How did T-Mobile's revenue performance in Q1 2017 compare to Q1 2016?

T-Mobile US reported a substantial 11% increase in total revenues, reaching $9.6 billion in the first quarter of 2017 compared to $8.7 billion in the same period of 2016. This growth was primarily fueled by an 11% rise in service revenues, driven by an expanded customer base and higher average revenues per user for both branded postpaid and prepaid services.

What was the primary driver behind the significant increase in net income?

The primary driver for the 46% increase in net income to $698 million was a significant income tax benefit of $91 million in Q1 2017, compared to an income tax expense of $272 million in Q1 2016. Specifically, T-Mobile recorded a $270 million tax benefit related to the reduction of a valuation allowance against deferred tax assets in certain state jurisdictions, which substantially boosted profitability.

What is the significance of the 600 MHz spectrum auction win?

T-Mobile's winning bid of $8.0 billion for licenses in the FCC's 600 MHz spectrum auction is a major strategic move. This acquisition provides T-Mobile with valuable low-band spectrum, which is crucial for extending network coverage and capacity, especially in rural areas, and enhancing its 4G LTE and future 5G capabilities. The company plans to fund a significant portion of this purchase through debt, including $4.0 billion from Deutsche Telekom.

How has T-Mobile's debt position changed?

T-Mobile's total debt increased to $30.2 billion as of March 31, 2017, up from $27.8 billion at the end of 2016. This increase is primarily due to substantial new debt issuances, including a $4.0 billion secured term loan facility with Deutsche Telekom and $1.5 billion in public senior notes. These borrowings were used for refinancing existing debt and to support ongoing operations and strategic initiatives like spectrum acquisition.

T-Mobile US, Inc. 10-Q Quarterly Report Q1 FY2017

Summary

T-Mobile US, Inc. reported solid revenue growth for the first quarter of 2017, with total revenues increasing by 11% year-over-year to $9.6 billion. This growth was primarily driven by increases in branded postpaid and prepaid service revenues, reflecting the ongoing success of their "Un-carrier" initiatives and the continued strength of the MetroPCS brand. While operating income saw a decline due to lower gains on spectrum licenses compared to the prior year and increased operating expenses, net income saw a significant increase of 46% to $698 million, largely attributed to a substantial tax benefit from the reduction of a deferred tax asset valuation allowance. The company also demonstrated strong operational cash flow, with net cash provided by operating activities increasing by 67% to $1.7 billion. Free Cash Flow also saw a significant improvement, turning positive to $185 million from a negative $310 million in the prior year quarter. A major development during and shortly after the quarter was T-Mobile's winning bid of $8.0 billion in the FCC's 600 MHz spectrum auction, positioning the company for future growth and network expansion, though it will require significant funding, partly sourced from Deutsche Telekom and debt issuance.

Financial Highlights

55 data points

Beta

Revenue

$9.61B

0.7% Gross Margin

Net Income

$698.00M

0.1% Net Margin

EPS (Diluted)

$0.80

Total Assets

$68.05B

Cash & Equivalents

$7.50B

Free Cash Flow

-$920.00M

Financial Statements

Beta

Revenue	$9.61B
Cost of Revenue	$2.69B
Gross Profit	$6.93B
SG&A Expenses	$2.96B
Operating Expenses	$8.58B
Operating Income	$1.04B
Interest Expense	$339.00M
Net Income	$698.00M
EPS (Basic)	$0.83
EPS (Diluted)	$0.80
Shares Outstanding (Basic)	827.72M
Shares Outstanding (Diluted)	869.40M

Key Highlights

1Total revenues grew 11% to $9.6 billion, driven by strong performance in branded postpaid and prepaid services.
2Net income increased significantly by 46% to $698 million, boosted by a $270 million tax benefit from reducing a valuation allowance on deferred tax assets.
3Net cash provided by operating activities surged 67% to $1.7 billion, indicating improved operational cash generation.
4Free Cash Flow improved dramatically from -$310 million to $185 million, highlighting better cash generation after capital expenditures.
5T-Mobile was the winning bidder in the FCC's 600 MHz spectrum auction for $8.0 billion, a significant investment for future network expansion.
6Total debt increased to $30.2 billion, reflecting new debt issuances to support operations and refinancing activities, including significant borrowing from Deutsche Telekom.
7Total customers grew 11% year-over-year to 72.6 million, with strong gains in both branded and wholesale segments.

T-Mobile US, Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions