Unrivaled 5G Network Leadership and Best
Value Combined with Industry-Leading Postpaid Customer Growth Set
Up Strong 2022 Outlook
T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading and Record-High
Postpaid Account and Postpaid Customer Net Additions in
2021(1)
- Postpaid net account additions of 315 thousand in Q4 2021 — 1.2
million in full-year 2021, more than doubled year-over-year
- Postpaid net customer additions of 1.8 million in Q4 2021 — 5.5
million in full-year 2021, exceeded guidance
- Postpaid phone net customer additions of 844 thousand in Q4
2021 — 2.9 million in full-year 2021, increased 32%
year-over-year
- High Speed Internet net customer additions of 224 thousand in
Q4 2021, highest in industry— 546 thousand in full-year 2021
Differentiated Growth Model Unlocks
Industry-Leading Service Revenue and Cash Flow Growth in
2021
- Service revenues of $15.0 billion in Q4 2021 — $58.4 billion in
full-year 2021, record-high
- Net income of $422 million in Q4 2021 — $3.0 billion in
full-year 2021
- Core Adjusted EBITDA(2) of $5.7 billion in Q4 2021 — $23.6
billion in full-year 2021, exceeded guidance
- Net cash provided by operating activities of $3.0 billion in Q4
2021 — $13.9 billion in full-year 2021, grew more than 60%
year-over-year
- Free Cash Flow(2) of $1.1 billion in Q4 2021 — $5.6 billion in
full-year 2021, nearly doubled year-over-year(3)
Award-Winning 5G Network Pulls Further
Ahead of Competition as Merger Synergies Ramp
- Ultra Capacity 5G covered 210 million people and Extended Range
5G covered 94% of people at year-end
- Merger synergies of $3.8 billion in full-year 2021 increased
nearly 3x year-over-year, exceeded guidance
Doing Good - the Un-carrier way -
Leading the Industry to Build Sustainable Future and Bridge Digital
Divide
- First and only U.S. wireless provider to commit to and achieve
its RE100 goal in 2021, years ahead of others
- Project 10Million connected 3.2 million students and High Speed
Internet reaches 10 million rural households
Strong 2022 Outlook on Continued
Industry-Leading Postpaid Customer Growth and Merger
Synergies(4)
- Core Adjusted EBITDA(2) is expected to grow approximately 10%
year-over-year at mid-point of guidance
- Net cash provided by operating activities is expected to grow
more than 10% year-over-year and Free Cash Flow(2) is expected to
grow more than 30% year-over-year at mid-point of guidance
T-Mobile US, Inc. (NASDAQ: TMUS) reported fourth quarter and
full-year 2021 results today, delivering industry-leading service
revenue and cash flow growth in 2021 enabled by its differentiated
customer growth momentum and synergy-backed model. T-Mobile’s
unmatched network and value combination resulted in record-high and
industry-leading postpaid account and customer growth in 2021.
“T-Mobile had our strongest year ever. We didn’t just meet the
bold goals we set for 2021 around customer growth, profitability,
merger synergies and network buildout – we crushed all of them,”
said Mike Sievert, T-Mobile CEO. “Our industry-leading year-end
results – adding 1.2 million postpaid accounts and 5.5 million
postpaid customers, extending Ultra Capacity 5G to 210 million
people – show that the Un-carrier is experiencing the greatest
growth momentum in wireless. And we’re poised to sustain that
position into 2022 and beyond as we continue to execute on our
winning playbook and consistently make investments that have
enabled our success. With plenty of room to run, we’re in the
best-ever position to continue delivering.”
___________________________________________________________
(1)
AT&T Inc. historically does
not disclose postpaid net account additions.
(2)
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,
stock-based compensation 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.
(3)
As compared to Free Cash Flow
excluding gross payments for the settlement of interest rate swaps
in 2020.
(4)
Postpaid customer growth is based
on industry consensus expectations.
Industry-Leading and Record-High
Postpaid Account and Postpaid Customer Net Additions in
2021
- Postpaid net account additions were 315 thousand in Q4
2021, the highest Q4 in four years and reached a record 1.2 million
in full-year 2021, more than doubling year-over-year.
- Postpaid net customer additions were industry-leading
with 1.8 million in Q4 2021, the highest Q4, and 5.5 million in
full-year 2021, a record-high and above the company’s recent
guidance of 5.1 to 5.3 million.
- Postpaid phone net customer additions were 844 thousand
in Q4 2021 and 2.9 million in full-year 2021. Postpaid phone churn
was 1.10% in Q4 2021, as the company ramped up its Sprint customer
integration, and 0.98% in full-year 2021.
- Postpaid other net customer additions were 906 thousand
in Q4 2021 and 2.6 million in full-year 2021, which included High
Speed Internet net customer additions of 224 thousand in Q4 2021
and 546 thousand in full-year 2021. T-Mobile ended the year with
646 thousand High Speed Internet customers, exceeding its year-end
goal of 500 thousand customers.
- Prepaid net customer additions were 49 thousand in Q4
2021 and 342 thousand in full-year 2021, more than doubling
year-over-year. Prepaid churn was 3.01% in Q4 2021 and 2.83% in
full-year 2021.
- Total net customer additions were 1.8 million in Q4 2021
and 5.8 million in full-year 2021, the highest annual number in
five years. The total customer count increased to a record-high of
108.7 million.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results have not been retroactively adjusted and reflect
standalone T-Mobile.
Quarter
Year Ended December
31,
(in thousands, except churn)
Q4 2021
Q3 2021
Q4 2020
2021
2020
Postpaid net account additions
315
268
131
1,188
566
Total net customer additions
1,799
1,325
1,702
5,837
5,631
Postpaid net customer additions
1,750
1,259
1,618
5,495
5,486
Postpaid phone net customer additions
844
673
824
2,917
2,218
Postpaid other net customer additions
906
586
794
2,578
3,268
Prepaid net customer additions
49
66
84
342
145
Total customers, end of period (1)
108,719
106,920
102,064
108,719
102,064
Postpaid phone churn
1.10
%
0.96
%
1.03
%
0.98
%
0.90
%
Prepaid churn
3.01
%
2.90
%
2.92
%
2.83
%
3.03
%
Differentiated Growth Model Unlocks
Industry-Leading Service Revenue and Cash Flow Growth in
2021
- Total service revenues increased 6% year-over-year to
$15.0 billion in Q4 2021 and 16% year-over-year to $58.4 billion in
full-year 2021.
- Net income decreased year-over-year to $422 million in
Q4 2021 and decreased year-over-year to $3.0 billion in full-year
2021, primarily due to a planned increase in merger-related costs.
Diluted earnings per share (EPS) decreased year-over-year to
$0.34 in Q4 2021 and decreased year-over-year to $2.41 in full-year
2021, primarily due to a planned increase in merger-related
costs.
- Adjusted EBITDA was $6.3 billion in Q4 2021 and $26.9
billion in full-year 2021, and Core Adjusted EBITDA
increased 3% year-over-year to $5.7 billion in Q4 2021 and
increased 16% year-over-year to $23.6 billion in full-year
2021.
- Net cash provided by operating activities decreased
year-over-year to $3.0 billion in Q4 2021 and increased
year-over-year to $13.9 billion in full-year 2021, which included
cash payments for merger-related costs.
- Cash purchases of property and equipment, including
capitalized interest was $2.9 billion in Q4 2021 and $12.3 billion
in full-year 2021.
- Free Cash Flow more than doubled year-over-year to $1.1
billion in Q4 2021 and nearly doubled year-over-year(2) to $5.6
billion in full-year 2021.
(1)
Includes 818,000 postpaid
customers acquired from acquisitions in 2021 which were not
included in net customer additions.
(2)
As compared to Free Cash Flow
excluding gross payments for the settlement of interest rate swaps
in 2020.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results have not been retroactively adjusted and reflect
standalone T-Mobile.
(in millions, except EPS)
Quarter
Year Ended December
31,
Q4 2021 vs. Q3 2021
Q4 2021 vs. Q4 2020
YTD 2021 vs. YTD 2020
Q4 2021
Q3 2021
Q4 2020
2021
2020
Total service revenues
$
14,963
$
14,722
$
14,180
$
58,369
$
50,395
1.6 %
5.5 %
15.8 %
Total revenues
20,785
19,624
20,341
80,118
68,397
5.9 %
2.2 %
17.1 %
Net income
422
691
750
3,024
3,064
(38.9)%
(43.7)%
(1.3)%
Diluted EPS
0.34
0.55
0.60
2.41
2.65
(38.2)%
(43.3)%
(9.1)%
Adjusted EBITDA
6,302
6,811
6,746
26,924
24,557
(7.5)%
(6.6)%
9.6 %
Core Adjusted EBITDA
5,679
6,041
5,501
23,576
20,376
(6.0)%
3.2 %
15.7 %
Net cash provided by operating
activities
3,000
3,477
3,474
13,917
8,640
(13.7)%
(13.6)%
61.1 %
Cash purchases of property and equipment,
including capitalized interest
2,929
2,944
3,807
12,326
11,034
(0.5)%
(23.1)%
11.7 %
Free Cash Flow
1,112
1,559
476
5,646
658
(28.7)%
133.6 %
758.1 %
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
1,112
1,559
476
5,646
3,001
(28.7)%
133.6 %
88.1 %
Award-Winning 5G Network Pulls Further
Ahead of Competition
T-Mobile continues to strengthen its network leadership position
as America's only nationwide standalone 5G network, delivering
unparalleled network performance and blazing fast speeds to people
across the country at an unprecedented pace.
As of year-end, T-Mobile’s 5G network covered 310 million people
across 1.8 million square miles, delivering nearly 5x more
geographic coverage than Verizon and nearly 2x more than AT&T.
As the only operator to have deployed dedicated mid-band spectrum
nationwide, T-Mobile continues to rapidly expand both the breadth
and depth of its 5G footprint to fuel customer growth, including in
smaller markets and rural areas, T-Mobile for Business and new
product categories like High Speed Internet. And T-Mobile isn’t
slowing down, with plans to bring Ultra Capacity 5G to 260 million
people this year and 300 million in 2023.
With the largest, fastest, and most reliable 5G network,
T-Mobile has earned the crown of America’s 5G leader. More than 20
reports from third-party testing firms in the last year confirm
T-Mobile is #1 in 5G speed and availability. As the most awarded 5G
network in the country, T-Mobile’s momentum continues into 2022
with new expert studies:
- Opensignal: T-Mobile customers enjoy the fastest average
5G download and upload speeds and can connect to 5G more often and
in more places than anyone else. The gap over competitors has
gotten wider as T-Mobile’s average 5G download speed is more than
2.5x faster than Verizon’s average 5G download speed and more than
3x faster than AT&T’s average 5G download speed.
- Ookla: In its Q4 Market Analysis, T-Mobile was the first
wireless provider ever to win all six network performance
categories, including 5G speed, performance and availability as
well as network performance and speeds overall.
- umlaut: T-Mobile’s download speeds across all eight US
cities tested averaged more than 2x faster than Verizon 5G and
nearly 4x faster than AT&T 5G in those cities.
5G and aviation safety have been in the headlines lately and
have created some confusion around 5G. To be clear, T-Mobile’s 5G
network is already covering 94% of American’s nationwide, and our
customers are not affected by this. While headlines talk about
“5G,” this issue is really with one specific frequency of spectrum
called C-band, which T-Mobile 5G does not use today. So, T-Mobile
customers can continue to use their 5G phones and 5G network with
confidence!
Accelerated Merger Integration
Continues Ahead of Schedule
T-Mobile continues to over-deliver on integration milestones,
including ending the year with approximately 64% of Sprint
customers transitioned to the T-Mobile network. The company
continues to expect to complete the network migration by
mid-2022.
T-Mobile realized approximately $3.8 billion in Merger synergies
in 2021, nearly tripling year-over-year, with over $1.8 billion of
sales, general and administrative (SG&A) expense reductions and
over $900 million of cost of service expense reductions, which
increased cash flows while funding growth initiatives and network
build, and approximately $1.0 billion in avoided network build
costs.
The company incurred Merger-related costs of $1.2 billion in Q4
2021 and $3.1 billion in full-year 2021. Net of taxes,
Merger-related costs were $950 million, or $0.76 per share, in Q4
2021 and $2.3 billion, or $1.86 per share, in full-year 2021. Cash
payments for merger-related costs were $1.1 billion in Q4 2021 and
$2.2 billion in full-year 2021.
Doing Good - the Un-carrier way -
Leading the Industry to Build Sustainable Future and Bridge Digital
Divide
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 for all:
- T-Mobile was the first and only U.S. provider to commit to
sourcing 100% of its total electricity usage with renewable energy
by the end of 2021 and the first in wireless to achieve this
milestone years ahead of its competition.
- The company met its goal through a combination of renewable
energy investments that support its efforts to mobilize for a
thriving planet.
- In addition, T-Mobile has also led Green America’s Wireless
Scorecard three years in a row, and the company recently received a
top grade in the 2021 CDP Climate Change questionnaire.
- T-Mobile continues to remove economic and geographic barriers
by helping to bridge the digital divide:
- Connected 3.2 million students through Project 10Million.
- Reached 10 million rural households through its High Speed
Internet service.
- During the pandemic, the Un-carrier launched T-Mobile Connect,
its lowest priced plan, and recently expanded participation in the
government’s Affordable Connectivity Program to Metro by T-Mobile,
in addition to ongoing support from Assurance Wireless.
- The Connecting Heroes program had double-digit growth of first
responder agencies joining T-Mobile.
- T-Mobile continues its progress on its Equity in Action
commitments to further embed diversity, equity, and inclusion into
its culture. For the 10th year in a row, the company recently
scored 100% on the 2022 Human Rights Campaign Corporate Equality
Index.
Strong 2022 Outlook on Continued
Industry-Leading Postpaid Customer Growth and Merger
Synergies
Building on its best customer and financial growth in company
history, T-Mobile’s differentiated growth playbook, 5G leadership
and synergy-backed model unlocks a strong outlook for 2022:
- Postpaid net customer additions are expected to be between 5.0
million and 5.5 million, expecting to lead the industry for the 8th
consecutive year.
- Core Adjusted EBITDA, which is Adjusted EBITDA less lease
revenues, is expected to be between $25.6 billion and $26.1
billion, up approximately 10% year-over-year at the mid-point.
- Merger synergies are expected to be between $5.0 billion and
$5.3 billion, including $2.2 billion to $2.35 billion of SG&A
expense reductions, $1.5 billion to $1.65 billion of cost of
service expense reductions and approximately $1.3 billion in
avoided network build costs.
- 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 $15.5 billion
and $16.1 billion, up more than 10% year-over-year at the
mid-point.
- Cash purchases of property and equipment, including capitalized
interest, are expected to be between $13.0 billion to $13.5
billion.
- Free Cash Flow, including payments for Merger-related costs, is
expected to be between $7.1 billion and $7.6 billion, up more than
30% year-over-year at the mid-point. Free Cash Flow guidance does
not assume any material net cash inflows from securitization.
(in millions, except Postpaid net
customer additions)
FY 2022 Guidance
Postpaid net customer additions
(thousands)
5,000
5,500
Net income (1)
N/A
N/A
Core Adjusted EBITDA (2)
25,600
26,100
Merger synergies
5,000
5,300
Merger-related costs (3)
4,500
5,000
Net cash provided by operating
activities
15,500
16,100
Capital expenditures (4)
13,000
13,500
Free Cash Flow (5)
7,100
7,600
(1)
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.
Core Adjusted EBITDA should not be used to predict Net income as
the difference between this measure and Net income is variable.
(2)
Management uses Core Adjusted
EBITDA as a measure to monitor the financial performance of our
operations, excluding the impact of lease revenues from our related
device financing programs. Our guidance ranges assume lease
revenues to be between $1.1 billion and $1.4 billion for 2022.
(3)
Merger-related costs are excluded
from Core Adjusted EBITDA but will impact Net income, Net cash
provided by operating activities and Free Cash Flow.
(4)
Capital expenditures means cash
purchases of property and equipment, including capitalized
interest.
(5)
Free Cash Flow guidance does not
assume any material net cash inflows from securitization in
2022.
Financial Results
For more details on T-Mobile’s Q4 2021 financial results,
including the Investor Factbook with detailed financial tables,
please visit T-Mobile US, Inc.’s Investor Relations website at
http://investor.t-mobile.com.
Earnings Call
Information
Date/Time
- Wednesday, February 2, 2022 at 4:30 p.m. (EST)
Access via Phone (audio only)
Please plan on accessing the call 10 minutes prior to the
scheduled start time.
- US/Canada: 866-575-6534
- International: +1 856-344-9215
- Participant Passcode: 5049036
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 5049036.
Submit Questions via Twitter
Send a tweet to @TMobileIR or @MikeSievert using $TMUS
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 (https://investor.t-mobile.com), newsroom website
(https://t-mobile.com/news), press
releases, SEC filings and public conference calls and webcasts. We
also intend to use certain social media accounts as means of
disclosing information about us and our services and for complying
with our disclosure obligations under Regulation FD (the @TMobileIR
Twitter account (https://twitter.com/TMobileIR) and the
@MikeSievert Twitter (https://twitter.com/MikeSievert) account,
which Mr. Sievert also uses as a means for personal communications
and observations). 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.
T-Mobile US, Inc. (NASDAQ: TMUS) is America’s supercharged
Un-carrier, delivering an advanced 4G LTE and transformative
nationwide 5G network that will offer reliable connectivity for
all. T-Mobile’s customers benefit from its unmatched combination of
value and quality, unwavering obsession with offering them the best
possible service experience and undisputable drive for disruption
that creates competition and innovation in wireless and beyond.
Based in Bellevue, Wash., T-Mobile provides services through its
subsidiaries and operates its flagship brands, T-Mobile and Metro
by T-Mobile. For more information please visit: http://www.t-mobile.com.
Forward-Looking
Statements
This communication includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical fact,
including information concerning T-Mobile US, Inc.’s future results
of operations, are forward-looking statements. These
forward-looking statements are generally identified by the words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,”
“could” or similar expressions. Forward-looking statements are
based on current expectations and assumptions, which are subject to
risks and uncertainties and may cause actual results to differ
materially from the forward-looking statements. 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: natural disasters, public
health crises, including the COVID-19 pandemic (the “Pandemic”),
terrorist attacks or similar incidents; adverse economic, political
or market conditions in the U.S. and international markets,
including those caused by the Pandemic; competition, industry
consolidation and changes in the market condition for wireless
services; disruption, data loss or other security attacks, such as
the criminal cyberattack we became aware of in August 2021; our
inability to take advantage of technology developments on a timely
basis; our inability to retain or motivate key personnel, hire
qualified personnel or maintain our corporate culture; system
failures and business disruptions, allowing for unauthorized use of
or interference with our network and other systems; scarcity and
cost of additional wireless spectrum and regulations relating to
spectrum use; the impacts of the actions we have taken and
conditions we have agreed to in connection with the regulatory
proceedings and approvals of the Transactions (as defined below),
including the acquisition by DISH Network Corporation (“DISH”) of
the prepaid wireless business operated under the Boost Mobile and
Sprint prepaid brands (excluding the Assurance brand Lifeline
customers and the prepaid wireless customers of Shenandoah Personal
Communications Company LLC (“Shentel”) and Swiftel Communications,
Inc.), including customer accounts, inventory, contracts,
intellectual property and certain other specified assets (the
“Prepaid Business”), and the assumption of certain related
liabilities (the “Prepaid Transaction”), the complaint and proposed
final judgment (the “Consent Decree”) agreed to by us, Deutsche
Telekom AG (“DT”), Sprint Corporation (“Sprint”), SoftBank Group
Corp. (“SoftBank”) and DISH with the U.S. District Court for the
District of Columbia, which was approved by the Court on April 1,
2020, the proposed commitments filed with the Secretary of the
Federal Communications Commission (“FCC”), which we announced on
May 20, 2019, certain national security commitments and
undertakings, and any other commitments or undertakings entered
into including but not limited to those we have made to certain
states and nongovernmental organizations (collectively, the
“Government Commitments”), and the challenges in satisfying the
Government Commitments in the required time frames and the
significant cumulative costs incurred in tracking and monitoring
compliance; economic, political and market conditions; our
inability to manage the ongoing commercial and transition services
arrangements entered into in connection with the Prepaid
Transaction, and known or unknown liabilities arising in connection
therewith; the effects of any future acquisition, investment, or
merger involving us; any disruption or failure of our third parties
(including key suppliers) to provide products or services for the
operation of our business; our substantial level of indebtedness
and our inability to service our debt obligations in accordance
with their terms or to comply with the restrictive covenants
contained therein or limitations on our operating flexibility
imposed by such covenants; changes in US credit market conditions,
credit rating downgrade or an inability to access the investment
grade debt markets; the risk of future material weaknesses we may
identify while we work to integrate and align policies, principles
and practices of the two companies following the Merger (as defined
below), or any other failure by us to maintain effective internal
controls, and the resulting significant costs and reputational
damage; any changes in regulations or in the regulatory framework
under which we operate; laws and regulations relating to the
handling of privacy and data protection; unfavorable outcomes of
existing or future legal proceedings, including proceedings and
inquiries relating to the criminal cyberattack we became aware of
in August 2021; our offering of regulated financial services
products and exposure to a wide variety of state and federal
regulations; new or amended tax laws or regulations or
administrative interpretations and judicial decisions affecting the
scope or application of tax laws or regulations; the possibility
that we may be unable to renew our wireless licenses on attractive
terms or the possible revocation of our existing licenses in the
event that we violate applicable laws; the choice of forum
provision contained in our Certificate of Incorporation; interests
of our significant stockholders that may differ from the interests
of other stockholders; future sales of our common stock by DT and
SoftBank and our inability to attract additional equity financing
outside the United States due to foreign ownership limitations by
the FCC; our lack of plan to pay cash dividends in the foreseeable
future; failure to realize the expected benefits and synergies of
the merger (the “Merger”) with Sprint, pursuant to the Business
Combination Agreement with Sprint and the other parties named
therein (as amended, the “Business Combination Agreement”) and the
other transactions contemplated by the Business Combination
Agreement (collectively, the “Transactions”) in the expected
timeframes or in the amounts anticipated; any delay and costs of,
or difficulties in, integrating our business and Sprint’s business
and operations, and unexpected additional operating costs, customer
loss and business disruptions, including challenges in maintaining
relationships with employees, customers, suppliers or vendors; and
unanticipated difficulties, disruption, or significant delays in
our long-term strategy to migrate Sprint’s legacy customers onto
T-Mobile’s existing billing platforms; and other risks as disclosed
in our most recent annual report on Form 10-K and other filings
with the Securities and Exchange Commission. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. We undertake no obligation to
revise or publicly release the results of any revision to these
forward-looking statements, 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 and Core Adjusted EBITDA should not be used to predict Net
income as the difference between either of these measures and Net
income is variable.
The following table includes the impact of the Sprint merger on
a prospective basis from the close date of April 1, 2020.
Historical results prior to April 1, 2020 have not been restated
and reflect standalone T-Mobile.
Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net
income as follows:
Quarter
Year Ended December
31,
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
2020
2021
Net income
$
951
$
110
$
1,253
$
750
$
933
$
978
$
691
$
422
$
3,064
$
3,024
Adjustments:
Income from discontinued operations, net
of tax
—
(320
)
—
—
—
—
—
—
(320
)
—
Income (loss) from continuing
operations
951
(210
)
1,253
750
933
978
691
422
2,744
3,024
Interest expense
185
776
765
757
792
820
780
797
2,483
3,189
Interest expense to affiliates
99
63
44
41
46
32
58
37
247
173
Interest income
(12
)
(6
)
(3
)
(8
)
(3
)
(2
)
(2
)
(13
)
(29
)
(20
)
Other expense, net
10
195
99
101
125
1
60
13
405
199
Income tax expense
306
2
407
71
246
277
(3
)
(193
)
786
327
Operating income
1,539
820
2,565
1,712
2,139
2,106
1,584
1,063
6,636
6,892
Depreciation and amortization
1,718
4,064
4,150
4,219
4,289
4,077
4,145
3,872
14,151
16,383
Operating income from discontinued
operations (1)
—
432
—
—
—
—
—
—
432
—
Stock-based compensation (2)
123
139
125
129
130
129
127
135
516
521
Merger-related costs
143
798
288
686
298
611
955
1,243
1,915
3,107
COVID-19-related costs (3)
117
341
—
—
—
—
—
—
458
—
Impairment expense
—
418
—
—
—
—
—
—
418
—
Other, net (4)
25
5
1
—
49
(17
)
—
(11
)
31
21
Adjusted EBITDA
3,665
7,017
7,129
6,746
6,905
6,906
6,811
6,302
24,557
26,924
Lease revenues
(165
)
(1,421
)
(1,350
)
(1,245
)
(1,041
)
(914
)
(770
)
(623
)
(4,181
)
(3,348
)
Core Adjusted EBITDA
$
3,500
$
5,596
$
5,779
$
5,501
$
5,864
$
5,992
$
6,041
$
5,679
$
20,376
$
23,576
(1)
Following the Prepaid
Transaction, starting on July 1, 2020, we provide MVNO services to
DISH. We have included the operating income from discontinued
operations, for periods prior to the Prepaid Transaction, in our
determination of Adjusted EBITDA to reflect EBITDA contributions of
the Prepaid Business that has been replaced by the MVNO Agreement
beginning on July 1, 2020, in order to enable management, analysts
and investors to better assess ongoing operating performance and
trends.
(2)
Stock-based compensation includes
payroll tax impacts and may not agree to stock-based compensation
expense in the consolidated financial statements. Additionally,
certain stock-based compensation expenses associated with the
Sprint merger have been included in Merger-related costs.
(3)
Supplemental employee payroll, third-party
commissions and cleaning-related COVID-19-related costs were not
significant for Q3 2020, Q4 2020, Q1 2021, Q2 2021, Q3 2021 and Q4
2021.
(4)
Other, net may not agree to the
Consolidated Statements of Comprehensive Income, primarily due to
certain non-routine operating activities, such as other special
items that would not be expected to reoccur or are not reflective
of T-Mobile’s ongoing operating performance, and are therefore
excluded from Adjusted EBITDA and Core Adjusted EBITDA.
Adjusted EBITDA - Earnings before
Interest expense, net of Interest income, Income tax expense,
Depreciation and amortization expense, Stock-based compensation and
certain expenses not reflective of T-Mobile’s ongoing operating
performance, such as Merger-related costs, COVID-19-related costs
and Impairment expense. Core Adjusted EBITDA represents Adjusted
EBITDA less lease revenues. Core Adjusted EBITDA and Adjusted
EBITDA are non-GAAP financial measures utilized by T-Mobile’s
management to monitor the financial performance of our operations.
T-Mobile uses Core Adjusted EBITDA and Adjusted EBITDA as
benchmarks to evaluate T-Mobile’s operating performance in
comparison to its competitors. T-Mobile also uses Adjusted EBITDA
internally as a measure to evaluate and compensate its personnel
and management for their performance. Management believes analysts
and investors use Core Adjusted EBITDA and Adjusted EBITDA as
supplemental measures to evaluate overall operating performance and
facilitate comparisons with other wireless communications companies
because they are 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, stock-based compensation, Merger-related costs
including network decommissioning costs, incremental costs directly
attributable to COVID-19 and impairment expense, as they are not
indicative of T-Mobile’s ongoing operating performance, as well as
certain other nonrecurring income and expenses. Management believes
analysts and investors use Core Adjusted EBITDA because it
normalizes for the transition in the company’s device financing
strategy, by excluding the impact of lease revenues from Adjusted
EBITDA, to align with the related depreciation expense on leased
devices, which is excluded from the definition of Adjusted EBITDA.
Core Adjusted EBITDA and Adjusted EBITDA have limitations as
analytical tools and should not be considered in isolation or as a
substitute for 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)
Free Cash Flow and Free Cash Flow, excluding gross payments for
the settlement of interest rate swaps, are calculated as
follows:
Quarter
Year Ended December
31,
(in millions)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
2020
2021
Net cash provided by operating
activities
$
1,617
$
777
$
2,772
$
3,474
$
3,661
$
3,779
$
3,477
$
3,000
$
8,640
$
13,917
Cash purchases of property and
equipment
(1,753
)
(2,257
)
(3,217
)
(3,807
)
(3,183
)
(3,270
)
(2,944
)
(2,929
)
(11,034
)
(12,326
)
Proceeds from sales of tower sites
—
—
—
—
—
31
—
9
—
40
Proceeds related to beneficial interests
in securitization transactions
868
602
855
809
891
1,137
1,071
1,032
3,134
4,131
Cash payments for debt prepayment or debt
extinguishment costs
—
(24
)
(58
)
—
(65
)
(6
)
(45
)
—
(82
)
(116
)
Free Cash Flow
732
(902
)
352
476
1,304
1,671
1,559
1,112
658
5,646
Gross cash paid for the settlement of
interest rate swaps
—
2,343
—
—
—
—
—
—
2,343
—
Free Cash Flow, excluding gross payments
for the settlement of interest rate swaps
$
732
$
1,441
$
352
$
476
$
1,304
$
1,671
$
1,559
$
1,112
$
3,001
$
5,646
Free Cash Flow - Net cash
provided by operating activities less Cash purchases of property
and equipment, including Proceeds from sales of tower sites and
Proceeds related to beneficial interests in securitization
transactions and less Cash payments for debt prepayment or debt
extinguishment costs. Free Cash Flow and Free Cash Flow, excluding
gross payments for the settlement of interest rate swaps, are
utilized by T-Mobile’s management, investors and analysts to
evaluate cash available to pay debt and provide further investment
in the business.
Our guidance range for Free Cash Flow is calculated as
follows:
FY 2022
(in millions)
Guidance Range
Net cash provided by operating
activities
$
15,500
$
16,100
Cash purchases of property and
equipment
(13,000
)
(13,500
)
Proceeds related to beneficial interests
in securitization transactions (1)
4,600
5,000
Free Cash Flow
$
7,100
$
7,600
(1)
Free Cash Flow guidance does not
assume any material net cash inflows from securitization in
2022.
T-Mobile US, Inc. Calculation of Operating
Measures (Unaudited)
The following table illustrates the calculation of our operating
measures ARPA and ARPU from the related service revenues:
(in millions, except average number of
accounts and customers, ARPA and ARPU)
Quarter
Year Ended December
31,
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
2020
2021
Calculation of Postpaid ARPA
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
$
10,492
$
10,804
$
10,963
$
36,306
$
42,562
Divided by: Average number of postpaid
accounts (in thousands) and number of months in period
15,155
25,424
25,582
25,677
25,840
26,188
26,766
27,062
22,959
26,464
Postpaid ARPA
$
129.47
$
130.57
$
133.03
$
133.08
$
132.91
$
133.55
$
134.54
$
135.04
$
131.78
$
134.03
Calculation of Postpaid Phone
ARPU
Postpaid service revenues
$
5,887
$
9,959
$
10,209
$
10,251
$
10,303
$
10,492
$
10,804
$
10,963
$
36,306
$
42,562
Less: Postpaid other revenues
(310
)
(618
)
(677
)
(762
)
(820
)
(825
)
(852
)
(911
)
(2,367
)
(3,408
)
Postpaid phone service revenues
5,577
9,341
9,532
9,489
9,483
9,667
9,952
10,052
33,939
39,154
Divided by: Average number of postpaid
phone customers (in thousands) and number of months in period
40,585
64,889
65,437
66,084
66,834
67,680
69,033
69,764
59,249
68,327
Postpaid phone ARPU
$
45.80
$
47.99
$
48.55
$
47.86
$
47.30
$
47.61
$
48.06
$
48.03
$
47.74
$
47.75
Calculation of Prepaid ARPU
Prepaid service revenues
$
2,373
$
2,311
$
2,383
$
2,354
$
2,351
$
2,427
$
2,481
$
2,474
$
9,421
$
9,733
Divided by: Average number of prepaid
customers (in thousands) and number of months in period
20,759
20,380
20,632
20,605
20,728
20,994
20,936
20,977
20,594
20,909
Prepaid ARPU
$
38.11
$
37.80
$
38.49
$
38.08
$
37.81
$
38.53
$
39.49
$
39.32
$
38.12
$
38.79
Postpaid Postpaid Average Revenue
Per Account (Postpaid ARPA) - Average monthly postpaid service
revenue earned per account. Postpaid service revenues for the
specified period divided by the average number of postpaid accounts
during the period, further divided by the number of months in the
period.
Average Revenue Per User (ARPU) -
Average monthly service revenue earned per customer. Service
revenues for the specified period divided by the average number of
customers during the period, further divided by the number of
months in the period.
Postpaid phone ARPU excludes
postpaid other customers and related revenues.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220201006253/en/
Media Relations: mediarelations@t-mobile.com Investor Relations:
investor.relations@t-mobile.com
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