Record High Revenues, Accelerating Customer Net Additions and
Record Low Postpaid Phone Churn Close out 2018; Strong Outlook for 2019
Shows Continued Momentum for the Un-carrier
BELLEVUE, Wash.--(BUSINESS WIRE)--
T-Mobile US, Inc. (NASDAQ: TMUS):
Record Financial Performance in FY 2018 (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
Accelerating Customer Growth
-
Record 2.4 million total net additions in Q4 2018 — 7.0 million in 2018
-
1.4 million branded postpaid net additions in Q4 2018, best in the
industry — 4.5 million in 2018
-
1.0 million branded postpaid phone net additions in Q4 2018, best in
industry — 3.1 million in 2018
-
135,000 branded prepaid net additions in Q4 2018, expect to be best in
the industry — 460,000 in 2018
-
Q4 record-low branded postpaid phone churn of 0.99% in Q4 2018, down
19 bps YoY — 1.01% in 2018, down 17 bps from 2017
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
Strong Outlook for 2019
-
Branded postpaid net customer additions of 2.6 to 3.6 million
-
Net income is not available on a forward-looking basis(3)
-
Adjusted EBITDA target, excluding the impact of the new lease
standard, of $12.7 to $13.2 billion, which includes leasing revenues
of $0.6 to $0.7 billion(1)
-
Cash purchases of property and equipment, excluding capitalized
interest of approximately $400 million, of $5.4 to $5.7 billion and
cash purchases of property and equipment, including capitalized
interest, of $5.8 to $6.1 billion
-
Three-year compound annual growth rate (CAGR) from FY 2016 to FY 2019
for Net cash provided by operating activities is expected to be at 17%
- 21%, up from prior guidance of 7% - 12%(2)
-
Three-year CAGR from FY 2016 to FY 2019 for Free Cash Flow maintained
at 46% - 48%(1)(2)
________________________________________________________________
(1)
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|
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 financial measures are
provided in the Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures tables.
|
(2)
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|
In Q1 2018, the adoption of the new cash flow accounting standard
resulted in a reclassification of cash flows related to the deferred
purchase price from securitization transactions from operating
activities to investing activities. In addition, cash flows related
to debt prepayment and extinguishment costs were reclassified from
operating activities to financing activities. In Q1 2018, we
redefined Free Cash Flow to reflect the above changes in
classification and present cash flows on a consistent basis for
investor transparency. The effects of this change are applied
retrospectively and are provided in the Reconciliation of Non-GAAP
Financial Measures to GAAP Financial Measures tables.
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(3)
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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. Adjusted EBITDA should
not be used to predict net income as the difference between the two
measures is variable.
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T-Mobile US, Inc. (NASDAQ: TMUS) reported another strong quarter with
record financials and the best postpaid phone growth in the industry. In
Q4, T-Mobile delivered record-high service and total revenues, strong
net income, record Q4 Adjusted EBITDA, record-low Q4 postpaid phone
churn, strong net cash provided by operating activities and record Free
Cash Flow. These results cap off 2018 where the Company delivered strong
customer growth and service revenue growth for the fifth consecutive
year.
Un-carrier is all about putting customers first by solving everyday pain
points. When customers join T-Mobile, they get more value for their
money and the best customer service in the industry - all on the
nation’s fastest 4G LTE network. The Company’s investments in new
geographies, underpenetrated segments, and a completely new model for
customer care continue to pay off. As a result, the Un-carrier’s
customer growth accelerated year-over-year with T-Mobile again leading
the industry in the fourth quarter, capturing more than 50% of industry
postpaid phone growth and 56% more postpaid phone net additions than our
next closest competitor. In addition, T-Mobile delivered record-low Q4
postpaid phone churn of 0.99% - the best result for a fourth quarter in
T-Mobile’s history.
“This never gets old! 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!” said
John Legere, CEO of T-Mobile. “T-Mobile is competing hard and winning
customers - and we continue to deliver results beyond expectations. Our
2019 guidance shows that we expect our incredible standalone momentum to
continue!”
Record Financial Performance in FY 2018
T-Mobile’s record full-year financial performance in 2018 proves that
taking care of customers is also good for shareholders. The Company
continues to successfully translate customer growth into
industry-leading service and total revenue percentage growth.
(in millions, except EPS)
|
|
Quarter
|
|
Year Ended
December 31,
|
|
Q4 2018
vs.
Q3 2018
|
|
Q4 2018
vs.
Q4 2017
|
|
YTD 2018
vs.
YTD 2017
|
|
Q4 2018
|
|
Q3 2018
|
|
Q4 2017
|
|
2018
|
|
2017
|
|
|
|
Total service revenues(1) |
|
$
|
8,189
|
|
|
$
|
8,066
|
|
|
$
|
7,757
|
|
|
$
|
31,992
|
|
|
$
|
30,160
|
|
|
1.5
|
%
|
|
5.6
|
%
|
|
6.1
|
%
|
Total revenues(1) |
|
11,445
|
|
|
10,839
|
|
|
10,759
|
|
|
43,310
|
|
|
40,604
|
|
|
5.6
|
%
|
|
6.4
|
%
|
|
6.7
|
%
|
Net income(1) |
|
640
|
|
|
795
|
|
|
2,707
|
|
|
2,888
|
|
|
4,536
|
|
|
(19.5
|
)%
|
|
(76.4
|
)%
|
|
(36.3
|
)%
|
EPS(1) |
|
0.75
|
|
|
0.93
|
|
|
3.11
|
|
|
3.36
|
|
|
5.20
|
|
|
(19.4
|
)%
|
|
(75.9
|
)%
|
|
(35.4
|
)%
|
Adjusted EBITDA(1)(2) |
|
2,970
|
|
|
3,239
|
|
|
2,711
|
|
|
12,398
|
|
|
11,213
|
|
|
(8.3
|
)%
|
|
9.6
|
%
|
|
10.6
|
%
|
Cash purchases of property and equipment, including capitalized
interest
|
|
1,184
|
|
|
1,362
|
|
|
921
|
|
|
5,541
|
|
|
5,237
|
|
|
(13.1
|
)%
|
|
28.6
|
%
|
|
5.8
|
%
|
Net cash provided by operating activities(3) |
|
954
|
|
|
914
|
|
|
865
|
|
|
3,899
|
|
|
3,831
|
|
|
4.4
|
%
|
|
10.3
|
%
|
|
1.8
|
%
|
Free Cash Flow(3) |
|
1,220
|
|
|
890
|
|
|
1,137
|
|
|
3,552
|
|
|
2,725
|
|
|
37.1
|
%
|
|
7.3
|
%
|
|
30.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
On January 1, 2018, we adopted Accounting Standards Update (“ASU”)
2014-09, “Revenue from Contracts with Customers (Topic 606”) and the
related amendments (collectively, the “new revenue standard”), using
the modified retrospective method with the cumulative effect of
initially applying the guidance recognized at the date of initial
application. Comparative information has not been restated and
continues to be reported under the standards in effect for those
periods.
|
(2)
|
|
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 financial measures are
provided in the Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures tables.
|
(3)
|
|
In Q1 2018, the adoption of the new cash flow accounting standard
resulted in a reclassification of cash flows related to the deferred
purchase price from securitization transactions from operating
activities to investing activities. In addition, cash flows related
to debt prepayment and extinguishment costs were reclassified from
operating activities to financing activities. In Q1 2018, we
redefined Free Cash Flow to reflect the above changes in
classification and present cash flows on a consistent basis for
investor transparency. The effects of this change are applied
retrospectively and are provided in the Reconciliation of Non-GAAP
Financial Measures to GAAP Financial Measures tables.
|
|
|
|
The following discussion is for the three months and year ended
December 31, 2018, compared to the same periods in 2017 unless otherwise
stated.
-
Total service revenues increased 6% to a record-high $8.2
billion in Q4 2018 and 6% to a record-high of $32.0 billion in
full-year 2018. These results represent our best quarterly and
full-year performance ever and mark the 19th consecutive quarter of
leading the industry in year-over-year service revenue percentage
growth. Branded postpaid revenues grew 8.0% in Q4 2018, an increase
from growth of 6.6% in Q3 2018.
-
Total revenues increased 6% to a record-high $11.4 billion in
Q4 2018 and 7% to a record-high of $43.3 billion in full-year 2018,
driven by growth in service revenues and equipment revenues.
-
Branded postpaid phone Average Revenue per User (ARPU) remained
generally stable in Q4 2018 at $46.29, down 0.2%. For full-year 2018,
branded postpaid phone ARPU remained generally stable at $46.40, down
1.2%. The slight decrease in both periods was primarily due to the
growing success of new customer segments and rate plans such as
T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for
Business and T-Mobile Essentials, the impact of the ongoing growth in
our Netflix offering, and a reduction in certain non-recurring charges.
-
Branded prepaid ARPU remained generally stable at $38.39 in Q4
2018 and $38.53 in full-year 2018, down 0.6% and 0.4%, respectively.
-
Net income decreased 76% to $640 million in Q4 2018 and 36% to
$2.9 billion in full-year 2018 primarily due to the impact from the
TCJA which resulted in an income tax benefit of $2.2 billion
recognized in Q4 2017. Excluding the impact from the TCJA, net income
would have increased by 21% in Q4 2018 and 22% in full-year 2018.
-
EPS decreased by $2.36 to $0.75 in Q4 2018 and by $1.84 to
$3.36 in full-year 2018 primarily due to the impact of the TCJA,
resulting in a benefit of $2.50 in Q4 2017 and $2.49 in full-year 2017.
-
Adjusted EBITDA increased 10% to $3.0 billion in Q4 2018 and
11% to $12.4 billion in full-year 2018, primarily due to higher
operating income. Positive impacts to Adjusted EBITDA include $83
million in Q4 2018 and $398 million in full-year 2018 from the new
revenue standard and $158 million in full-year 2018 from insurance
reimbursements related to hurricanes, net of costs.
-
Cash purchases of property and equipment increased 29% to $1.2
billion in Q4 2018 and 6% to $5.5 billion in full-year 2018 including
capitalized interest of $116 million and $362 million, respectively.
These increases were primarily due to deployment of low band 600 MHz
spectrum and laying the groundwork for 5G.
-
Net cash provided by operating activities increased 10% to $954
million in Q4 2018. The increase resulted from higher net non-cash
adjustments to Net income, partially offset by lower Net income, both
primarily related to impacts of the TCJA, and an increase in net cash
outflows from working capital primarily due to a paydown of Accounts
payable and accrued liabilities. Net cash provided by operating
activities increased 2% to $3.9 billion in full-year 2018.
-
Free Cash Flow increased 7% to $1.2 billion in Q4 2018 from
higher proceeds related to our deferred purchase price from
securitization transactions and higher net cash provided by operating
activities, partially offset by higher cash purchases of property and
equipment. Free Cash Flow was $3.6 billion, up 30% in full-year 2018.
Accelerating Customer Growth
T-Mobile continues to deliver strong customer growth, and Q4 2018 was no
different. We once again led the industry in branded postpaid phone
customer net additions and captured over 50% of industry growth.
|
|
Quarter
|
|
Year Ended
December 31,
|
(in thousands, except churn)
|
|
Q4 2018
|
|
Q3 2018
|
|
Q4 2017
|
|
2018
|
|
2017
|
Total net customer additions(1) |
|
2,402
|
|
|
1,630
|
|
|
1,854
|
|
|
7,044
|
|
|
5,658
|
|
Branded postpaid net customer additions
|
|
1,358
|
|
|
1,079
|
|
|
1,072
|
|
|
4,459
|
|
|
3,620
|
|
Branded postpaid phone net customer additions(1) |
|
1,020
|
|
|
774
|
|
|
891
|
|
|
3,097
|
|
|
2,817
|
|
Branded postpaid other customer additions
|
|
338
|
|
|
305
|
|
|
181
|
|
|
1,362
|
|
|
803
|
|
Branded prepaid net customer additions(1) |
|
135
|
|
|
35
|
|
|
149
|
|
|
460
|
|
|
855
|
|
Total customers, end of period (1) |
|
79,651
|
|
|
77,249
|
|
|
72,585
|
|
|
79,651
|
|
|
72,585
|
|
Branded postpaid phone churn
|
|
0.99
|
%
|
|
1.02
|
%
|
|
1.18
|
%
|
|
1.01
|
%
|
|
1.18
|
%
|
Branded prepaid churn
|
|
3.99
|
%
|
|
4.12
|
%
|
|
4.00
|
%
|
|
3.96
|
%
|
|
4.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As a result of the acquisition of Iowa Wireless Services, LLC (IWS),
we included an adjustment of 13,000 branded postpaid phone and 4,000
branded prepaid IWS customers in our reported subscriber base as of
January 1, 2018. Additionally, as a result of the acquisition of
Layer3 TV, we included an adjustment of 5,000 branded prepaid
customers in our reported subscriber base as of January 22, 2018.
Customer activity post acquisition was included in our net customer
additions for the remainder of 2018.
|
|
|
|
-
Total net customer additions were a record 2.4 million in Q4
2018, bringing our total customer count to 79.7 million, and marking
the 23rd straight quarter in which T-Mobile generated more than 1
million total net customer additions. For full-year 2018, total
customer additions were 7.0 million, marking the fifth year in a row
of more than 5 million total net additions.
-
Branded postpaid net customer additions were 1.4 million in Q4
2018, which was the best result in 17 quarters. For full-year 2018,
branded postpaid net customer additions were 4.5 million, the best
annual result in three years.
-
Branded postpaid phone net customer additions were 1.0 million
in Q4 2018 and marked the 20th consecutive quarter in which T-Mobile
led the industry in this category. Branded postpaid phone net customer
additions were 3.1 million in full-year 2018. Increased branded
postpaid phone net customer additions were due to lower churn and
continued growth in existing and Greenfield markets including the
growing success of new customer segments and rate plans such as
T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for
Business and T-Mobile Essentials.
-
Branded postpaid other net customer additions were 338,000 in
Q4 2018 and 1.4 million for the full-year 2018 primarily due to higher
gross customer additions from wearables and lower churn.
-
Branded postpaid phone churn was a Q4 record low of 0.99% in Q4
2018, down 19 basis points year-over-year and decreased 17 basis
points to 1.01% in full-year 2018. These improvements were primarily
due to increased customer satisfaction and loyalty from ongoing
improvements to network quality, industry-leading customer service and
the overall value of our offerings.
-
Branded prepaid net customer additions were 135,000 in Q4 2018
and 460,000 in full-year 2018, down primarily due to increased
competitive activity, partially offset by lower migrations to branded
postpaid plans. On October 8, 2018, MetroPCS was re-branded “Metro™ by
T-Mobile” and launched new unlimited rate plans that include premium
features such as Amazon Prime and Google One.
-
Branded prepaid churn was 3.99% in Q4 2018, flat year-over-year
and down 8 basis points to 3.96% in full-year 2018.
Building the First Real 5G Network While
Improving 4G LTE
We continue to increase and expand the coverage and capacity of our
network to better serve our customers. Our rapid deployment of 600 MHz
provides customers with even better coverage and sets the stage for
nationwide standards-based 5G. Highlights from Q4 2018 included:
-
5G update. T-Mobile is building out standards-based 5G across
the US, including six of the Top 10 markets, including New York and
Los Angeles, in 2018. This network will be ready for the introduction
of the first standards-based 5G smartphones in 2019. We plan on the
delivery of a nationwide standards-based 5G network next year.
-
Clearing and deploying 600 MHz spectrum. At the end of Q4 2018,
T-Mobile owned a nationwide average of 31 MHz of 600 MHz low band
spectrum. As of December 31, 2018, we had cleared approximately 135
million POPs and we expect to clear spectrum covering approximately
272 million POPs by year-end 2019. 600 MHz deployments continued at an
accelerated pace with spectrum covering more than 2,700 cities and
towns in 43 states and Puerto Rico across hundreds of thousands of
square miles already lit up. Combining 600 MHz and 700 MHz, we have
deployed low band spectrum to 301 million POPs. We now have 29 devices
compatible with 600 MHz including the latest iPhone generation.
-
Expanding our coverage breadth. T-Mobile now covers more than
325 million people with 4G LTE, up from 322 million at the end of
2017. As promised, T-Mobile has achieved effective network population
coverage parity with Verizon.
-
Operating America’s Fastest 4G LTE network. In Q4 2018, we were
once again the nation’s fastest LTE network, realizing average 4G LTE
download speeds of 33.4 Mbps, and average 4G LTE upload speeds of 12.1
Mbps. This was the 20th consecutive quarter that we have led the
industry in both download and upload speeds based on analysis by Ookla®
of Speedtest Intelligence® data.
Strong 2019 Outlook
We expect postpaid net customer additions between 2.6 and 3.6 million in
2019.
Net income is not available on a forward-looking basis.
Adjusted EBITDA, excluding the impact of the new lease standard, is
expected to be between $12.7 and $13.2 billion in 2019. Our Adjusted
EBITDA target includes leasing revenues of $0.6 to $0.7 billion.
Cash purchases of property and equipment, excluding capitalized interest
of approximately $400 million, are expected to be between $5.4 and $5.7
billion and cash purchases of property and equipment, including
capitalized interest, are expected to be between $5.8 and $6.1 billion
in 2019. Cash purchases of property and equipment in 2019 include
expenditures for 5G and 600 MHz deployment.
The three-year CAGR guidance (2016 - 2019) for net cash provided by
operating activities is expected to be at 17% - 21%, up from prior
guidance of 7% - 12%.
Three-year CAGR guidance (2016 - 2019) for Free Cash Flow is unchanged
at 46% - 48%.
In 2019, including those arising from a potential change in a previously
failed sale-leaseback transaction, we expect the following impacts from
the adoption of the new lease standard, which are excluded from the
guidance ranges provided above. See Note 1 in our Annual Report on Form
10-K filed on February 7, 2019 for more information:
-
Other revenues - decrease of $230 - $250 million
-
Operating expenses - decrease of $220 - $260 million
-
Interest expense - decrease of $200 - $240 million
-
Net income - increase of $140 - $180 million
-
Adjusted EBITDA - decrease of $40 - $80 million
-
Total Assets - increase of $9.1 - $10.0 billion
-
Total Liabilities - increase of $7.0 - $7.5 billion
-
Equity Adjustment - increase of $2.1 - $2.5 billion
-
Net cash provided by operating activities - decrease of $20 - $40
million
-
Net cash used in financing activities - decrease of $20 - $40 million
Financial Results
For more details on T-Mobile’s Q4 and full year 2018 financial results,
including the Investor Factbook with detailed financial tables and
reconciliations of certain historical non-GAAP measures disclosed in
this release to the most comparable measures under GAAP, please visit
T-Mobile US, Inc.’s Investor Relations website at http://investor.t-mobile.com.
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, press releases, SEC filings and public conference calls and
webcasts. We also intend to use the @TMobileIR Twitter account (https://twitter.com/TMobileIR)
and the @JohnLegere Twitter (https://twitter.com/JohnLegere),
Facebook and Periscope accounts, which Mr. Legere also uses as a means
for personal communications and observations, as means of disclosing
information about the Company and its services and for complying with
its disclosure obligations under Regulation FD. 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.
As America’s Un-carrier, T-Mobile US, Inc. (NASDAQ: TMUS) is redefining
the way consumers and businesses buy wireless services through leading
product and service innovation. Our advanced nationwide 4G LTE network
delivers outstanding wireless experiences to 79.7 million customers who
are unwilling to compromise on quality and value. Based in Bellevue,
Washington, T-Mobile US 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
or join the conversation on Twitter using $TMUS.
Q4 and Full-Year 2018 Earnings Call, Livestream
and Webcast Access Information
Access via Phone (audio only):
Date:
|
|
February 7, 2019
|
Time:
|
|
8:30 a.m. (ET)
|
US/Canada:
|
|
866-575-6534
|
International:
|
|
+1 786-460-7205
|
Participant Passcode:
|
|
6928233
|
|
|
|
Please plan on accessing the earnings call ten minutes prior to the
scheduled start time.
Access via Social Media:
The @TMobileIR Twitter account will live-tweet the earnings call.
Submit Questions via Text, Twitter, or Facebook:
Text:
|
|
Send a text message to 313131, enter the keyword TMUS followed by a
space
|
Twitter:
|
|
Send a tweet to @TMobileIR or @JohnLegere using $TMUS
|
Facebook:
|
|
Post a comment to John Legere’s Facebook Earnings post
|
|
|
|
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 6928233.
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Forward-Looking Statements
This news release 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,” “expect,” “believe,”
“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: the failure to obtain, or delays
in obtaining, required regulatory approvals for the merger contemplated
under the Business Combination Agreement with Sprint Corporation
(“Sprint”), and related transactions (collectively, the “Transactions”)
and the risk that such approvals may result in the imposition of
conditions that could adversely affect the combined company or the
expected benefits of the Transactions, or the failure to satisfy any of
the other conditions to the Transactions on a timely basis or at all;
the occurrence of events that may give rise to a right of one or both of
the parties to terminate the Business Combination Agreement with Sprint;
adverse effects on the market price of our common stock or on our or
Sprint’s operating results because of a failure to complete the
Transactions in the anticipated timeframe or at all; inability to obtain
the financing contemplated to be obtained in connection with the
Transactions on the expected terms or timing or at all; the ability of
us, Sprint and the combined company to make payments on debt or to repay
existing or future indebtedness when due or to comply with the covenants
contained therein; adverse changes in the ratings of our or Sprint’s
debt securities or adverse conditions in the credit markets; negative
effects of the announcement, pendency or consummation of the
Transactions on the market price of our common stock and on our or
Sprint’s operating results, including as a result of changes in key
customer, supplier, employee or other business relationships;
significant costs related to the Transactions, including financing
costs, and unknown liabilities of Sprint or that may arise; failure to
realize the expected benefits and synergies of the Transactions in the
expected timeframes or at all; costs or difficulties related to the
integration of Sprint’s network and operations into our network and
operations; the risk of litigation or regulatory actions related to the
Transactions; the inability of us, Sprint or the combined company to
retain and hire key personnel; the risk that certain contractual
restrictions contained in the Business Combination Agreement with Sprint
during the pendency of the Transactions could adversely affect our or
Sprint’s ability to pursue business opportunities or strategic
transactions; adverse economic or political conditions in the U.S. and
international markets; competition, industry consolidation, and changes
in the market for wireless services, which could negatively affect our
ability to attract and retain customers; the effects of any future
merger, investment, or acquisition involving us, as well as the effects
of mergers, investments, or acquisitions in the technology, media and
telecommunications industry; challenges in implementing our business
strategies or funding our operations, including payment for additional
spectrum or network upgrades; the possibility that we may be unable to
renew our spectrum licenses on attractive terms or acquire new spectrum
licenses at reasonable costs and terms; difficulties in managing growth
in wireless data services, including network quality; material changes
in available technology and the effects of such changes, including
product substitutions and deployment costs and performance; the timing,
scope and financial impact of our deployment of advanced network and
business technologies; the impact on our networks and business from
major technology equipment failures; breaches of our and/or our
third-party vendors’ networks, information technology and data security,
resulting in unauthorized access to customer confidential information;
natural disasters, terrorist attacks or similar incidents; unfavorable
outcomes of existing or future litigation; any changes in the regulatory
environments in which we operate, including any increase in restrictions
on the ability to operate our networks and data privacy laws; any
disruption or failure of our third parties’ or key suppliers’
provisioning of products or services; material adverse changes in labor
matters, including labor campaigns, negotiations or additional
organizing activity, and any resulting financial, operational and/or
reputational impact; changes in accounting assumptions that regulatory
agencies, including the Securities and Exchange Commission (“SEC”), may
require, which could result in an impact on earnings; changes in tax
laws, regulations and existing standards and the resolution of disputes
with any taxing jurisdictions; the possibility that the reset process
under our trademark license with Deutsche Telekom AG results in changes
to the royalty rates for our trademarks; the possibility that we may be
unable to adequately protect our intellectual property rights or be
accused of infringing the intellectual property of others; our business,
investor confidence in our financial results and stock price may be
adversely affected if our internal controls are not effective; and
interests of a majority stockholder may differ from the interests of
other stockholders. You should not place undue reliance on these
forward-looking statements. We do not undertake to update
forward-looking statements, whether as a result of new information,
future events or otherwise, 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 should not be used to predict net
income as the difference between the two measures is variable.
Adjusted EBITDA is reconciled to net income as follows:
|
|
Quarter
|
|
Year Ended
December 31,
|
(in millions)
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
2017
|
|
2018
|
Net income
|
|
$
|
698
|
|
|
$
|
581
|
|
|
$
|
550
|
|
|
$
|
2,707
|
|
|
$
|
671
|
|
|
$
|
782
|
|
|
$
|
795
|
|
|
$
|
640
|
|
|
$
|
4,536
|
|
|
$
|
2,888
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
339
|
|
|
265
|
|
|
253
|
|
|
254
|
|
|
251
|
|
|
196
|
|
|
194
|
|
|
194
|
|
|
1,111
|
|
|
835
|
|
Interest expense to affiliates
|
|
100
|
|
|
131
|
|
|
167
|
|
|
162
|
|
|
166
|
|
|
128
|
|
|
124
|
|
|
104
|
|
|
560
|
|
|
522
|
|
Interest income
|
|
(7
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(17
|
)
|
|
(19
|
)
|
Other (income) expense, net
|
|
(2
|
)
|
|
92
|
|
|
(1
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|
64
|
|
|
(3
|
)
|
|
3
|
|
|
73
|
|
|
54
|
|
Income tax expense (benefit)
|
|
(91
|
)
|
|
353
|
|
|
356
|
|
|
(1,993
|
)
|
|
210
|
|
|
286
|
|
|
335
|
|
|
198
|
|
|
(1,375
|
)
|
|
1,029
|
|
Operating income
|
|
1,037
|
|
|
1,416
|
|
|
1,323
|
|
|
1,112
|
|
|
1,282
|
|
|
1,450
|
|
|
1,440
|
|
|
1,137
|
|
|
4,888
|
|
|
5,309
|
|
Depreciation and amortization
|
|
1,564
|
|
|
1,519
|
|
|
1,416
|
|
|
1,485
|
|
|
1,575
|
|
|
1,634
|
|
|
1,637
|
|
|
1,640
|
|
|
5,984
|
|
|
6,486
|
|
Stock-based compensation (1) |
|
67
|
|
|
72
|
|
|
83
|
|
|
85
|
|
|
96
|
|
|
106
|
|
|
102
|
|
|
85
|
|
|
307
|
|
|
389
|
|
Cost associated with the Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
53
|
|
|
102
|
|
|
—
|
|
|
196
|
|
Other, net (2) |
|
—
|
|
|
5
|
|
|
—
|
|
|
29
|
|
|
3
|
|
|
2
|
|
|
7
|
|
|
6
|
|
|
34
|
|
|
18
|
|
Adjusted EBITDA
|
|
$
|
2,668
|
|
|
$
|
3,012
|
|
|
$
|
2,822
|
|
|
$
|
2,711
|
|
|
$
|
2,956
|
|
|
$
|
3,233
|
|
|
$
|
3,239
|
|
|
$
|
2,970
|
|
|
$
|
11,213
|
|
|
$
|
12,398
|
|
(1)
|
|
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 Transactions have been included in Cost
associated with the Transactions.
|
(2)
|
|
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 in Adjusted EBITDA.
|
|
|
|
Adjusted EBITDA - Earnings before Interest expense, net of Interest
income, Income tax expense, depreciation and amortization expense,
non-cash Stock-based compensation and certain expenses not reflective of
T-Mobile’s ongoing operating performance. Adjusted EBITDA is a non-GAAP
financial measure utilized by T-Mobile’s management to monitor the
financial performance of our operations. T-Mobile uses Adjusted EBITDA
internally as a measure to evaluate and compensate its personnel and
management for their performance, and as a benchmark to evaluate
T-Mobile’s operating performance in comparison to its competitors.
Management believes analysts and investors use Adjusted EBITDA as a
supplemental measure to evaluate overall operating performance and
facilitate comparisons with other wireless communications companies
because it is 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,
non-cash stock-based compensation, network decommissioning costs and
costs related to the Transactions, as they are not indicative of
T-Mobile’s ongoing operating performance, as well as certain other
nonrecurring income and expenses. Adjusted EBITDA has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for income from operations, 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)
|
Net debt (excluding Tower obligations) to last twelve months Net income
and Adjusted EBITDA ratios are calculated as follows:
(in millions, except net debt ratio)
|
|
Mar 31,
2017
|
|
Jun 30,
2017
|
|
Sep 30,
2017
|
|
Dec 31,
2017
|
|
Mar 31,
2018
|
|
Jun 30,
2018
|
|
Sep 30,
2018
|
|
Dec 31,
2018
|
Short-term debt
|
|
$
|
7,542
|
|
|
$
|
522
|
|
|
$
|
558
|
|
|
$
|
1,612
|
|
|
$
|
3,320
|
|
|
$
|
1,004
|
|
|
$
|
783
|
|
|
$
|
841
|
|
Short-term debt to affiliates
|
|
—
|
|
|
680
|
|
|
—
|
|
|
—
|
|
|
445
|
|
|
320
|
|
|
—
|
|
|
—
|
|
Long-term debt
|
|
13,105
|
|
|
13,206
|
|
|
13,163
|
|
|
12,121
|
|
|
12,127
|
|
|
12,065
|
|
|
11,993
|
|
|
12,124
|
|
Long-term debt to affiliates
|
|
9,600
|
|
|
14,086
|
|
|
14,586
|
|
|
14,586
|
|
|
14,586
|
|
|
14,581
|
|
|
14,581
|
|
|
14,582
|
|
Less: Cash and cash equivalents
|
|
(7,501
|
)
|
|
(181
|
)
|
|
(739
|
)
|
|
(1,219
|
)
|
|
(2,527
|
)
|
|
(215
|
)
|
|
(329
|
)
|
|
(1,203
|
)
|
Net debt (excluding Tower Obligations)
|
|
$
|
22,746
|
|
|
$
|
28,313
|
|
|
$
|
27,568
|
|
|
$
|
27,100
|
|
|
$
|
27,951
|
|
|
$
|
27,755
|
|
|
$
|
27,028
|
|
|
$
|
26,344
|
|
Divided by: Last twelve months Net income
|
|
$
|
1,679
|
|
|
$
|
2,035
|
|
|
$
|
2,219
|
|
|
$
|
4,536
|
|
|
$
|
4,509
|
|
|
$
|
4,710
|
|
|
$
|
4,955
|
|
|
$
|
2,888
|
|
Net Debt (excluding Tower Obligations) to last twelve months Net
income
|
|
13.5
|
|
|
13.9
|
|
|
12.4
|
|
|
6.0
|
|
|
6.2
|
|
|
5.9
|
|
|
5.5
|
|
|
9.1
|
|
Divided by: Last twelve months Adjusted EBITDA
|
|
$
|
10,493
|
|
|
$
|
10,976
|
|
|
$
|
11,109
|
|
|
$
|
11,213
|
|
|
$
|
11,501
|
|
|
$
|
11,722
|
|
|
$
|
12,139
|
|
|
$
|
12,398
|
|
Net Debt (excluding Tower Obligations) to last twelve months
Adjusted EBITDA Ratio
|
|
2.2
|
|
|
2.6
|
|
|
2.5
|
|
|
2.4
|
|
|
2.4
|
|
|
2.4
|
|
|
2.2
|
|
|
2.1
|
|
Net debt is defined as Short-term debt, short-term debt to affiliates,
long-term debt (excluding tower obligations), and long-term debt to
affiliates, less cash and cash equivalents.
Free Cash Flow(1) is calculated as follows:
|
|
Quarter
|
|
Year Ended
December 31,
|
(in millions)
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
2017
|
|
2018
|
Net cash provided by operating activities
|
|
$
|
608
|
|
|
$
|
1,106
|
|
|
$
|
1,252
|
|
|
$
|
865
|
|
|
$
|
770
|
|
|
$
|
1,261
|
|
|
$
|
914
|
|
|
$
|
954
|
|
|
$
|
3,831
|
|
|
$
|
3,899
|
|
Cash purchases of property and equipment
|
|
(1,528
|
)
|
|
(1,347
|
)
|
|
(1,441
|
)
|
|
(921
|
)
|
|
(1,366
|
)
|
|
(1,629
|
)
|
|
(1,362
|
)
|
|
(1,184
|
)
|
|
(5,237
|
)
|
|
(5,541
|
)
|
Proceeds related to beneficial interests in securitization
transactions
|
|
1,134
|
|
|
882
|
|
|
1,110
|
|
|
1,193
|
|
|
1,295
|
|
|
1,323
|
|
|
1,338
|
|
|
1,450
|
|
|
4,319
|
|
|
5,406
|
|
Cash payments for debt prepayment or debt extinguishment costs
|
|
(29
|
)
|
|
(159
|
)
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(181
|
)
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
(212
|
)
|
Free Cash Flow
|
|
$
|
185
|
|
|
$
|
482
|
|
|
$
|
921
|
|
|
$
|
1,137
|
|
|
$
|
668
|
|
|
$
|
774
|
|
|
$
|
890
|
|
|
$
|
1,220
|
|
|
$
|
2,725
|
|
|
$
|
3,552
|
|
Net cash (used in) provided by investing activities
|
|
$
|
(416
|
)
|
|
$
|
(6,251
|
)
|
|
$
|
(345
|
)
|
|
$
|
267
|
|
|
$
|
(462
|
)
|
|
$
|
(306
|
)
|
|
$
|
(42
|
)
|
|
$
|
231
|
|
|
$
|
(6,745
|
)
|
|
$
|
(579
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
1,809
|
|
|
$
|
(2,175
|
)
|
|
$
|
(349
|
)
|
|
$
|
(652
|
)
|
|
$
|
1,000
|
|
|
$
|
(3,267
|
)
|
|
$
|
(758
|
)
|
|
$
|
(311
|
)
|
|
$
|
(1,367
|
)
|
|
$
|
(3,336
|
)
|
(1)
|
|
In Q1 2018, the adoption of the new cash flow accounting standard
resulted in a reclassification of cash flows related to the deferred
purchase price from securitization transactions from operating
activities to investing activities. In addition, cash flows related
to debt prepayment and extinguishment costs were reclassified from
operating activities to financing activities. In Q1 2018, we
redefined Free Cash Flow to reflect the above changes in
classification and present cash flows on a consistent basis for
investor transparency. The effects of this change are applied
retrospectively.
|
|
|
|
Free Cash Flow - Net cash provided by operating activities less cash
purchases of property and equipment, including proceeds related to
beneficial interests in securitization transactions and less cash
payments for debt prepayment of debt extinguishment costs. Free Cash
Flow is utilized by T-Mobile’s management, investors, and analysts to
evaluate cash available to pay debt and provide further investment in
the business.
T-Mobile US, Inc.
|
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures (continued)
|
(Unaudited)
|
Free Cash Flow(1) three-year CAGR is calculated as follows:
|
|
FY
|
|
FY
|
|
|
(in millions, except CAGR Range)
|
|
2016
|
|
2019 Guidance Range
|
|
CAGR Range
|
Net cash provided by operating activities
|
|
$
|
2,779
|
|
|
$
|
4,505
|
|
|
$
|
4,955
|
|
|
17
|
%
|
|
21
|
%
|
Cash purchases of property and equipment
|
|
(4,702
|
)
|
|
(5,800
|
)
|
|
(6,100
|
)
|
|
7
|
%
|
|
9
|
%
|
Proceeds related to beneficial interests in securitization
transactions
|
|
3,356
|
|
|
5,795
|
|
|
5,795
|
|
|
|
|
|
Cash payments for debt prepayment or debt extinguishment costs
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
|
|
|
Free Cash Flow
|
|
$
|
1,433
|
|
|
$
|
4,500
|
|
|
$
|
4,600
|
|
|
46
|
%
|
|
48
|
%
|
(1)
|
|
In Q1 2018, the adoption of the new cash flow accounting standard
resulted in a reclassification of cash flows related to the deferred
purchase price from securitization transactions from operating
activities to investing activities. In addition, cash flows related
to debt prepayment and extinguishment costs were reclassified from
operating activities to financing activities. In Q1 2018, we
redefined Free Cash Flow to reflect the above changes in
classification and present cash flows on a consistent basis for
investor transparency. The effects of this change are applied
retrospectively.
|
|
|
|
T-Mobile US, Inc.
|
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures (continued)
|
(Unaudited)
|
The following table reconciles the impact of certain nonrecurring items
to selected financial statement line items:
(in millions)
|
|
Quarter
|
|
Year Ended December 31,
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
2017
|
|
2018
|
Service revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service revenues
|
|
$
|
7,329
|
|
|
$
|
7,445
|
|
|
$
|
7,629
|
|
|
$
|
7,757
|
|
|
$
|
7,806
|
|
|
$
|
7,931
|
|
|
$
|
8,066
|
|
|
$
|
8,189
|
|
|
$
|
30,160
|
|
|
$
|
31,992
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
(44
|
)
|
|
49
|
|
|
—
|
|
|
35
|
|
Hurricane costs
|
|
—
|
|
|
—
|
|
|
31
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|
—
|
|
Service revenues, as adjusted
|
|
$
|
7,329
|
|
|
$
|
7,445
|
|
|
$
|
7,660
|
|
|
$
|
7,774
|
|
|
$
|
7,836
|
|
|
$
|
7,931
|
|
|
$
|
8,022
|
|
|
$
|
8,238
|
|
|
$
|
30,208
|
|
|
$
|
32,027
|
|
Equipment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment revenues
|
|
$
|
2,043
|
|
|
$
|
2,506
|
|
|
$
|
2,118
|
|
|
$
|
2,708
|
|
|
$
|
2,353
|
|
|
$
|
2,325
|
|
|
$
|
2,391
|
|
|
$
|
2,940
|
|
|
$
|
9,375
|
|
|
$
|
10,009
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77
|
)
|
|
(96
|
)
|
|
(105
|
)
|
|
(115
|
)
|
|
—
|
|
|
(393
|
)
|
Hurricane costs
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
Equipment revenues, as adjusted
|
|
$
|
2,043
|
|
|
$
|
2,506
|
|
|
$
|
2,126
|
|
|
$
|
2,708
|
|
|
$
|
2,276
|
|
|
$
|
2,229
|
|
|
$
|
2,286
|
|
|
$
|
2,825
|
|
|
$
|
9,383
|
|
|
$
|
9,616
|
|
Cost of services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
$
|
1,408
|
|
|
$
|
1,518
|
|
|
$
|
1,594
|
|
|
$
|
1,580
|
|
|
$
|
1,589
|
|
|
$
|
1,530
|
|
|
$
|
1,586
|
|
|
$
|
1,602
|
|
|
$
|
6,100
|
|
|
$
|
6,307
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(24
|
)
|
|
(24
|
)
|
|
—
|
|
|
(74
|
)
|
Hurricane reimbursements (costs)
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
(36
|
)
|
|
(36
|
)
|
|
70
|
|
|
54
|
|
|
(12
|
)
|
|
(105
|
)
|
|
76
|
|
Cost of services, as adjusted
|
|
$
|
1,408
|
|
|
$
|
1,518
|
|
|
$
|
1,525
|
|
|
$
|
1,544
|
|
|
$
|
1,553
|
|
|
$
|
1,574
|
|
|
$
|
1,616
|
|
|
$
|
1,566
|
|
|
$
|
5,995
|
|
|
$
|
6,309
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
$
|
2,955
|
|
|
$
|
2,915
|
|
|
$
|
3,098
|
|
|
$
|
3,291
|
|
|
$
|
3,164
|
|
|
$
|
3,185
|
|
|
$
|
3,314
|
|
|
$
|
3,498
|
|
|
$
|
12,259
|
|
|
$
|
13,161
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|
7
|
|
|
6
|
|
|
35
|
|
|
—
|
|
|
96
|
|
Hurricane reimbursements (costs)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(1
|
)
|
|
(36
|
)
|
|
12
|
|
Cost associated with the Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
(53
|
)
|
|
(102
|
)
|
|
—
|
|
|
(196
|
)
|
Selling, general and administrative, as adjusted
|
|
$
|
2,955
|
|
|
$
|
2,915
|
|
|
$
|
3,062
|
|
|
$
|
3,291
|
|
|
$
|
3,212
|
|
|
$
|
3,151
|
|
|
$
|
3,280
|
|
|
$
|
3,430
|
|
|
$
|
12,223
|
|
|
$
|
13,073
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
698
|
|
|
$
|
581
|
|
|
$
|
550
|
|
|
$
|
2,707
|
|
|
$
|
671
|
|
|
$
|
782
|
|
|
$
|
795
|
|
|
$
|
640
|
|
|
$
|
4,536
|
|
|
$
|
2,888
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
(62
|
)
|
|
(101
|
)
|
|
(61
|
)
|
|
—
|
|
|
(295
|
)
|
Hurricane costs (reimbursements)
|
|
—
|
|
|
—
|
|
|
90
|
|
|
40
|
|
|
23
|
|
|
(45
|
)
|
|
(88
|
)
|
|
11
|
|
|
130
|
|
|
(99
|
)
|
Cost associated with the Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
53
|
|
|
88
|
|
|
—
|
|
|
180
|
|
Gains on disposal of spectrum licenses(1) |
|
(23
|
)
|
|
(1
|
)
|
|
(18
|
)
|
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
Effect of TCJA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,178
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,178
|
)
|
|
—
|
|
Net income, as adjusted
|
|
$
|
675
|
|
|
$
|
580
|
|
|
$
|
622
|
|
|
$
|
445
|
|
|
$
|
623
|
|
|
$
|
714
|
|
|
$
|
659
|
|
|
$
|
678
|
|
|
$
|
2,314
|
|
|
$
|
2,674
|
|
(1)
|
|
Presented quarterly tax-effected Gains on disposal of spectrum
licenses reflect previously as-filed amounts. The full-year 2017
amount is based off of enacted Q4 tax rates.
|
|
|
|
T-Mobile US, Inc.
|
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures (continued)
|
(Unaudited)
|
The following table reconciles the impact of certain non-recurring items
to Net income and Adjusted EBITDA:
|
|
Quarter
|
|
Year Ended
December 31,
|
(in millions)
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
2017
|
|
2018
|
Net income
|
|
$
|
698
|
|
|
$
|
581
|
|
|
$
|
550
|
|
|
$
|
2,707
|
|
|
$
|
671
|
|
|
$
|
782
|
|
|
$
|
795
|
|
|
$
|
640
|
|
|
$
|
4,536
|
|
|
$
|
2,888
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
339
|
|
|
265
|
|
|
253
|
|
|
254
|
|
|
251
|
|
|
196
|
|
|
194
|
|
|
194
|
|
|
1,111
|
|
|
835
|
|
Interest expense to affiliates
|
|
100
|
|
|
131
|
|
|
167
|
|
|
162
|
|
|
166
|
|
|
128
|
|
|
124
|
|
|
104
|
|
|
560
|
|
|
522
|
|
Interest income
|
|
(7
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(17
|
)
|
|
(19
|
)
|
Other (income) expense, net
|
|
(2
|
)
|
|
92
|
|
|
(1
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|
64
|
|
|
(3
|
)
|
|
3
|
|
|
73
|
|
|
54
|
|
Income tax expense (benefit)
|
|
(91
|
)
|
|
353
|
|
|
356
|
|
|
(1,993
|
)
|
|
210
|
|
|
286
|
|
|
335
|
|
|
198
|
|
|
(1,375
|
)
|
|
1,029
|
|
Operating income
|
|
1,037
|
|
|
1,416
|
|
|
1,323
|
|
|
1,112
|
|
|
1,282
|
|
|
1,450
|
|
|
1,440
|
|
|
1,137
|
|
|
4,888
|
|
|
5,309
|
|
Depreciation and amortization
|
|
1,564
|
|
|
1,519
|
|
|
1,416
|
|
|
1,485
|
|
|
1,575
|
|
|
1,634
|
|
|
1,637
|
|
|
1,640
|
|
|
5,984
|
|
|
6,486
|
|
Stock-based compensation (1) |
|
67
|
|
|
72
|
|
|
83
|
|
|
85
|
|
|
96
|
|
|
106
|
|
|
102
|
|
|
85
|
|
|
307
|
|
|
389
|
|
Cost associated with the Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
53
|
|
|
102
|
|
|
—
|
|
|
196
|
|
Other, net (2) |
|
—
|
|
|
5
|
|
|
—
|
|
|
29
|
|
|
3
|
|
|
2
|
|
|
7
|
|
|
6
|
|
|
34
|
|
|
18
|
|
Adjusted EBITDA
|
|
$
|
2,668
|
|
|
$
|
3,012
|
|
|
$
|
2,822
|
|
|
$
|
2,711
|
|
|
$
|
2,956
|
|
|
$
|
3,233
|
|
|
$
|
3,239
|
|
|
$
|
2,970
|
|
|
$
|
11,213
|
|
|
$
|
12,398
|
|
Non-recurring adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
(84
|
)
|
|
(136
|
)
|
|
(83
|
)
|
|
—
|
|
|
(398
|
)
|
Hurricane costs (reimbursements)
|
|
—
|
|
|
—
|
|
|
148
|
|
|
53
|
|
|
36
|
|
|
(70
|
)
|
|
(138
|
)
|
|
14
|
|
|
201
|
|
|
(158
|
)
|
Gains on disposal of spectrum licenses
|
|
(37
|
)
|
|
(1
|
)
|
|
(29
|
)
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
|
—
|
|
Adjusted EBITDA, as adjusted
|
|
$
|
2,631
|
|
|
$
|
3,011
|
|
|
$
|
2,941
|
|
|
$
|
2,596
|
|
|
$
|
2,897
|
|
|
$
|
3,079
|
|
|
$
|
2,965
|
|
|
$
|
2,901
|
|
|
$
|
11,179
|
|
|
$
|
11,842
|
|
(1)
|
|
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 Transactions have been included in Cost
associated with the Transactions.
|
(2)
|
|
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 in Adjusted EBITDA.
|
|
|
|
T-Mobile US, Inc.
|
Reconciliation of Operating Measures to Service Revenues
|
(Unaudited)
|
The following tables illustrate the calculation of our operating
measures ARPU and Average Billings Per User (ABPU) and reconcile these
measures to the related service revenues:
(in millions, except average number of customers, ARPU and ABPU)
|
|
Quarter
|
|
Year Ended
December 31,
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
2017
|
|
2018
|
Calculation of Branded Postpaid Phone ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid service revenues
|
|
$
|
4,725
|
|
|
$
|
4,820
|
|
|
$
|
4,920
|
|
|
$
|
4,983
|
|
|
$
|
5,070
|
|
|
$
|
5,164
|
|
|
$
|
5,244
|
|
|
$
|
5,384
|
|
|
$
|
19,448
|
|
|
$
|
20,862
|
|
Less: Branded postpaid other revenues
|
|
(225
|
)
|
|
(255
|
)
|
|
(294
|
)
|
|
(303
|
)
|
|
(259
|
)
|
|
(272
|
)
|
|
(289
|
)
|
|
(297
|
)
|
|
(1,077
|
)
|
|
(1,117
|
)
|
Branded postpaid phone service revenues
|
|
$
|
4,500
|
|
|
$
|
4,565
|
|
|
$
|
4,626
|
|
|
$
|
4,680
|
|
|
$
|
4,811
|
|
|
$
|
4,892
|
|
|
$
|
4,955
|
|
|
$
|
5,087
|
|
|
$
|
18,371
|
|
|
$
|
19,745
|
|
Divided by: Average number of branded postpaid phone customers (in
thousands) and number of months in period
|
|
31,564
|
|
32,329
|
|
32,852
|
|
33,640
|
|
34,371
|
|
35,051
|
|
35,779
|
|
36,631
|
|
32,596
|
|
35,458
|
Branded postpaid phone ARPU (1) |
|
$
|
47.53
|
|
|
$
|
47.07
|
|
|
$
|
46.93
|
|
|
$
|
46.38
|
|
|
$
|
46.66
|
|
|
$
|
46.52
|
|
|
$
|
46.17
|
|
|
$
|
46.29
|
|
|
$
|
46.97
|
|
|
$
|
46.40
|
|
Calculation of Branded Postpaid ABPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid service revenues
|
|
$
|
4,725
|
|
|
$
|
4,820
|
|
|
$
|
4,920
|
|
|
$
|
4,983
|
|
|
$
|
5,070
|
|
|
$
|
5,164
|
|
|
$
|
5,244
|
|
|
$
|
5,384
|
|
|
$
|
19,448
|
|
|
$
|
20,862
|
|
EIP billings
|
|
1,402
|
|
|
1,402
|
|
|
1,481
|
|
|
1,581
|
|
|
1,698
|
|
|
1,585
|
|
|
1,601
|
|
|
1,664
|
|
|
5,866
|
|
|
6,548
|
|
Lease revenues
|
|
324
|
|
|
234
|
|
|
159
|
|
|
160
|
|
|
171
|
|
|
177
|
|
|
176
|
|
|
168
|
|
|
877
|
|
|
692
|
|
Total billings for branded postpaid customers
|
|
$
|
6,451
|
|
|
$
|
6,456
|
|
|
$
|
6,560
|
|
|
$
|
6,724
|
|
|
$
|
6,939
|
|
|
$
|
6,926
|
|
|
$
|
7,021
|
|
|
$
|
7,217
|
|
|
$
|
26,191
|
|
|
$
|
28,102
|
|
Divided by: Average number of branded postpaid customers (in
thousands) and number of months in period
|
|
34,740
|
|
35,636
|
|
36,505
|
|
37,436
|
|
38,458
|
|
39,559
|
|
40,561
|
|
41,720
|
|
36,079
|
|
40,075
|
Branded postpaid ABPU
|
|
$
|
61.89
|
|
|
$
|
60.40
|
|
|
$
|
59.89
|
|
|
$
|
59.88
|
|
|
$
|
60.14
|
|
|
$
|
58.37
|
|
|
$
|
57.69
|
|
|
$
|
57.66
|
|
|
$
|
60.49
|
|
|
$
|
58.44
|
|
Calculation of Branded Prepaid ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded prepaid service revenues
|
|
$
|
2,299
|
|
|
$
|
2,334
|
|
|
$
|
2,376
|
|
|
$
|
2,371
|
|
|
$
|
2,402
|
|
|
$
|
2,402
|
|
|
$
|
2,395
|
|
|
$
|
2,399
|
|
|
$
|
9,380
|
|
|
$
|
9,598
|
|
Divided by: Average number of branded prepaid customers (in
thousands) and number of months in period
|
|
19,889
|
|
|
20,131
|
|
|
20,336
|
|
|
20,461
|
|
|
20,583
|
|
|
20,806
|
|
|
20,820
|
|
|
20,833
|
|
|
20,204
|
|
|
20,761
|
|
Branded prepaid ARPU
|
|
$
|
38.53
|
|
|
$
|
38.65
|
|
|
$
|
38.93
|
|
|
$
|
38.63
|
|
|
$
|
38.90
|
|
|
$
|
38.48
|
|
|
$
|
38.34
|
|
|
$
|
38.39
|
|
|
$
|
38.69
|
|
|
$
|
38.53
|
|
(1)
|
|
Branded postpaid phone ARPU includes the reclassification of 43,000
DIGITS average customers and related revenue to the “Branded
postpaid other customers” category for the second quarter of 2017.
|
|
|
|
Average Revenue Per User (ARPU) - Average monthly service revenues
earned from customers. Service revenues for the specified period divided
by the average customers during the period, further divided by the
number of months in the period.
Branded postpaid phone ARPU excludes branded postpaid other customers
and related revenues.
Average Billings per User (ABPU) - Average monthly branded postpaid
service revenues earned from customers plus monthly equipment
installment plan (EIP) billings and lease revenues divided by the
average branded postpaid customers during the period, further divided by
the number of months in the period. T-Mobile believes branded postpaid
ABPU is indicative of estimated cash collections, including device
financing payments, from T-Mobile’s postpaid customers each month.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190207005384/en/
Press Contact:
Media Relations
T-Mobile US, Inc.
mediarelations@t-mobile.com
http://newsroom.t-mobile.com
Investor Relations Contact:
Nils Paellmann
T-Mobile US,
Inc.
investor.relations@t-mobile.com
http://investor.t-mobile.com
Source: T-Mobile US, Inc.