T-Mobile Retains Industry-leading Growth across Segments

T-Mobile Times Square store opening, Wednesday, Jan. 27, 2016.

Revenues jumped 17.8% Y-o-Y to $9.2 billion, its 13th consecutive quarterly growth

t1T-Mobile US Inc. (NASDAQ: TMUS) announced its Q3 FY16 financial results on October 24th, 2016.

The Bellevue, Washington-based company, together with its subsidiaries, provides mobile communications services for consumers and businesses in the U.S., Puerto Rico, and the U.S. Virgin Islands. T-Mobile offers voice, messaging, and data services in the postpaid, prepaid, and wholesale markets. It also provides wireless devices, including smartphones, tablets, and other mobile communication devices, as well as accessories under the T-Mobile and MetroPCS brands through its owned and operated retail stores, as well as through its websites. It delivers wireless services to approximately 65.5 million customers. T-Mobile US Inc. operates as a subsidiary of Deutsche Telekom Holding B.V. Read more about T-Mobile’s financial results below.

Q3 FY16 financial highlights

During Q3 FY16, T-Mobile, the third largest wireless carrier in the U.S., emerged as the fastest growing wireless company with its industry-leading customer growth in both the prepaid and postpaid segments. During Q3 FY16, T-Mobile’s total revenues jumped 17.8% Y-o-Y to $9.2 billion, its 13th consecutive quarterly growth in the past 14 quarters. The growth in revenues was mainly due to higher service revenues from growth in the customer base and higher equipment revenues.

Source: T-Mobile
Source: T-Mobile

During Q3 FY16, service revenues grew 13.2% Y-o-Y to $7.13 billion, its 10th consecutive quarterly growth so far, mainly due to growth in T-Mobile’s branded customer base from the continued success of T-Mobile’s Un-carrier initiatives and T-Mobile’s prepaid brands, and strong customer response to promotional activities. These increases were partially offset by a higher non-cash net revenue deferral from Data Stash, which totaled $59 million in Q3 FY16 compared to $3 million in Q3 FY15.

Equipment revenues in Q3 FY16 soared 37.6% to $1.94 billion from $1.41 billion in Q3 FY15, comprising lease revenues of $353 million and non-lease revenues of $1.595 billion.

Subscriber metrics

Postpaid: During Q3 FY16, T-Mobile reported 1,970,000 million total net additions, its 14th consecutive quarter in which total net customer additions exceeded one million, versus 2,312,000 in Q3 FY15. T-Mobile ended the quarter with 69.4 million total customers.

Source: T-Mobile
Source: T-Mobile

The Company reported 851,000 branded postpaid phone net additions in Q3 FY16, its 11th consecutive quarter so far. Branded postpaid mobile broadband net customer additions were 118,000 in Q3 FY16, compared to 242,000 in Q3 FY15. Branded postpaid phone churn was 1.32% in Q3 FY16, down 14 bps from 1.46% in Q3 FY15.

Prepaid: During Q3 FY16, T-Mobile reported 684,000 branded prepaid net additions, which is its second best quarterly net additions performance so far, as compared to 595,000 in Q3 FY15. Total branded net customer additions were 1,653,000 in Q3 FY16 compared to 1,680,000 in Q3 FY15. Branded prepaid churn was 3.82% in Q3 FY16, compared to 4.09% in Q3 FY15.

Source: T-Mobile
Source: T-Mobile

LTE Network: T-Mobile continues to have the fastest 4G (Long Term Evolution) LTE network in the t5U.S. for the 11th consecutive quarter in both average download speeds and average upload speeds. In Q3 FY16, T-Mobile’s average 4G LTE download speed was 22.8 (megabytes per second) Mbps compared to Verizon Communications Inc. (NYSE: VZ) at 22.5 Mbps, AT&T Inc. (NYSE: T) at 21.8 Mbps, and Sprint Corp. (NYSE: S) at 15.8 Mbps. In Q3 FY16, T-Mobile’s average 4G LTE upload speed was 11.8 Mbps compared to Verizon at 8.1 Mbps, AT&T at 7.3 Mbps, and Sprint at 4.7 Mbps.

Source: T-Mobile
Source: T-Mobile

During Q3 FY16, T-Mobile’s branded postpaid phone average revenue per user (ARPU) was $48.15, up 0.3% from $47.99 in Q3 FY15. Branded prepaid ARPU was $38.01 in Q3 FY16, up 1.5% compared to $37.46 in Q3 FY15, due to a decrease in customers with lower branded prepaid ARPU and higher data attach rates, partially offset by dilution from growth of customers on rate plan promotions.

t7Finally, Q3 FY16 net income was $366 million, up 165% compared to $138 million in Q3 FY16, and included after-tax spectrum gains of $122 million. Q3 FY16 EPS was $0.42 compared to $0.15 in Q3 FY15; the after-tax impact of spectrum gains on EPS in Q3 FY16 was $0.15.

T-Mobile has taken market share from bigger rivals Verizon and AT&T, and that momentum is expected to continue in the coming months.

T-Mobile has become the likeliest acquisition target as carriers facing a saturated wireless market are looking for content to attract mobile users and producers of shows and movies are seeking digital distribution, especially after AT&T Inc.’s proposed $85.4 billion takeover of Time Warner Inc. (NYSE: TWX).

Updated guidance for full year FY16

For the full-year FY16, T-Mobile expects branded postpaid net customer additions to be between 3.7 billion and 3.9 million, an increase from the previous guidance range of 3.4 billion to 3.8 million. Adjusted EBITDA is forecasted to be in the range of $10.2 billion to $10.4 billion, raising and narrowing the previous guidance range of $9.8 billion to $10.1 billion.

Cash capital expenditures for the full-year FY16 are expected to be in the range of $4.5 billion to $4.7 billion, narrowing the previous guidance range of $4.5 billion to $4.8 billion.

Stock Performance

t8T-Mobile’s stock finished the day flat at $49.50, at the close on Thursday, October 27th, 2016, having vacillated between an intraday high of $49.75 and a low of $48.95 during the session. The stock’s trading volume was at 4,161,655 for the day. The Company’s market cap was at $40.99 billion as of Thursday’s close.

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