T-Mobile Delivers Industry-Leading Growth in Customers and Profitability in Q2 2023, Raises 2023 Guidance Again

Rhea-AI Summary

T-Mobile US, Inc. (NASDAQ: TMUS): Achieves Record-Breaking Postpaid Phone Net Adds and Industry-Leading Financial Growth

Positive

• T-Mobile reported the best Q2 postpaid phone net adds in eight years, lowest postpaid phone churn in the industry for the first time ever, and industry-leading financial growth.
• Postpaid net account additions of 299 thousand and postpaid net customer additions of 1.6 million were the best in the industry.
• Core Adjusted EBITDA grew 11% year-over-year, reaching $7.3 billion, and net income increased to $2.2 billion, resulting in diluted earnings per share of $1.86.

Negative

• None.

Un-carrier Reaches Another Milestone with the Lowest Postpaid Phone Churn in the Industry for the First Time Ever, while Delivering the Highest Q2 Postpaid Phone Net Adds in Eight Years

BELLEVUE, Wash.--(BUSINESS WIRE)-- T-Mobile US, Inc. (NASDAQ: TMUS):

Industry-Leading Customer Growth Fueled by Network Leadership and Launch of Phone Freedom⁽¹⁾

• Postpaid net account additions of 299 thousand, best in industry
• Postpaid net customer additions of 1.6 million, best in industry and raising guidance
• Postpaid phone net customer additions of 760 thousand, best in industry and best Q2 in eight years
• Postpaid phone churn of 0.77%, best in industry for the first time ever and a record low
• High Speed Internet net customer additions of 509 thousand, more than AT&T, Verizon, Comcast and Charter combined for the 5^th consecutive quarter

Differentiated Profitable Growth Strategy Drives Industry-Leading Financial Performance

• Service revenues of $15.7 billion grew 3% year-over-year and Postpaid service revenues of $12.1 billion grew 5% year-over-year, both best in industry growth
• Net income of $2.2 billion grew $2.3 billion year-over-year and diluted earnings per share (“EPS”) of $1.86 grew $1.95 year-over-year, best in industry growth
• Core Adjusted EBITDA⁽²⁾ of $7.3 billion grew 11% year-over-year, best in industry growth and raising guidance
• Net cash provided by operating activities of $4.4 billion grew 3% year-over-year, raising guidance
• Adjusted Free Cash Flow⁽²⁾ of $2.9 billion grew 64% year-over-year
• Repurchased 25.2 million shares of common stock in Q2 2023 for $3.5 billion

T-Mobile Reigns as Nationwide Overall Network Leader and Largest, Fastest and Most-Awarded 5G Network

• Clean sweep across every category for overall network performance for the third quarter in a row from Ookla, along with continued wins across multiple overall network and 5G categories from Opensignal and umlaut
• 5G network covers 98% of Americans and Ultra-Capacity 5G covers 285 million people

T-Mobile US, Inc. (NASDAQ: TMUS) reported second quarter 2023 results today, delivering industry-best growth in postpaid customers driven by growth in postpaid phone gross additions coupled with the lowest postpaid phone churn in the industry for the first time ever — fueled by the company’s unique combination of network and value leadership. The company continues to translate its industry-leading customer growth into best-in-class growth in Service revenues, Net income, and Core Adjusted EBITDA, while raising full-year 2023 guidance. Furthermore, T-Mobile continues delivering on its plan to return value to stockholders, buying back $3.5 billion of common stock throughout the quarter.

“If you were wondering how T-Mobile would perform if growth in our category moderated, I think you’ll find the answer in our latest results — including our best Q2 postpaid phone net adds in eight years, the lowest postpaid phone churn in the industry for the first-time ever, and industry-leading financial growth,” said Mike Sievert, CEO of T-Mobile. “We’ve set audacious goals and delivered a durable and differentiated plan that is working just as we said it would. And now, fueled by our unique growth opportunities, the momentum of our latest Un-carrier moves, and an unquenchable desire to be the very best at delivering for customers, we are the one to watch — with no plans to slow down.”

_________________________

(1)		AT&T Inc. historically does not disclose postpaid net account additions. Comcast and Charter do not disclose postpaid phone net additions. Industry-leading claims are based on consensus expectations if results are not yet reported.
(2)		Core Adjusted EBITDA and Adjusted 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 GAAP 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 Net income, including, but not limited to, Income tax expense and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable. Starting in Q1 2023, we renamed Free Cash Flow to Adjusted Free Cash Flow. This change in name did not result in any change to the definition or calculation of this non-GAAP financial measure.

Industry-Leading Customer Growth Fueled by Network Leadership and Launch of Phone Freedom⁽¹⁾

• Postpaid net account additions of 299 thousand decreased 81 thousand year-over-year, reflecting continued industry-leading share of net account additions in an environment of moderating industry growth and fewer High Speed Internet only net account additions.
• Postpaid net customer additions of 1.6 million decreased 95 thousand year-over-year.
• Postpaid phone net customer additions of 760 thousand increased 37 thousand year-over-year, driven by an increase in postpaid phone gross additions and churn improvement. Postpaid phone churn of 0.77% improved 3 bps year-over-year.
• Prepaid net customer additions of 124 thousand decreased 22 thousand year-over-year, and Prepaid churn was 2.62%.
• High Speed Internet net customer additions of 509 thousand decreased 51 thousand year-over-year. T-Mobile ended the quarter with 3.7 million High Speed Internet customers.
• Total net customer additions of 1.7 million decreased 117 thousand year-over-year. The total customer count increased to a record high of 116.6 million.

	Quarter									Six Months Ended June 30,
(in thousands, except churn)	Q2 2023			Q1 2023			Q2 2022			2023			2022
Postpaid net account additions	299			287			380			586			728
Total net customer additions	1,685			1,319			1,802			3,004			3,182
Postpaid net customer additions	1,561			1,293			1,656			2,854			2,974
Postpaid phone net customer additions	760			538			723			1,298			1,312
Postpaid other net customer additions (2)	801			755			933			1,556			1,662
Prepaid net customer additions (2)	124			26			146			150			208
Total customers, end of period (2)(3)	116,602			114,917			110,023			116,602			110,023
Postpaid phone churn	0.77	%		0.89	%		0.80	%		0.83	%		0.86	%
Prepaid churn	2.62	%		2.76	%		2.58	%		2.69	%		2.62	%
High Speed Internet net customer additions	509			523			560			1,032			898
Total High Speed Internet customers, end of period	3,678			3,169			1,544			3,678			1,544

(1)		AT&T Inc. historically does not disclose postpaid net account additions. Comcast and Charter do not disclose postpaid phone net additions. Industry-leading claims are based on consensus expectations if results are not yet reported.
(2)		Includes High Speed Internet customers.
(3)		The total base adjustment in the second quarter of 2022 was a reduction of 1,320,000 total customers. Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers and 349,000 postpaid other customers in the first quarter of 2022 and 284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers in the second quarter of 2022. In connection with our acquisition of companies, we included a base adjustment in the first quarter of 2022 to increase postpaid phone customers by 17,000 and reduce postpaid other customers by 14,000. Certain customers now serviced through reseller contracts were removed from our reported postpaid customer base resulting in the removal of 42,000 postpaid phone customers and 20,000 postpaid other customers in the second quarter of 2022.

Differentiated Profitable Growth Strategy Drives Industry-Leading Financial Performance

• Total service revenues of $15.7 billion increased 3% year-over-year and Postpaid service revenues of $12.1 billion increased 5% year-over-year.
• Net income of $2.2 billion increased $2.3 billion year-over-year, which included lower Merger-related costs, net of tax, of $207 million and a non-cash impairment expense of $358 million in the prior year related to the Wireline Business. Diluted EPS of $1.86 per share increased $1.95 per share year-over-year.
• Core Adjusted EBITDA of $7.3 billion increased 11% year-over-year, primarily due to Service revenue growth and increased synergy realization.
• Net cash provided by operating activities of $4.4 billion increased 3% year-over-year, which included cash payments for Merger-related costs of $728 million.
• Cash purchases of property and equipment, including capitalized interest, of $2.8 billion decreased 22% year-over-year, driven by increased capital efficiencies from accelerated investments in the nationwide 5G network in 2022.
• Adjusted Free Cash Flow of $2.9 billion increased 64% year-over-year, which included cash payments for Merger-related costs of $728 million.
• Common stock repurchases of 25.2 million shares for $3.5 billion in Q2 2023. As of July 21, 2023, the cumulative total repurchased was 83.5 million shares for $11.8 billion with remaining authorization of up to $2.2 billion through the end of September 2023.

	Quarter												Six Months Ended June 30,								Q2 2023 vs. Q1 2023			Q2 2023 vs. Q2 2022			YTD 2023 vs. YTD 2022
(in millions, except EPS)	Q2 2023				Q1 2023				Q2 2022					2023				2022
Total service revenues	$	15,738			$	15,546			$	15,316			$	31,284			$	30,444			1.2	%		2.8	%		2.8	%
Postpaid service revenues		12,070				11,862				11,445				23,932				22,646			1.8	%		5.5	%		5.7	%
Total revenues		19,196				19,632				19,701				38,828				39,821			(2.2	)%		(2.6	)%		(2.5	)%
Net income (loss)		2,221				1,940				(108	)			4,161				605			14.5	%		NM			587.8	%
Diluted EPS		1.86				1.58				(0.09	)			3.44				0.48			17.7	%		NM			616.7	%
Adjusted EBITDA		7,405				7,199				7,004				14,604				13,954			2.9	%		5.7	%		4.7	%
Core Adjusted EBITDA		7,336				7,052				6,618				14,388				13,081			4.0	%		10.8	%		10.0	%
Net cash provided by operating activities		4,355				4,051				4,209				8,406				8,054			7.5	%		3.5	%		4.4	%
Cash purchases of property and equipment, including capitalized interest		2,789				3,001				3,572				5,790				6,953			(7.1	)%		(21.9	)%		(16.7	)%
Adjusted Free Cash Flow		2,877				2,401				1,758				5,278				3,407			19.8	%		63.7	%		54.9	%
NM - Not Meaningful

T-Mobile Reigns as Nationwide Overall Network Leader and Largest, Fastest and Most-Awarded 5G Network

T-Mobile’s 5G leadership has translated into overall network leadership while 5G is increasingly becoming the overall network experience for customers. The Un-carrier continues its third-party report winning streak for overall network and 5G:

• Ookla: In its latest Speedtest Global Index Market Analysis, T-Mobile dominated the competition, winning every single category for overall network for the third quarter in a row with undefeated 5G performance. T-Mobile’s network earned the top ranking for fastest mobile network, lowest latency, most consistent, best mobile video, best 5G performance and best 5G consistency.
• Opensignal: In its latest Network Experience Reports, T-Mobile took home several wins measuring overall network performance and 5G performance, including fastest download speeds (including 5G download speeds more than twice as fast as Verizon and AT&T), best overall live video experience, best overall consistent quality and best 5G availability.
• umlaut: In its latest 5G Network Performance Audit Report, T-Mobile once again received top honors with the overall highest 5G score including best 5G coverage, stability, and speeds.

T-Mobile’s 5G network covers 326 million people with more geographic coverage than AT&T and Verizon combined. 285 million people nationwide are covered by T-Mobile’s super-fast Ultra Capacity 5G, and the Un-carrier plans to reach 300 million people with Ultra Capacity this year.

Note: See 5G device, coverage, & access details at T-Mobile.com. Fastest: Based on median, overall combined 5G speeds according to analysis by Ookla® of Speedtest Intelligence® data 5G download speeds for Q2 2023. Ookla trademarks used under license and reprinted with permission.

Raising 2023 Guidance

• Postpaid net customer additions are expected to be between 5.6 million and 5.9 million, an increase from prior guidance of 5.3 million to 5.7 million.
• Core Adjusted EBITDA, which is Adjusted EBITDA less lease revenues, is expected to be between $28.9 billion and $29.2 billion, an increase from prior guidance of $28.8 billion to $29.2 billion.
• Merger synergies are expected to be approximately $7.5 billion, an increase from prior guidance of $7.3 billion to $7.5 billion.
• Merger-related costs are expected to be approximately $1.0 billion before taxes. These costs are excluded from Core Adjusted EBITDA but will impact Net income, Net cash provided by operating activities and Adjusted Free Cash Flow.
• Net cash provided by operating activities, including payments for Merger-related costs, is expected to be between $18.0 billion and $18.3 billion, an increase from prior guidance of $17.9 billion to $18.3 billion.
• Cash purchases of property and equipment, including capitalized interest, are expected to be between $9.5 billion and $9.7 billion an increase from the prior guidance of $9.4 billion to $9.7 billion.
• Adjusted Free Cash Flow, including payments for Merger-related costs, is expected to be between $13.2 billion and $13.6 billion. Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization.

(in millions, except Postpaid net customer additions)	Previous								Current								Change (Mid-point)
Postpaid net customer additions (thousands)		5,300				5,700				5,600				5,900				250
Net income (1)		N/A				N/A				N/A				N/A				N/A
Core Adjusted EBITDA (2)	$	28,800			$	29,200			$	28,900			$	29,200			$	50
Merger synergies		7,300				7,500			~7,500									100
Merger-related costs (3)	~1,000								~1,000									—
Net cash provided by operating activities		17,900				18,300				18,000				18,300				50
Capital expenditures (4)		9,400				9,700				9,500				9,700				50
Adjusted Free Cash Flow (5)		13,200				13,600				13,200				13,600				—

(1)		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 and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable.
(2)		Management uses Core Adjusted EBITDA as a measure to monitor the financial performance of company operations, excluding the impact of lease revenues from related device financing programs. Guidance ranges assume lease revenues of approximately $300 million for 2023.
(3)		Merger-related costs are excluded from Core Adjusted EBITDA but will impact Net income, Net cash provided by operating activities and Adjusted Free Cash Flow.
(4)		Capital expenditures means cash purchases of property and equipment, including capitalized interest.
(5)		Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2023.

Doing Good — The Un-carrier Way — Industry Leader in Building a More Connected and Sustainable Future

T-Mobile published its most recent annual Corporate Responsibility Report, detailing the ongoing initiatives to positively impact people, communities and the planet. The company continues to stay true to its commitment to use its network, scale and resources for good, building a more connected, equitable and sustainable future:

• T-Mobile landed #1 out of 400 companies on USA Today’s first-ever America’s Climate Leaders list, a reflection of the Un-carrier’s commitment to reducing its environmental footprint.
• The Un-carrier was the highest ranked telecommunications services provider for corporate reputation in the Axios Harris Poll for the most visible brands in America in 2023.
• T-Mobile named 25 more recipients of its Hometown Grant program, marking 200 towns supported throughout the United States since the start of 2021 with nearly $9 million distributed among 42 states.

Financial Results

For more details on T-Mobile’s Q2 2023 financial results, including the Investor Factbook with detailed financial tables, please visit T-Mobile US, Inc.’s Investor Relations website at https://investor.t-mobile.com.

Earnings Call Information

Date/Time

• Thursday, July 27, 2023, at 4:30 p.m. (EDT)

Access via Phone (audio only)

• Please plan on accessing the call 10 minutes prior to the scheduled start time.
• US/Canada: 877-390-2342
• International: +1 309-216-6532

Access via Webcast

The earnings call will be broadcasted live and can be replayed via the Investor Relations website at https://investor.t-mobile.com.

Submit Questions via Twitter

Send a tweet to @TMobileIR or @MikeSievert using $TMUS

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 (https://investor.t-mobile.com), newsroom website (https://t-mobile.com/news), press releases, SEC filings and public conference calls and webcasts. We also intend to use certain social media accounts as a 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), the @MikeSievert Twitter account (https://twitter.com/MikeSievert), which Mr. Sievert also uses as a means for personal communications and observations, and the @TMobileCFO Twitter Account (https://twitter.com/tmobilecfo), and our CFO’s LinkedIn account (https://www.linkedin.com/in/peter-osvaldik-3887394), both of which Mr. Osvaldik also uses as a means for personal communication 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 and Metro by T-Mobile. For more information please visit: https://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: competition, industry consolidation and changes in the market for wireless communication services and other forms of connectivity; criminal cyberattacks, disruption, data loss or other security breaches; our inability to take advantage of technological developments on a timely basis; our inability to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture; system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems; the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use; the difficulties in maintaining multiple billing systems following the Merger (as defined below) and any unanticipated difficulties, disruption, or significant delays in our long-term strategy to convert Sprint’s legacy customers onto T-Mobile’s billing platforms; 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 (as defined below), including the acquisition by DISH Network Corporation (“DISH”) of the prepaid wireless business operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Personal Communications Company LLC (“Shentel”) and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets, and the assumption of certain related liabilities (collectively, the “Prepaid Transaction”), the complaint and proposed final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp. (“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 Federal Communications Commission (“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 (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative costs incurred in tracking and monitoring compliance over multiple years; adverse economic, political or market conditions in the U.S. and international markets, including changes resulting from increases in inflation or interest rates, supply chain disruption, impacts of current geopolitical instability caused by the war in Ukraine; our inability to manage the ongoing commercial and transition services arrangements entered into in connection with the Prepaid Transaction, and known or unknown liabilities arising in connection therewith; the timing and effects of any future acquisition, divestiture, investment, or merger involving us; any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business; our inability to fully realize the synergy benefits from the merger (the "Merger") with 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 time frame; our substantial level of indebtedness and our inability to service our debt obligations in accordance with their terms or to comply with the restrictive covenants contained therein; changes in the credit market conditions, credit rating downgrades or an inability to access debt markets; restrictive covenants including the agreements governing our indebtedness and other financings; the risk of future material weaknesses we may identify, or any other failure by us to maintain effective internal controls, and the resulting significant costs and reputational damage; any changes in regulations or in the regulatory framework under which we operate; laws and regulations relating to the handling of privacy and data protection; unfavorable outcomes of and increased costs from existing or future regulatory or legal proceedings; our offering of regulated financial services products and exposure to a wide variety of state and federal regulations; new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations; our wireless licenses, including those controlled through leasing agreements, are subject to renewal and may be revoked; our exclusive forum provision as provided in our Certificate of Incorporation; interests of DT, our controlling stockholder, that may differ from the interests of other stockholders; future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC; our 2022 Stock Repurchase Program may not be fully consummated, our share repurchase program may not enhance long-term stockholder value and other risks as disclosed in our most recent annual report on Form 10-K, 10-Q and other filings with the Securities and Exchange Commission (the “SEC”).

For our environmental, climate, or other “Environmental, Social, and Governance (ESG)” targets, goals and commitments outlined in this communication, we face additional risks and uncertainties, including unexpected delays, difficulties, and expenses in executing against such targets, goals and commitments, as well as changes in laws or regulations affecting us, such as changes in cybersecurity, data privacy, environmental, safety and health laws, and other risks as disclosed in our most recent annual report on Form 10-K, 10-Q and other filings with the SEC. 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.

In addition, some of the statements contained in this communication may rely on third-party information and projections that management believes to be reputable; however, we do not independently verify or audit this information. This communication also contains ESG-related statements based on hypothetical scenarios and assumptions as well as estimates that are subject to a high level of uncertainty, and these statements should not necessarily be viewed as being representative of current or actual risk or performance, or forecasts of expected risk or performance. In addition, historical, current, and forward-looking environmental and social-related statements may be based on standards for measuring progress that are still developing, and internal controls and processes that continue to evolve. Forward-looking and other statements in this communication may also address our corporate responsibility and sustainability progress, plans, and goals, and the inclusion of such statements is not an indication that these contents are necessarily material for the purposes of complying with or reporting pursuant to the U.S. federal securities laws and regulations, even if we use the word “material” or “materiality” in this communication in relation to those statements. Website references throughout this communication are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this communication.

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 and Interest expense. Adjusted EBITDA and Core Adjusted EBITDA should not be used to predict Net income as the difference between either of these measures and Net income is variable.

Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net income (loss) as follows:

	Quarter																								Six Months Ended June 30,
(in millions)	Q1 2022				Q2 2022				Q3 2022				Q4 2022				Q1 2023				Q2 2023					2022				2023
Net income (loss)	$	713			$	(108	)		$	508			$	1,477			$	1,940			$	2,221			$	605			$	4,161
Adjustments:
Interest expense, net		864				851				827				822				835				861				1,715				1,696
Other expense (income), net		11				21				3				(2	)			(9	)			(6	)			32				(15	)
Income tax expense (benefit)		218				(55	)			(57	)			450				631				717				163				1,348
Operating income		1,806				709				1,281				2,747				3,397				3,793				2,515				7,190
Depreciation and amortization		3,585				3,491				3,313				3,262				3,203				3,110				7,076				6,313
Stock-based compensation (1)		136				149				145				146				173				155				285				328
Merger-related costs		1,413				1,668				1,296				592				358				276				3,081				634
Impairment expense		—				477				—				—				—				—				477				—
Legal-related expenses (recoveries), net (2)		—				400				(19	)			10				(43	)			—				400				(43	)
Loss (gain) on disposal group held for sale		—				—				1,071				16				(42	)			17				—				(25	)
Other, net (3)		10				110				(48	)			55				153				54				120				207
Adjusted EBITDA		6,950				7,004				7,039				6,828				7,199				7,405				13,954				14,604
Lease revenues		(487	)			(386	)			(311	)			(246	)			(147	)			(69	)			(873	)			(216	)
Core Adjusted EBITDA	$	6,463			$	6,618			$	6,728			$	6,582			$	7,052			$	7,336			$	13,081			$	14,388

(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 Sprint Merger have been included in Merger-related costs.
(2)		Legal-related expenses (recoveries), net, consists of the settlement of certain litigation associated with the August 2021 cyberattack, net of insurance recoveries.
(3)		Other, net, primarily consists of certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Merger, which are not reflective of T-Mobile’s core business activities (“special items”), and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.

Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, stock-based compensation and certain income and expenses not reflective of T-Mobile’s ongoing operating performance. Core Adjusted EBITDA represents Adjusted EBITDA less lease revenues. Core Adjusted EBITDA and Adjusted EBITDA are non-GAAP financial measures utilized by T-Mobile’s management to monitor the financial performance of our operations. T-Mobile uses Core Adjusted EBITDA and Adjusted EBITDA as benchmarks to evaluate T-Mobile’s operating performance in comparison to its competitors. T-Mobile also uses Core Adjusted EBITDA internally as a measure to evaluate and compensate its personnel and management for their performance. Management believes analysts and investors use Core Adjusted EBITDA and Adjusted EBITDA as supplemental measures to evaluate overall operating performance and to facilitate comparisons with other wireless communications companies because they are 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, stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, loss (gain) on disposal group held for sale and certain legal-related recoveries and expenses, as well as other special income and expenses which are not reflective of T-Mobile’s core business activities. Management believes analysts and investors use Core Adjusted EBITDA because it normalizes for the transition in the company’s device financing strategy, by excluding the impact of lease revenues from Adjusted EBITDA, to align with the related depreciation expense on leased devices, which is excluded from the definition of Adjusted EBITDA. Core Adjusted EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for 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)

Adjusted Free Cash Flow is calculated as follows:

	Quarter																								Six Months Ended June 30,
(in millions, except percentages)	Q1 2022				Q2 2022				Q3 2022				Q4 2022				Q1 2023				Q2 2023					2022				2023
Net cash provided by operating activities	$	3,845			$	4,209			$	4,391			$	4,336			$	4,051			$	4,355			$	8,054			$	8,406
Cash purchases of property and equipment, including capitalized interest		(3,381	)			(3,572	)			(3,634	)			(3,383	)			(3,001	)			(2,789	)			(6,953	)			(5,790	)
Proceeds from sales of tower sites		—				—				—				9				6				2				—				8
Proceeds related to beneficial interests in securitization transactions		1,185				1,121				1,308				1,222				1,345				1,309				2,306				2,654
Adjusted Free Cash Flow	$	1,649			$	1,758			$	2,065			$	2,184			$	2,401			$	2,877			$	3,407			$	5,278
Net cash provided by operating activities margin (Net cash provided by operating activities divided by Service revenues)		25.4	%			27.5	%			28.6	%			27.9	%			26.1	%			27.7	%			26.5	%			26.9	%
Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues)		10.9	%			11.5	%			13.4	%			14.1	%			15.4	%			18.3	%			11.2	%			16.9	%

Adjusted 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 or debt extinguishment costs. Adjusted Free Cash Flow is utilized by T-Mobile’s management, investors and analysts to evaluate cash available to pay debt, repurchase shares and provide further investment in the business. Starting in Q1 2023, we renamed Free Cash Flow to Adjusted Free Cash Flow. This change in name did not result in any change to the definition or calculation of this non-GAAP measure.

Adjusted Free Cash Flow margin - Adjusted Free Cash Flow divided by Service revenues. Adjusted Free Cash Flow Margin is utilized by T-Mobile’s management, investors, and analysts to evaluate the company’s ability to convert service revenue efficiently into cash available to pay debt, repurchase shares and provide further investment in the business.

The guidance range for Adjusted Free Cash Flow is calculated as follows:

	FY 2023
(in millions)	Guidance Range
Net cash provided by operating activities	$	18,000			$	18,300
Cash purchases of property and equipment, including capitalized interest		(9,500	)			(9,700	)
Proceeds related to beneficial interests in securitization transactions (1)		4,700				5,000
Adjusted Free Cash Flow	$	13,200			$	13,600

(1)

Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2023.

 

T-Mobile US, Inc.
Operating Measures
(Unaudited)

The following table sets forth company operating measures ARPA and ARPU:

	Quarter																								Six Months Ended June 30,
(in dollars)	Q1 2022				Q2 2022				Q3 2022				Q4 2022				Q1 2023				Q2 2023					2022				2023
Postpaid ARPA	$	136.53			$	137.92			$	137.49			$	137.78			$	138.04			$	138.94			$	137.23			$	138.49
Postpaid phone ARPU		48.41				48.96				48.89				48.86				48.63				48.84				48.69				48.73
Prepaid ARPU		39.19				38.71				38.86				38.29				37.98				37.98				38.95				37.98

Postpaid Average Revenue Per Account (Postpaid 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 revenue earned per customer. Service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.

Postpaid phone ARPU excludes postpaid other customers and related revenues.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726237368/en/

Media Relations: mediarelations@t-mobile.com

Investor Relations: investor.relations@t-mobile.com

Source: T-Mobile US, Inc.

FAQ

What are T-Mobile's Q2 2023 financial results?

T-Mobile reported the best Q2 postpaid phone net adds in eight years, with 299 thousand postpaid net account additions and 1.6 million postpaid net customer additions. The company also achieved a record low postpaid phone churn of 0.77%.

What is T-Mobile's 5G network coverage?

T-Mobile's 5G network covers 98% of Americans, with Ultra-Capacity 5G covering 285 million people. The company plans to reach 300 million people with Ultra Capacity this year.

What is T-Mobile's guidance for 2023?

T-Mobile raised its guidance for 2023, expecting postpaid net customer additions between 5.6 million and 5.9 million, Core Adjusted EBITDA between $28.9 billion and $29.2 billion, and merger synergies of approximately $7.5 billion.

How is T-Mobile contributing to corporate responsibility?

T-Mobile is committed to building a more connected and sustainable future, ranking #1 on USA Today's America's Climate Leaders list and supporting 200 towns through its Hometown Grant program.