T-Mobile US, Inc. (NASDAQ: TMUS):
Industry-Leading Customer Growth and Sprint Merger Result in Overtaking AT&T as #2 Wireless Provider
Strong Financial Results in First Quarter as New T-Mobile
Building Transformative Nationwide 5G Network and Delivering Merger Synergies
__________________________________________________________
(1) |
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. 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. |
T-Mobile US, Inc. (NASDAQ: TMUS) reported second quarter results today, highlighted by overtaking AT&T in total branded customers as America's #2 wireless provider and another quarter of industry-leading customer growth. In the company's first quarter since closing the Sprint merger and during an unprecedented social and economic climate, the New T-Mobile established itself as the undisputed growth leader in wireless by continuing to lead the industry in total branded net customer additions for the 22nd consecutive quarter.
Since closing its merger with Sprint on April 1, 2020, T-Mobile has been driving hard on integration and remains highly confident in its ability to unlock massive synergies and build the world's best 5G network. Already, the company has unified employees and customers under one brand, converting thousands of legacy Sprint stores to magenta and adding the tools and systems to serve all customers in all stores. T-Mobile also amped up competition like never before to celebrate this event with its recent supercharged Un-carrier deal ? available only for a limited time this summer, customers can get four lines of unlimited data for just $25 each per month plus tax including access to the nation's largest 5G network.
"Surpassing AT&T to become #2 was a huge milestone to kick off Q2, but that was only the beginning! In our first quarter as a combined company, T-Mobile led the industry in total branded customer adds ? even in a challenging environment ? and there is no doubt that we are THE leading growth company in wireless," said Mike Sievert, T-Mobile CEO. "Now we're setting our sights on #1 ? in customer choice and customers' hearts ? and we'll get there by doing ONLY what the Un-carrier can do: offering customers the most advanced 5G network AND the best value while continuing to make big moves that fix customer pain points and disrupt this industry. I'm excited about what's to come in this new T-Mobile era ? we're just getting started!"
Industry-Leading Customer Growth and Sprint Merger Result in Overtaking AT&T as #2 Wireless Provider
__________________________________________________________
(2) |
Includes net reduction of 14.1 million customers related to divested prepaid customers and alignment to New T-Mobile subscriber policies in Q2 2020. | |
(3) |
Includes net reduction of 1.9 million customers related to divested prepaid customers and alignment to New T-Mobile subscriber policies in Q2 2020. |
The following table reflects the combined company results of New T-Mobile for Q2 2020, while prior periods represent the historical results of standalone T-Mobile.
|
Quarter |
|
Six Months Ended
|
|||||||||||
(in thousands, except churn) |
Q2 2020 |
|
Q1 2020 |
|
Q2 2019 |
|
2020 |
|
2019 |
|||||
Net customer additions |
1,245 |
|
|
649 |
|
|
1,239 |
|
|
1,894 |
|
|
2,327 |
|
Postpaid net customer additions |
1,112 |
|
|
777 |
|
|
1,108 |
|
|
1,889 |
|
|
2,127 |
|
Postpaid phone net customer additions |
253 |
|
|
452 |
|
|
710 |
|
|
705 |
|
|
1,366 |
|
Postpaid other customer additions |
859 |
|
|
325 |
|
|
398 |
|
|
1,184 |
|
|
761 |
|
Prepaid net customer (losses) additions |
133 |
|
|
(128) |
|
|
131 |
|
|
5 |
|
|
200 |
|
Total customers, end of period(2) |
98,327 |
|
|
68,543 |
|
|
65,983 |
|
|
98,327 |
|
|
65,983 |
|
Postpaid phone churn |
0.80 |
% |
|
0.86 |
% |
|
0.78 |
% |
|
0.82 |
% |
|
0.83 |
% |
Prepaid churn |
2.81 |
% |
|
3.52 |
% |
|
3.49 |
% |
|
3.17 |
% |
|
3.67 |
% |
Strong Financial Results in First Quarter as New T-Mobile
The following table reflects the combined company results of New T-Mobile for Q2 2020, while prior periods represent the historical results of standalone T-Mobile.
(in millions, except EPS) |
Quarter |
|
Six Months Ended
|
|
Q2 2020
|
|
Q2 2020
|
|
YTD 2020
|
|||||||||||||||||||
Q2 2020 |
|
Q1 2020 |
|
Q2 2019 |
2020 |
|
2019 |
|
|
|||||||||||||||||||
Total service revenues |
$ |
13,230 |
|
|
$ |
8,846 |
|
|
$ |
8,546 |
|
|
$ |
22,076 |
|
|
$ |
16,937 |
|
|
49.6 |
% |
|
54.8 |
% |
|
30.3 |
% |
Total revenues |
17,671 |
|
|
11,113 |
|
|
10,979 |
|
|
28,784 |
|
|
22,059 |
|
|
59.0 |
% |
|
61.0 |
% |
|
30.5 |
% |
|||||
Net income |
110 |
|
|
951 |
|
|
939 |
|
|
1,061 |
|
|
1,847 |
|
|
(88.4) |
% |
|
(88.3) |
% |
|
(42.6) |
% |
|||||
EPS |
0.09 |
|
|
1.10 |
|
|
1.09 |
|
|
1.00 |
|
|
2.14 |
|
|
(91.8) |
% |
|
(91.7) |
% |
|
(53.3) |
% |
|||||
Adjusted EBITDA |
7,017 |
|
|
3,665 |
|
|
3,461 |
|
|
10,682 |
|
|
6,745 |
|
|
91.5 |
% |
|
102.7 |
% |
|
58.4 |
% |
|||||
Net cash provided by operating activities |
777 |
|
|
1,617 |
|
|
2,147 |
|
|
2,394 |
|
|
3,539 |
|
|
(51.9) |
% |
|
(63.8) |
% |
|
(32.4) |
% |
|||||
Cash purchases of property and equipment, including capitalized interest |
2,257 |
|
|
1,753 |
|
|
1,789 |
|
|
4,010 |
|
|
3,720 |
|
|
28.8 |
% |
|
26.2 |
% |
|
7.8 |
% |
|||||
Free Cash Flow, excluding gross payments for the settlement of interest rate swaps |
1,441 |
|
|
732 |
|
|
1,169 |
|
|
2,173 |
|
|
1,787 |
|
|
96.9 |
% |
|
23.3 |
% |
|
21.6 |
% |
Building Transformative Nationwide 5G Network and Delivering Merger Synergies
Outlook for H2 2020
Financial Results
For more details on T-Mobile's Q2 2020 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
Access via Phone (audio only):
Please plan on accessing the call 10 minutes prior to the scheduled start time.
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 4205072.
Submit Questions via Twitter:
Send a tweet to @TMobileIR or @MikeSievert using $TMUS
Contact Information
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 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, Metro by T-Mobile and Sprint. 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: the failure to realize the expected benefits and synergies of the merger with Sprint Corporation ("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, in part or at all; adverse economic, political or market conditions in the U.S. and international markets, including those caused by the coronavirus disease 2019 ("COVID-19") pandemic, and the impact that any of the foregoing may have on us and our customers and other stakeholders; costs of or difficulties in integrating Sprint's network and operations into our network and operations, including intellectual property and communications systems, administrative and information technology infrastructure and accounting, financial reporting and internal control systems; changes in key customers, suppliers, employees or other business relationships as a result of the consummation of the Transactions; the risk that our business, investor confidence in our financial results and stock price may be adversely affected if our internal controls are not effective; the risk of future material weaknesses resulting from the differences between T-Mobile's and Sprint's internal controls environments as we work to integrate and align policies and practices; 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 including the acquisition of Sprint's prepaid wireless business by DISH Network Corporation ("DISH") (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets (the "Prepaid Transaction"), the complaint and proposed final judgment agreed to by us, DT, Sprint, 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 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; the ongoing commercial and transition services arrangements entered into in connection with such Prepaid Transaction, which we completed on July 1, 2020; the assumption of significant liabilities, including the liabilities of Sprint in connection with, and significant costs, including financing costs, related to the Transactions; our ability 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 debt securities or adverse conditions in the credit markets; natural disasters, public health crises, including the COVID-19 pandemic, terrorist attacks or similar incidents; 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; breaches of our and/or our third-party vendors' networks, information technology and data security, resulting in unauthorized access to customer confidential information; the inability to implement and maintain effective cybersecurity measures over critical business systems; challenges in implementing our business strategies or funding our operations, including payment for additional spectrum or network upgrades; the impact on our networks and business from major system and network failures; 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 occurrence of high fraud rates related to device financing, customer credit cards, dealers, subscriptions or account take over fraud; our inability to retain and hire key personnel; any changes in the regulatory environments in which we operate, including any increase in restrictions on the ability to operate our networks and changes in data privacy laws; unfavorable outcomes of existing or future litigation or regulatory actions, including litigation or regulatory actions related to the Transactions; the possibility that we may be unable to adequately protect our intellectual property rights or be accused of infringing the intellectual property rights of others; changes in tax laws, regulations and existing standards and the resolution of disputes with any taxing jurisdictions; the possibility that we may be unable to renew our spectrum leases on attractive terms or acquire new spectrum licenses or leases at reasonable costs and terms; any disruption or failure of third parties (including key suppliers) to provide 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 U.S. Securities and Exchange Commission, may require, which could result in an impact on earnings; and interests of our significant stockholders that may differ from the interests of other stockholders. 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 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 |
|
Six Months Ended
|
||||||||||||||||||||||||||||||||||||||||
(in millions) |
Q2 2018 |
|
Q3 2018 |
|
Q4 2018 |
|
Q1 2019 |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
|
Q1 2020 |
|
Q2 2020 |
|
2019 |
|
2020 |
||||||||||||||||||||||
Net income |
$ |
782 |
|
|
$ |
795 |
|
|
$ |
640 |
|
|
$ |
908 |
|
|
$ |
939 |
|
|
$ |
870 |
|
|
$ |
751 |
|
|
$ |
951 |
|
|
$ |
110 |
|
|
$ |
1,847 |
|
|
$ |
1,061 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Income from discontinued operations, net of tax |
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
(320) |
|
|
? |
|
|
(320) |
|
|||||||||||
(Loss) income from continuing operations |
782 |
|
|
795 |
|
|
640 |
|
|
908 |
|
|
939 |
|
|
870 |
|
|
751 |
|
|
951 |
|
|
(210) |
|
|
1,847 |
|
|
741 |
|
|||||||||||
Interest expense |
196 |
|
|
194 |
|
|
194 |
|
|
179 |
|
|
182 |
|
|
184 |
|
|
182 |
|
|
185 |
|
|
776 |
|
|
361 |
|
|
961 |
|
|||||||||||
Interest expense to affiliates |
128 |
|
|
124 |
|
|
104 |
|
|
109 |
|
|
101 |
|
|
100 |
|
|
98 |
|
|
99 |
|
|
63 |
|
|
210 |
|
|
162 |
|
|||||||||||
Interest income |
(6) |
|
|
(5) |
|
|
(2) |
|
|
(8) |
|
|
(4) |
|
|
(5) |
|
|
(7) |
|
|
(12) |
|
|
(6) |
|
|
(12) |
|
|
(18) |
|
|||||||||||
Other expense, net |
64 |
|
|
(3) |
|
|
3 |
|
|
(7) |
|
|
22 |
|
|
(3) |
|
|
(4) |
|
|
10 |
|
|
195 |
|
|
15 |
|
|
205 |
|
|||||||||||
Income tax expense |
286 |
|
|
335 |
|
|
198 |
|
|
295 |
|
|
301 |
|
|
325 |
|
|
214 |
|
|
306 |
|
|
2 |
|
|
596 |
|
|
308 |
|
|||||||||||
Operating income |
1,450 |
|
|
1,440 |
|
|
1,137 |
|
|
1,476 |
|
|
1,541 |
|
|
1,471 |
|
|
1,234 |
|
|
1,539 |
|
|
820 |
|
|
3,017 |
|
|
2,359 |
|
|||||||||||
Depreciation and amortization |
1,634 |
|
|
1,637 |
|
|
1,640 |
|
|
1,600 |
|
|
1,585 |
|
|
1,655 |
|
|
1,776 |
|
|
1,718 |
|
|
4,064 |
|
|
3,185 |
|
|
5,782 |
|
|||||||||||
Operating income from discontinued operations (1) |
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
432 |
|
|
? |
|
|
432 |
|
|||||||||||
Stock-based compensation (2) |
106 |
|
|
102 |
|
|
85 |
|
|
93 |
|
|
111 |
|
|
108 |
|
|
111 |
|
|
123 |
|
|
139 |
|
|
204 |
|
|
262 |
|
|||||||||||
Merger-related costs |
41 |
|
|
53 |
|
|
102 |
|
|
113 |
|
|
222 |
|
|
159 |
|
|
126 |
|
|
143 |
|
|
798 |
|
|
335 |
|
|
941 |
|
|||||||||||
COVID-19-related costs |
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
117.00 |
|
|
341.00 |
|
|
? |
|
|
458 |
|
|||||||||||
Impairment expense |
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
|
418.00 |
|
|
? |
|
|
418 |
|
|||||||||||
Other, net (3) |
2 |
|
|
7 |
|
|
6 |
|
|
2 |
|
|
2 |
|
|
3 |
|
|
(5) |
|
|
25 |
|
|
5 |
|
|
$ |
4 |
|
|
30 |
|
||||||||||
Adjusted EBITDA |
$ |
3,233 |
|
|
$ |
3,239 |
|
|
$ |
2,970 |
|
|
$ |
3,284 |
|
|
$ |
3,461 |
|
|
$ |
3,396 |
|
|
$ |
3,242 |
|
|
$ |
3,665 |
|
|
$ |
7,017 |
|
|
$ |
6,745 |
|
|
$ |
10,682 |
|
(1) |
Following the Prepaid Transaction, starting on July 1, 2020, we will provide MVNO services to customers of the divested brands. We have included the operating income from discontinued operations in our determination of Adjusted EBITDA to reflect EBITDA contributions of the Prepaid Business that will be replaced by the MVNO Agreement beginning on July 1, 2020. |
|
(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 Transactions have been included in Merger-related costs. |
|
(3) |
Other, net may not agree to the Condensed 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, such as merger-related costs and COVID-19-related costs. 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, 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. 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 ratios) |
|
Mar 31,
|
|
Jun 30,
|
|
Sep 30,
|
|
Dec 31,
|
|
Mar 31,
|
|
Jun 30,
|
||||||||||||
Short-term debt |
|
$ |
250 |
|
|
$ |
300 |
|
|
$ |
475 |
|
|
$ |
25 |
|
|
$ |
? |
|
|
$ |
3,818 |
|
Short-term debt to affiliates |
|
598 |
|
|
? |
|
|
? |
|
|
? |
|
|
2,000 |
|
|
1,235 |
|
||||||
Short-term financing lease liabilities |
|
911 |
|
|
963 |
|
|
1,013 |
|
|
957 |
|
|
918 |
|
|
1,040 |
|
||||||
Long-term debt |
|
10,952 |
|
|
10,954 |
|
|
10,956 |
|
|
10,958 |
|
|
10,959 |
|
|
62,783 |
|
||||||
Long-term debt to affiliates |
|
13,985 |
|
|
13,985 |
|
|
13,986 |
|
|
13,986 |
|
|
11,987 |
|
|
4,706 |
|
||||||
Financing lease liabilities |
|
1,224 |
|
|
1,314 |
|
|
1,440 |
|
|
1,346 |
|
|
1,276 |
|
|
1,416 |
|
||||||
Less: Cash and cash equivalents |
|
(1,439) |
|
|
(1,105) |
|
|
(1,653) |
|
|
(1,528) |
|
|
(1,112) |
|
|
(11,076) |
|
||||||
Net debt (excluding tower obligations) |
|
$ |
26,481 |
|
|
$ |
26,411 |
|
|
$ |
26,217 |
|
|
$ |
25,744 |
|
|
$ |
26,028 |
|
|
$ |
63,922 |
|
Divided by: Last twelve months Net income |
|
$ |
3,125 |
|
|
$ |
3,282 |
|
|
$ |
3,357 |
|
|
$ |
3,468 |
|
|
$ |
3,511 |
|
|
$ |
2,682 |
|
Net debt (excluding tower obligations) to last twelve months Net income Ratio |
|
8.5 |
|
|
8.0 |
|
|
7.8 |
|
|
7.4 |
|
|
7.4 |
|
|
23.8 |
|
||||||
Divided by: Last twelve months Adjusted EBITDA |
|
$ |
12,726 |
|
|
$ |
12,954 |
|
|
$ |
13,111 |
|
|
$ |
13,383 |
|
|
$ |
13,764 |
|
|
$ |
17,320 |
|
Net debt (excluding tower obligations) to last twelve months Adjusted EBITDA Ratio |
|
2.1 |
|
|
2.0 |
|
|
2.0 |
|
|
1.9 |
|
|
1.9 |
|
|
3.7 |
|
Net debt is defined as Short-term debt, Short-term debt to affiliates, Short-term financing lease liabilities, Long-term debt (excluding tower obligations), Long-term debt to affiliates, and Financing lease liabilities less Cash and cash equivalents. Last twelve months Net income and Adjusted EBITDA reflect combined company results of New T-Mobile for Q2 2020 and standalone T-Mobile for prior periods.
Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, are calculated as follows:
|
Quarter |
|
Six Months Ended
|
||||||||||||||||||||||||||||
(in millions) |
Q1 2019 |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
|
Q1 2020 |
|
Q2 2020 |
|
2019 |
|
2020 |
||||||||||||||||
Net cash provided by operating activities |
$ |
1,392 |
|
|
$ |
2,147 |
|
|
$ |
1,748 |
|
|
$ |
1,537 |
|
|
$ |
1,617 |
|
|
$ |
777 |
|
|
$ |
3,539 |
|
|
$ |
2,394 |
|
Cash purchases of property and equipment |
(1,931) |
|
|
(1,789) |
|
|
(1,514) |
|
|
(1,157) |
|
|
(1,753) |
|
|
(2,257) |
|
|
(3,720) |
|
|
(4,010) |
|
||||||||
Proceeds related to beneficial interests in securitization transactions |
1,157 |
|
|
839 |
|
|
900 |
|
|
980 |
|
|
868 |
|
|
602 |
|
|
1,996 |
|
|
1,470 |
|
||||||||
Proceeds from sales of tower sites |
? |
|
|
? |
|
|
? |
|
|
38 |
|
|
? |
|
|
? |
|
|
? |
|
|
? |
|
||||||||
Cash payments for debt prepayment or debt extinguishment costs |
? |
|
|
(28) |
|
|
? |
|
|
? |
|
|
? |
|
|
(24) |
|
|
(28) |
|
|
(24) |
|
||||||||
Free Cash Flow |
618 |
|
|
1,169 |
|
|
1,134 |
|
|
1,398 |
|
|
732 |
|
|
(902) |
|
|
1,787 |
|
|
(170) |
|
||||||||
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 |
618 |
|
|
1,169 |
|
|
1,134 |
|
|
1,398 |
|
|
732 |
|
|
1,441 |
|
|
1,787 |
|
|
2,173 |
|
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 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)
Our guidance range for Free Cash Flow is calculated as follows:
|
H2 2020 |
||||||
(in millions) |
Guidance Range |
||||||
Net cash provided by operating activities |
$ |
5,300 |
|
|
$ |
5,700 |
|
Cash purchases of property and equipment |
(6,500) |
|
|
(6,900) |
|
||
Proceeds related to beneficial interests in securitization transactions |
1,500 |
|
|
1,700 |
|
||
Free Cash Flow |
$ |
300 |
|
|
$ |
500 |
|
(1) |
See Note 7 ? Fair Value Measurements in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, for additional details. |
The following table illustrates the calculation of our operating measures ARPA and ARPU and reconciles these measures to the related service revenues:
(in millions, except average number of customers, ARPA and ARPU) |
Quarter |
|
Six Months Ended
|
||||||||||||||||||||||||||||
Q1 2019 |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
|
Q1 2020 |
|
Q2 2020 |
|
2019 |
|
2020 |
|||||||||||||||||
Calculation of Postpaid ARPA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Postpaid service revenues |
$ |
5,493 |
|
|
$ |
5,613 |
|
|
$ |
5,746 |
|
|
$ |
5,821 |
|
|
$ |
5,887 |
|
|
$ |
9,959 |
|
|
$ |
11,106 |
|
|
$ |
15,846 |
|
Divided by: Average number of postpaid accounts (in thousands) and number of months in period |
14,108 |
|
14,354 |
|
14,602 |
|
14,881 |
|
|
15,155 |
|
|
25,424 |
|
|
14,231 |
|
|
20,289 |
|
|||||||||||
Postpaid ARPA |
$ |
129.77 |
|
|
$ |
130.36 |
|
|
$ |
131.15 |
|
|
$ |
130.39 |
|
|
$ |
129.47 |
|
|
$ |
130.57 |
|
|
$ |
130.07 |
|
|
$ |
130.16 |
|
Calculation of Postpaid Phone ARPU |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Postpaid service revenues |
$ |
5,493 |
|
|
$ |
5,613 |
|
|
$ |
5,746 |
|
|
$ |
5,821 |
|
|
$ |
5,887 |
|
|
$ |
9,959 |
|
|
$ |
11,106 |
|
|
$ |
15,846 |
|
Less: Postpaid other revenues |
(310) |
|
|
(326) |
|
|
(346) |
|
|
(362) |
|
|
(310) |
|
|
(618) |
|
|
(636) |
|
|
(928) |
|
||||||||
Postpaid phone service revenues |
$ |
5,183 |
|
|
$ |
5,287 |
|
|
$ |
5,400 |
|
|
$ |
5,459 |
|
|
$ |
5,577 |
|
|
$ |
9,341 |
|
|
$ |
10,470 |
|
|
$ |
14,918 |
|
Divided by: Average number of postpaid phone customers (in thousands) and number of months in period |
37,504 |
|
38,226 |
|
38,944 |
|
39,736 |
|
|
40,585 |
|
64,889 |
|
|
37,865 |
|
|
52,737 |
|
||||||||||||
Postpaid phone ARPU |
$ |
46.07 |
|
|
$ |
46.10 |
|
|
$ |
46.22 |
|
|
$ |
45.79 |
|
|
$ |
45.80 |
|
|
$ |
47.99 |
|
|
$ |
46.09 |
|
|
$ |
47.15 |
|
Calculation of Prepaid ARPU |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Prepaid service revenues |
$ |
2,386 |
|
|
$ |
2,379 |
|
|
$ |
2,385 |
|
|
$ |
2,393 |
|
|
$ |
2,373 |
|
|
$ |
2,311 |
|
|
$ |
4,765 |
|
|
$ |
4,684 |
|
Divided by: Average number of prepaid customers (in thousands) and number of months in period |
21,122 |
|
|
21,169 |
|
|
20,837 |
|
|
20,691 |
|
|
20,759 |
|
|
20,380 |
|
|
21,146 |
|
|
20,570 |
|
||||||||
Prepaid ARPU |
$ |
37.65 |
|
|
$ |
37.46 |
|
|
$ |
38.16 |
|
|
$ |
38.54 |
|
|
$ |
38.11 |
|
|
$ |
37.80 |
|
|
$ |
37.56 |
|
|
$ |
37.95 |
|
Average Revenue Per Account (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 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.
Postpaid phone ARPU excludes postpaid other customers and related revenues.
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