T-Mobile Claims Strong Quarterly Results But Revenue Misses By $500M

T-Mobile US, Inc. (NASDAQ: TMUS) reported third quarter 2022 results yesterday. The company said its differentiated growth strategy and year-over-year postpaid phone churn improvement drove the highest postpaid service revenue and cash flow growth in the industry. The company also said it sustained performance and significant progress on integration allowed it to receive full investment grade ratings from all three rating agencies and board approval to commence a share repurchase program for up to $14 billion of the company’s common stock through September 2023. The company’s US GAAP EPS of $0.40 beat projections by $0.14, although revenue of $19.48B misses by $500M.

“We’ve always said our aspiration was to be the first and only provider to offer customers both the best network and the best value without having to sacrifice one for the other — and based on another set of standout customer and financial results for Q3, it’s clear we’re delivering on that promise,” said Mike Sievert, CEO of T-Mobile. “On the heels of our highest ever postpaid account net additions and industry-leading postpaid and broadband customer growth, we are raising guidance for the third time this year. Our Un-carrier playbook continues to win in this ever-changing competitive and macro-economic climate and our momentum is only getting stronger.”

Highlights included:

• Total service revenues increased 4 percent year-over-year to $15.4 billion, which included Postpaid service revenue growth of 7 percent year-over-year driven by continued customer growth.
• Net income of $508 million and Diluted EPS of $0.40 decreased year-over-year primarily due to the impacts in the current quarter, net of tax, associated with merger-related costs of $972 million, or $0.77 per share and loss related to the anticipated sale of the wireline business of $803 million, or $0.64 per share.
• Core Adjusted EBITDA increased 11 percent year-over-year to $6.7 billion primarily due to Service revenue growth and increased synergy realization.
• Net cash provided by operating activities increased 26 percent year-over-year to $4.4 billion, which included cash payments for merger-related costs of $942 million.
• Cash purchases of property and equipment, including capitalized interest, increased 23 percent year-over-year to $3.6 billion driven by the accelerated build-out of the nationwide 5G network.
• Free Cash Flow increased 32 percent year-over-year to $2.1 billion, which included cash payments for merger-related costs of $942 million.
• Merger-related costs are expected to be between $4.8 billion and $5.0 billion before taxes, an increase from prior guidance of $4.7 billion to $5.0 billion. These costs are excluded from Core Adjusted EBITDA but will impact Net income, Net cash provided from operating activities and Free Cash Flow.