10-QPeriod: Q3 FY2017

T-Mobile US, Inc. Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 23, 2017For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. reported robust financial performance for the nine months ended September 30, 2017. Total revenues increased by 9% to $29.8 billion, driven by strong growth in both service and equipment revenues. Service revenues saw a 9% increase to $22.4 billion, largely due to customer base expansion fueled by T-Mobile's "Un-carrier" initiatives and the success of the MetroPCS brand. Equipment revenues also grew by 11% to $6.7 billion, reflecting higher average revenue per device and increased purchases of leased devices. Net income saw a significant jump of 71% to $1.8 billion, benefiting from improved operating income, a lower effective tax rate due to valuation allowance adjustments on deferred tax assets, and a reduction in interest expense. The company also demonstrated improved operational efficiency, with Net cash provided by operating activities increasing by 30% to $5.9 billion and Free Cash Flow surging by 130% to $1.6 billion. Significant investments in spectrum licenses, including the substantial acquisition in the 600 MHz auction, highlight the company's strategic focus on future growth and network capabilities.

Financial Highlights

54 data points
Beta

Revenue

$10.02B

73.9% Gross Margin

Net Income

$550.00M

5.5% Net Margin

EPS (Diluted)

$0.63

Total Assets

$67.92B

Cash & Equivalents

$739.00M

Free Cash Flow

-$189.00M

Financial Statements
Beta
Revenue$10.02B
Cost of Revenue$2.62B
Gross Profit$7.40B
SG&A Expenses$3.10B
Operating Expenses$8.70B
Operating Income$1.32B
Interest Expense$253.00M
Net Income$550.00M
EPS (Basic)$0.65
EPS (Diluted)$0.63
Shares Outstanding (Basic)831.19M
Shares Outstanding (Diluted)871.42M

Key Highlights

  • 1Total revenues increased 9% year-over-year to $29.8 billion for the first nine months of 2017.
  • 2Service revenues grew 9% to $22.4 billion, driven by customer base expansion and 'Un-carrier' initiatives.
  • 3Net income rose significantly by 71% to $1.8 billion, aided by lower tax rates and reduced interest expenses.
  • 4Net cash provided by operating activities increased 30% to $5.9 billion.
  • 5Free Cash Flow saw a substantial increase of 130% to $1.6 billion.
  • 6The company invested $8.0 billion in acquiring 1,525 licenses in the 600 MHz spectrum auction.
  • 7Total debt stood at $28.3 billion as of September 30, 2017.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in service revenues, fueled by a growing customer base attracted to T-Mobile's "Un-carrier" initiatives and promotions, as well as the success of the MetroPCS brand. Equipment revenues also contributed positively due to higher average revenue per device sold and increased purchases of leased devices.

T-Mobile invested $8.0 billion in acquiring 1,525 licenses in the 600 MHz spectrum auction. This significant investment was funded through a combination of cash reserves and debt issuance. While it increased the company's spectrum license assets, it also involved a substantial cash outflow and increased the company's debt obligations.

The substantial increase in net income was driven by higher operating income resulting from revenue growth and improved cost management. Additionally, a lower effective tax rate, largely due to the reduction of a valuation allowance against deferred tax assets, and a net decrease in interest expense significantly boosted net income.

T-Mobile demonstrated strong cash flow performance. Net cash provided by operating activities increased by 30% to $5.9 billion for the nine months ended September 30, 2017. Free Cash Flow also saw a remarkable increase of 130% to $1.6 billion, indicating improved operational efficiency and the ability to generate cash for investments and debt repayment.