10-QPeriod: Q3 FY2015

T-Mobile US, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 27, 2015For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) reported solid financial performance for the nine months ended September 30, 2015, demonstrating significant growth in key areas. Total revenues increased by 11% year-over-year to $23.8 billion, driven by a robust 13% rise in branded postpaid revenues, which reached $12.0 billion. This growth is attributed to the success of the company's 'Un-carrier' initiatives, leading to an 11% increase in total customers to 61.2 million. The company also saw a substantial improvement in net income, which grew to $436 million from $146 million in the prior year's comparable period, alongside a significant increase in Adjusted EBITDA to $5.1 billion. Despite increased operating expenses, largely due to investments in network modernization and customer acquisition, T-Mobile managed its costs effectively, resulting in improved profitability. The company continues to invest heavily in its network infrastructure, with capital expenditures for property and equipment totaling $3.3 billion for the nine months ended September 30, 2015, and further spectrum acquisitions underscoring its commitment to future growth. While free cash flow remained negative at $(112) million, it improved from $(227) million in the prior year, reflecting enhanced operational cash generation.

Financial Highlights

52 data points
Beta

Revenue

$7.85B

74.7% Gross Margin

Net Income

$138.00M

1.8% Net Margin

EPS (Diluted)

$0.15

Total Assets

$58.47B

Cash & Equivalents

$2.63B

Free Cash Flow

$411.00M

Financial Statements
Beta
Revenue$7.85B
Cost of Revenue$1.99B
Gross Profit$5.86B
SG&A Expenses$2.62B
Operating Expenses$7.34B
Operating Income$513.00M
Interest Expense$262.00M
Net Income$138.00M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)815.07M
Shares Outstanding (Diluted)822.02M

Key Highlights

  • 1Total revenues grew 11% year-over-year to $23.8 billion for the first nine months of 2015.
  • 2Branded postpaid revenues increased by 13% to $12.0 billion for the same period, driven by customer growth and 'Un-carrier' initiatives.
  • 3Total customer base expanded by 11% to 61.2 million as of September 30, 2015.
  • 4Net income surged to $436 million for the nine months ended September 30, 2015, up from $146 million in the prior year.
  • 5Adjusted EBITDA increased by 32% to $5.1 billion for the first nine months of 2015.
  • 6Capital expenditures for property and equipment were $3.3 billion for the nine months, supporting network modernization and LTE expansion.
  • 7Free Cash Flow improved to $(112) million from $(227) million year-over-year.

Frequently Asked Questions

T-Mobile's revenue growth was primarily driven by an increase in branded postpaid revenues, up 13% year-over-year to $12.0 billion. This was fueled by the successful acquisition and retention of customers through its 'Un-carrier' initiatives and promotions, leading to a higher number of branded postpaid phone and mobile broadband customers. Growth in branded prepaid revenues and equipment sales also contributed to the overall revenue increase.

Profitability saw a significant improvement. Net income rose to $436 million for the nine months ended September 30, 2015, compared to $146 million in the same period of 2014. Adjusted EBITDA, a key performance metric, also increased substantially by 32% to $5.1 billion, reflecting strong revenue growth and effective cost management despite increased operating expenses related to network investments and customer acquisition.

T-Mobile is heavily investing in its network to maintain its competitive edge. Capital expenditures for property and equipment totaled $3.3 billion for the first nine months of 2015, primarily for network modernization and LTE deployment, reaching 300 million people. The company also acquired additional AWS spectrum licenses for $1.8 billion, further enhancing its nationwide broadband spectrum portfolio and plans to opportunistically acquire more spectrum in the future.

For the nine months ended September 30, 2015, T-Mobile generated $3.2 billion in cash from operations, an increase from $2.8 billion in the prior year. However, significant investments in property and equipment ($3.3 billion) and spectrum licenses ($1.9 billion) resulted in negative Free Cash Flow of $(112) million, an improvement from $(227) million in the prior year. The company expects its principal sources of liquidity to be sufficient for the next 12 months and may seek additional funding through debt or equity issuance for ongoing investments.