10-QPeriod: Q2 FY2021

T-Mobile US, Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 3, 2021For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) reported strong financial performance for the second quarter and first half of 2021, with total revenues increasing by 13% and 38% year-over-year, respectively. This growth was driven by robust increases in postpaid and wholesale revenues, alongside significant gains in equipment sales. The company also demonstrated improved profitability, with net income rising significantly in both periods, bolstered by strong operating income and effective cost management, though offset by increased interest expenses. Operationally, T-Mobile continued to expand its customer base, adding 1.35 million net new customers in the quarter, representing a 9% increase year-over-year. The company also highlighted its strategic investments in network infrastructure, particularly its 5G network expansion, and its successful acquisition of additional spectrum licenses. Despite increased debt levels and ongoing integration costs from the Sprint merger, the company's free cash flow generation showed substantial improvement, indicating a healthy ability to manage its financial obligations and invest in future growth.

Financial Highlights

53 data points
Beta

Revenue

$19.95B

Net Income

$978.00M

4.9% Net Margin

EPS (Diluted)

$0.78

Total Assets

$204.12B

Cash & Equivalents

$7.88B

Free Cash Flow

$509.00M

Financial Statements
Beta
Revenue$19.95B
SG&A Expenses$4.82B
Operating Expenses$17.84B
Operating Income$2.11B
Interest Expense$820.00M
Net Income$978.00M
EPS (Basic)$0.78
EPS (Diluted)$0.78
Shares Outstanding (Basic)1.25B
Shares Outstanding (Diluted)1.25B

Key Highlights

  • 1Total revenues grew by 13% to $19.95 billion for the quarter and 38% to $39.71 billion for the six months ended June 30, 2021.
  • 2Net income increased significantly to $978 million for the quarter and $1.91 billion for the six months, compared to $110 million and $1.06 billion in the prior year periods, respectively.
  • 3Total customers grew by 7% year-over-year to 104.8 million.
  • 4Free Cash Flow (excluding swap settlements) increased by 16% to $1.67 billion for the quarter and 37% to $2.98 billion for the six months.
  • 5The company successfully acquired significant C-band spectrum licenses in Auction 107 for $9.3 billion.
  • 6Operating expenses increased by 6% for the quarter and 34% for the six months, largely due to increased cost of services and equipment sales, and ongoing merger-related costs.
  • 7T-Mobile repurchased approximately $4.8 billion of Senior Notes during the six months ended June 30, 2021, and issued new long-term debt totaling $9.8 billion.

Frequently Asked Questions

T-Mobile's revenue growth was primarily driven by a 5% increase in postpaid revenues and a substantial 129% increase in wholesale revenues, largely due to the Master Network Service Agreement with DISH. Equipment revenues also saw a significant boost, increasing by 22% due to higher device sales and increased retail store traffic.

The Sprint merger integration continues to influence financial results. Merger-related costs contributed to higher operating expenses, particularly in cost of services and selling, general, and administrative expenses. However, the merger also expanded the customer base and revenue streams, and synergies are expected to drive future cost efficiencies.

T-Mobile is actively investing in its network infrastructure, particularly its 5G network. A key highlight is the successful acquisition of 142 licenses in the C-band spectrum (Auction 107) for $9.3 billion, which will enhance its 5G capabilities. The company expects significant capital expenditures in 2021 and 2022 to integrate this spectrum and build out its network.

T-Mobile has a substantial level of debt, with total debt and financing lease liabilities at $77.7 billion as of June 30, 2021. During the first half of 2021, the company issued $9.8 billion in long-term debt and redeemed approximately $5.5 billion in existing debt. The company's strong free cash flow generation and improved operating income provide the capacity to manage its debt obligations.