10-QPeriod: Q2 FY2017

T-Mobile US, Inc. Quarterly Report for Q2 Ended Jun 30, 2017

Filed July 20, 2017For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. reported strong financial and operational performance for the second quarter of 2017, with total revenues increasing by 10% year-over-year to $10.2 billion. This growth was driven by an 8% increase in service revenues to $7.4 billion and a significant 15% rise in equipment revenues to $2.5 billion. The company also saw a substantial improvement in profitability, with net income soaring by 158% to $581 million, reflecting effective cost management and increased operational efficiency. Key strategic initiatives, including the 'Un-carrier' program and the success of the MetroPCS brand, continue to drive customer acquisition and revenue growth. The company demonstrated robust cash flow generation, with operating cash flow increasing by 3% to $1.8 billion and Free Cash Flow growing by 15% to $482 million. Significant investments were made in network infrastructure and spectrum acquisition, particularly the acquisition of 600 MHz spectrum licenses, positioning T-Mobile for future growth and enhanced service capabilities.

Financial Highlights

55 data points
Beta

Revenue

$10.21B

72.1% Gross Margin

Net Income

$581.00M

5.7% Net Margin

EPS (Diluted)

$0.67

Total Assets

$67.16B

Cash & Equivalents

$181.00M

Free Cash Flow

-$241.00M

Financial Statements
Beta
Revenue$10.21B
Cost of Revenue$2.85B
Gross Profit$7.37B
SG&A Expenses$2.92B
Operating Expenses$8.80B
Operating Income$1.42B
Interest Expense$265.00M
Net Income$581.00M
EPS (Basic)$0.68
EPS (Diluted)$0.67
Shares Outstanding (Basic)830.97M
Shares Outstanding (Diluted)870.46M

Key Highlights

  • 1Total revenues grew by 10% to $10.2 billion in Q2 2017 compared to Q2 2016.
  • 2Service revenues increased by 8% to $7.4 billion, driven by branded postpaid and prepaid customer growth.
  • 3Equipment revenues saw a substantial 15% increase to $2.5 billion, fueled by higher average revenue per device and a strong mix of high-end device sales.
  • 4Net income surged by 158% to $581 million, indicating improved profitability.
  • 5Operating income grew by 70% to $1.4 billion, reflecting enhanced operational efficiency and cost management.
  • 6Net cash provided by operating activities increased by 3% to $1.8 billion, demonstrating strong operational cash generation.
  • 7Significant capital investment was made in acquiring new spectrum licenses for $8.0 billion, positioning the company for future network expansion.

Frequently Asked Questions

T-Mobile's revenue growth was primarily driven by increases in both service revenues and equipment revenues. Service revenues benefited from a growing branded postpaid and prepaid customer base, attributed to the success of 'Un-carrier' initiatives and the MetroPCS brand. Equipment revenues were boosted by higher average revenue per device sold, an increased mix of high-end devices, and revenue from the purchase of previously leased devices at the end of their lease term.

T-Mobile's profitability significantly improved in Q2 2017. Net income increased by 158% year-over-year to $581 million. This improvement was largely due to higher operating income, which grew by 70% to $1.4 billion, as a result of increased service revenues, improved cost management, and lower depreciation and amortization expenses. Additionally, a reduction in the valuation allowance against deferred tax assets contributed to the net income increase for the six-month period.

T-Mobile made a substantial investment in acquiring 600 MHz spectrum licenses for $8.0 billion during the quarter. This acquisition is a key strategic move to enhance network capabilities and expand service offerings. The company's liquidity from operations, debt issuances, and other financing activities is expected to be sufficient for its operational needs and future investments, including potential spectrum acquisitions or other strategic opportunities.

T-Mobile reported a solid increase in its total customer base, growing by 2.2 million to 69.6 million. Branded customers, which include postpaid and prepaid segments, increased by 3.9 million, representing 7% growth. Branded postpaid phone customers, a key segment, grew by 2.0 million, indicating strong market reception to their service offerings and promotions.