10-QPeriod: Q2 FY2012

T-Mobile US, Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 26, 2012For Securities:TMUSTMUSZTMUSITMUSL

Summary

MetroPCS Communications, Inc. (operating as MetroPCS) reported its financial results for the second quarter ended June 30, 2012. The company demonstrated revenue growth, with total revenues increasing by 6% year-over-year to $1.28 billion. This growth was primarily driven by a 4% increase in service revenues and a significant 27% increase in equipment revenues. Income from operations saw a substantial 48% rise to $311.9 million, indicating improved operational efficiency. Despite the positive top-line and operating income performance, investors should note a decline in net customer additions, with a net loss of 186,062 customers in the quarter compared to net additions in the prior year period. This shift in focus from customer growth to generating Adjusted EBITDA and cash flow, along with competitive pressures and customer expectations for 4G LTE service, are cited as contributing factors. The company maintained a strong liquidity position with approximately $2.3 billion in cash, cash equivalents, and short-term investments.

Financial Statements
Beta
Revenue$4.88B
Cost of Revenue$646.34M
Gross Profit$4.24B
SG&A Expenses$167.49M
Operating Expenses$4.43B
Operating Income$452.00M
Interest Expense$0
Net Income$207.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)535.29M
Shares Outstanding (Diluted)535.29M

Key Highlights

  • 1Total revenues increased by 6% to $1.28 billion for the three months ended June 30, 2012, compared to $1.21 billion for the same period in 2011.
  • 2Service revenues grew by 4% to $1.16 billion, while equipment revenues saw a substantial 27% increase to $122.2 million.
  • 3Income from operations surged by 48% to $311.9 million, reflecting improved operational efficiency.
  • 4Net customer additions turned into a net loss of 186,062 for the quarter, a significant shift from net additions of 198,810 in the prior year's comparable quarter.
  • 5Average monthly churn rate decreased to 3.4% from 3.9% year-over-year, indicating improved customer retention.
  • 6Adjusted EBITDA, a key non-GAAP metric, increased by 33% to $476.7 million for the quarter.
  • 7The company reported approximately $2.3 billion in cash, cash equivalents, and short-term investments as of June 30, 2012, indicating a solid liquidity position.

Frequently Asked Questions

MetroPCS reported total revenues of $1.28 billion, a 6% increase year-over-year. Service revenues grew 4% to $1.16 billion, and equipment revenues increased by 27% to $122.2 million. Income from operations rose significantly by 48% to $311.9 million. Net income also saw a substantial increase of 77% to $148.8 million.

The company experienced a net customer loss of 186,062 for the three months ended June 30, 2012, a notable shift from the net customer additions of 198,810 in the same period last year. This is attributed to a strategic focus on Adjusted EBITDA and cash flow generation, competitive pressures, and evolving customer demand for 4G LTE services. However, the average monthly churn rate improved to 3.4% from 3.9% in the prior year.

As of June 30, 2012, MetroPCS maintained a strong liquidity position with approximately $2.3 billion in cash, cash equivalents, and short-term investments. The company's total long-term debt, including current maturities, was approximately $4.7 billion. Management believes its current liquidity and anticipated cash flows from operations are sufficient to fund its near-term operations.

Key non-GAAP indicators include ARPU (Average Revenue Per User), CPGA (Cost Per Gross Addition), CPU (Cost Per User), and Adjusted EBITDA. ARPU saw a slight increase to $40.62 from $40.49. CPGA increased, reflecting lower gross additions. CPU decreased slightly for the quarter. Adjusted EBITDA showed strong growth, increasing by 33% to $476.7 million for the quarter, indicating robust operational performance beyond GAAP net income.