01—Abstract
Summary
Summary of the 10-K filed February 8, 2018. Cited figures are marked; the original filing is the authoritative source.
T-Mobile US, Inc.'s 2017 Form 10-K highlights a year of significant growth and strategic advancements, driven by its "Un-carrier" strategy and substantial network investments.
The company continued to expand its customer base, demonstrating strong performance in both branded postpaid and prepaid segments. Key financial highlights include a notable increase in total revenues and operating income, bolstered by the positive impact of the Tax Cuts and Jobs Act of 2017, which significantly boosted net income. Strategic investments in network infrastructure, particularly the acquisition of 600 MHz spectrum and early 5G deployment preparations, position T-Mobile for future growth.
The company also focused on expanding its distribution footprint and enhancing customer experience through its Un-carrier initiatives. While facing intense competition and regulatory considerations, T-Mobile's management emphasizes its commitment to customer-centric innovation and network superiority as core drivers of its ongoing success and market position.
02—Key points
Key Highlights
- Total revenues increased by 8% to $40.6 billion, driven by strong growth in branded postpaid and prepaid services, as well as equipment revenues.
- Operating income saw a substantial 21% increase to $4.9 billion, reflecting improved operational efficiency and revenue growth.
- Net income surged by 211% to $4.5 billion, largely due to a significant tax benefit from the Tax Cuts and Jobs Act of 2017, which provided a $2.2 billion net tax benefit.
- Net cash provided by operating activities increased by 30% to $8.0 billion, indicating robust operational cash generation.
- Free Cash Flow significantly increased by 90% to $2.7 billion, demonstrating improved financial flexibility and capacity for investment.
- The company aggressively expanded its spectrum holdings, notably winning nationwide 600 MHz spectrum licenses for $8.0 billion, quadrupling its low-band spectrum holdings and laying the groundwork for its 5G network.
- T-Mobile continued its customer growth trajectory, adding 4.5 million branded customers in 2017, supported by its Un-carrier initiatives and network enhancements.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, T-Mobile US, Inc. kept $0.11.
- Revenue$40.60B100.0%
- Cost of revenue−$11.61B28.6%
- Gross profit$29.00B71.4%
- Operating costs−$24.11B59.4%
- Operating income$4.89B12.0%
- Interest, other & tax−$352.0M0.9%
- Net income$4.54B11.2%
Where FY2017 revenue went
$40.60B- SG&A: $12.26B, 30% of revenue
- Other operating costs: $11.85B, 29% of revenue
- Cost of revenue: $11.61B, 29% of revenue
- Net income: $4.54B, 11% of revenue
- Interest, other & tax: $352.0M, 0.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 8, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $40.60B$37.49B | +8.3% |
| Cost of Revenue | $11.61B$10.82B | +7.3% |
| Gross Profit | $29.00B$26.67B | +8.7% |
| SG&A Expenses | $12.26B$11.38B | +7.7% |
| Operating Expenses | $35.72B$33.44B | +6.8% |
| Operating Income | $4.89B$4.05B | +20.7% |
| Interest Expense | $1.11B$1.42B | −21.7% |
| Net Income | $4.54B$1.46B | +210.7% |
| EPS (Basic) | $5.39$1.71 | +215.2% |
| EPS (Diluted) | $5.20$1.69 | +207.7% |
| Shares Outstanding (Basic) | 831.85M822.47M | +1.1% |
| Shares Outstanding (Diluted) | 871.79M833.05M | +4.6% |
05—Questions
Frequently Asked Questions
What was T-Mobile's overall financial performance in 2017?
In 2017, T-Mobile US, Inc. reported strong financial performance. Total revenues increased by 8% to $40.6 billion, and operating income rose by 21% to $4.9 billion. Net income saw a significant jump of 211% to $4.5 billion, primarily due to a substantial tax benefit from the Tax Cuts and Jobs Act of 2017. The company also generated strong cash flow, with net cash provided by operating activities increasing by 30% to $8.0 billion and Free Cash Flow more than doubling to $2.7 billion.
How is T-Mobile investing in its network and future technologies like 5G?
T-Mobile made substantial investments in its network infrastructure during 2017. A key highlight was the acquisition of nationwide 600 MHz spectrum licenses for $8.0 billion, which quadrupled its low-band spectrum holdings. This strategic move is crucial for expanding its 4G LTE network depth and breadth and is foundational for deploying its planned nationwide 5G network. The company also continued its network build-out, including the initial deployment of 600 MHz spectrum.
What is the status of T-Mobile's customer growth and its 'Un-carrier' strategy?
T-Mobile's 'Un-carrier' strategy continued to resonate with customers, driving significant growth. In 2017, the company added 4.5 million branded customers, comprising both branded postpaid and prepaid segments. This growth was supported by customer response to its Un-carrier initiatives, promotions, and ongoing network improvements, which aimed to enhance customer experience and provide added value.
What are the main risks T-Mobile faces, as outlined in the filing?
The filing identifies several key risks, including intense competition within the wireless industry from larger players with greater resources, the scarcity and cost of acquiring additional wireless spectrum, and the need to keep pace with rapid technological advancements. Other significant risks include potential data loss and security breaches, system failures, reliance on third-party suppliers, economic and political conditions, and the substantial amount of indebtedness the company carries.
06—Continue