand year-over-year.
• Postpaid phone net customer additions of 589 thousand including industry-leading postpaid phone gross additions. Postpaid phone churn was 0.93%, which improved an industry-leading 5 basis points year-over-year and 17 basis points sequentially.
• Prepaid net customer additions were 62 thousand. Prepaid churn was 2.67% in Q1 2022, which improved by 11 basis points year-over-year.
• High Speed Internet net customer additions of 338 thousand increased more than 3x year-over-year. T-Mobile ended the quarter with 984 thousand High Speed Internet customers and currently serves more than 1 million customers.
• Total net customer additions of 1.4 million increased 19 thousand year-over-year and the total customer count increased to a record-high of 109.5 million.

Strong Financial Results

• Total service revenues increased 7% year-over-year to $15.1 billion, which included Postpaid service revenue growth of 9% year-over-year driven by continued customer account and ARPA growth.
• Net income decreased year-over-year to $713 million and Diluted earnings per share (“EPS”) decreased year-over-year to $0.57, which included merger-related costs, net of tax, of $1.1 billion or $0.84 per share.
• Core Adjusted EBITDA increased 10% year-over-year to $6.5 billion due to Service revenue growth and increased synergy realization.
• Net cash provided by operating activities increased 5% year-over-year to $3.8 billion, which included cash payments for merger-related costs of $893 million.
• Cash purchases of property and equipment, including capitalized interest increased 6% year-over-year to $3.4 billion driven by the accelerated build-out of its nationwide 5G network.
• Free Cash Flow increased 26% year-over-year to $1.6 billion, which included cash payments for merger-related costs of $893 million and cash purchases of property and equipment of $3.4 billion.

Unprecedented Pace of Network Build Extends 5G Leadership

T-Mobile continues to pull away from the competition and further solidify its leadership position as America’s only nationwide, standalone 5G network, delivering unmatched performance and a differentiated network experience for consumers and businesses.

T-Mobile’s 5G network covers 315 million people, or 95% of Americans, across 1.8 million square miles, delivering more geographic coverage than Verizon and AT&T combined, including over 4x Verizon and over 30% more than AT&T. Super-fast Ultra-Capacity 5G covers 225 million people and nearly 85% of T-Mobile customers. And T-Mobile isn’t slowing down, with plans to bring Ultra Capacity 5G to 260 million people this year and 300 million by the end of 2023.

With the fastest and most available 5G network, T-Mobile has earned the crown of America’s 5G leader. The nation’s most awarded 5G network recently earned yet another win, with Ookla recognizing T-Mobile as #1 in Overall Speed, Highest Consistency, Fastest 5G Speed and Best 5G Availability in its Q1 nationwide Speedtest Market Analysis.

Raising 2022 Merger Synergies Guidance on Accelerated Integration Progress

T-Mobile continues to deliver on accelerated integration milestones, including plans to finish transitioning all Sprint customers to the T-Mobile network over the next few months – just over two years from merger close. The company is also on track to upgrade or decommission substantially all Sprint sites this year – less than three years from merger close. Roughly one-third of the 35,000 targeted sites have been decommissioned as of Q1 2022 with the remaining ramping in the second half of the year.

Based on the continued strength of execution, T-Mobile is raising merger synergies guidance range to $5.2 to $5.4 billion in 2022, up from the previous range of $5.0 to $5.3 billion.

• Approximately $2.3 billion to $2.4 billion of selling, general and administrative (SG&A) expense reductions
• Approximately $1.6 billion to $1.7 billion of network synergies achieved through cost of service expense reductions
• Approximately $1.3 billion of network synergies related to avoided site builds

Raising 2022 Guidance Across the Board

• Postpaid net customer additions are expected to be between 5.3 million and 5.8 million, an increase from prior guidance of 5.0 to 5.5 million.
• Core Adjusted EBITDA, which is Adjusted EBITDA less lease revenues, is expected to be between $25.8 billion and $26.2 billion, an increase from prior guidance of $25.6 to $26.1 billion.
• Merger-related costs are expected to be between $4.5 billion and $5.0 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 $15.7 billion and $16.1 billion, an increase from prior guidance of $15.5 to $16.1 billion.
• Cash purchases of property and equipment, including capitalized interest, are expected to be between $13.2 billion to $13.5 billion, an increase from the prior guidance of $13.0 to $13.5 billion as T-Mobile continues its accelerated build-out of its nationwide 5G network.
• Free Cash Flow, including payments for Merger-related costs, is expected to be between $7.2 billion and $7.6 billion, an increase from prior guidance of $7.1 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 was the first US wireless provider to set science-based targets (SBTs), which are independently verified targets aimed to help keep the global temperature increase limited to 1.5 degrees Celsius. T-Mobile not only achieved these targets at the end of 2021 but beat them four years ahead of schedule:
• Reduced combined absolute Scope 1 and 2 GHG emissions by 97%
• Reduced Scope 3 GHG emissions by 16% per T-Mobile customer
• In April 2022, T-Mobile announced its participation in the Welcome.US CEO Council, a ground-breaking public-private partnership committed to welcoming refugees to the United States with essential services, skills and employment. As part of this commitment, T-Mobile is providing up to 200,000 lines of free service from Metro by T-Mobile, including unlimited talk and text, to newcomers from Ukraine and Afghanistan.
• T-Mobile was once again named the #1 company in US telecommunications for environmental action by JUST Capital and also won the EPA’s Sustainable Material Management Electronics Challenge for the last two years.
• T-Mobile was named one of Forbes Best Employers in America and Best Employers for Diversity, and named as one of Fortune’s 100 Best Companies to Work For in the US for 2022 and one of Comparably’s Best Place to Work in the Seattle Metropolitan Area.

CT Bureau