T-Mobile Reports Financials for 2018 Amid Swirl of Merger Talk

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T-Mobile US, Inc. (NASDAQ: TMUS) reported its Q4 financials claiming, “the best postpaid phone growth in the industry” while market analysts tried to put a more somber spin on the “un-carrier’s” self-congratulations party.

“This never gets old!” said the company’s always-exuberant CEO John Legere. “T-Mobile finished another year with record breaking financials and our best-ever customer growth! Record revenues, strong net income, record Adjusted EBITDA, our lowest-ever Q4 postpaid phone churn that was better than AT&T for the very first time! Our 2019 guidance shows that we expect our incredible standalone momentum to continue!”

Craig Moffett, chief analyst with MoffettNathanson said a series of developments over the past few weeks have forced investors to consider the possibility that T-Mobile’s merger with Sprint may be in more trouble than previously appreciated.

“Is it time to consider Plan B?” Moffett said. “First, there was a letter from House Democrats calling the companies to another hearing on Capitol Hill. With no power to directly influence the outcome of the DOJ’s and FCC’s merger reviews, one might have been inclined to dismiss the House Democrats’ subpoena as empty virtue-signaling,” he said.  But by staking out a position against the Democrats, notwithstanding a contemporaneous letter in support from Democrat Anna Eshoo of California, Moffett said it made the merger a partisan issue. The result raises the odds that the state attorneys general of New York and California step in if the Republican DOJ declines to oppose the deal.

“Which, of course, must now be considered in the political calculus of the Republican DOJ,” Moffett said.

Highlights include: (all percentages year-over-year)

  • Record Service revenues of $8.2 billion, up 6% in Q4 2018 — up 6% to $32.0 billion in 2018
  • Record Total revenues of $11.4 billion, up 6% in Q4 2018 — up 7% to $43.3 billion in 2018
  • Strong Net income of $640 million, down 76% in Q4 2018 — down 36% to $2.9 billion in 2018. Up 21% and 22% in Q4 2018 and 2018, respectively, excluding the impact of the Tax Cuts and Jobs Act (“TCJA”) of $2.2 billion in 2017
  • Diluted earnings per share (“EPS”) of $0.75 and $3.36 in Q4 2018 and 2018, respectively
  • Record Q4 Adjusted EBITDA(1) of $3.0 billion, up 10% in Q4 2018 — up 11% to $12.4 billion in 2018
  • Strong Net cash provided by operating activities(2) of $954 million, up 10%, and $3.9 billion, up 2%, in Q4 2018 and 2018, respectively
  • Record Free Cash Flow(1)(2) of $1.2 billion, up 7% in Q4 2018 — up 30% to $3.6 billion in 2018

Building the First Real 5G Network While Improving 4G LTE

  • T-Mobile is building out standards-based 5G today, plans to have nationwide 5G coverage next year
  • Aggressive deployment of 600 MHz using 5G ready equipment, now reaching over 2,700 cities and towns on 29 devices
  • T-Mobile now covers more than 325 million people with 4G LTE
  • Fastest 4G LTE network for 20th consecutive quarter based on analysis by Ookla® of Speedtest Intelligence® data

February 8, 2019   

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