Oct 23. 2017
Records for Service Revenues, Net Cash Provided by Operating Activities and Free Cash Flow with Strong Net Income of $550 Million, and Record Q3 Adjusted EBITDA of $2.8 Billion
Strong Financial Performance (all percentages year-over-year):
Customer Growth Expected to Lead the Industry:
Strong Network and Distribution Expansion:
Continued strong outlook for 2017:
BELLEVUE, Wash. - October 23, 2017 - T-Mobile US, Inc. (NASDAQ: TMUS) reported record financial results in the third quarter of 2017 with best-ever service revenues, net cash provided by operating activities and free cash flow. The Un-carrier also posted strong net income and record Q3 Adjusted EBITDA. These results demonstrate our ability to translate customer growth into financial growth as we continue to generate momentum. In Q3, we delivered strong customer results across the board including 1.3 million total net customer additions. That marks 18 consecutive quarters that T-Mobile has added more than 1 million total customers and we expect to continue leading the industry in postpaid phone growth again in Q3. As a result of this continued strong performance, we are raising our guidance for 2017 - again.
Customers are continuing to choose T-Mobile over the competition because they get more value for their hard-earned dollar. Q3 was no different as we unveiled our latest industry changing move: Netflix on Us. The carriers focus on pushing bigger, fatter, pricier packages of content and services on their customers, while T-Mobile partnered with Netflix to give customers what they want - at no extra cost. In addition, customers are finding out that America’s Best Unlimited Network just keeps getting better. We continue to expand the depth and breadth of our network, and started rolling out 600 MHz spectrum in Q3 well ahead of schedule. The network expansion has enabled our distribution expansion, which is progressing ahead of schedule, and will bring real competition to every corner of the U.S. and sets T-Mobile up for more growth in the future.
"Just step back and look at these financial results - they’re incredible! Record service revenues, record free cash flow, record Q3 Adjusted EBITDA - and that’s on top of 18 quarters in a row with more than one million customers added," said John Legere, President and CEO of T-Mobile. "We’re delivering results that no one else can match and have proven time and time again that we know how to fight for customers and win for shareholders. We won’t stop!"
Strong Financial Performance
Our strong financial performance in Q3 2017 continues to prove T-Mobile's Un-carrier strategy is a winning formula.
• Total service revenues increased 7% year-over-year in Q3 2017 to $7.6 billion which is expected to mark the 14th quarter in a row that T-Mobile has led the industry in year-over-year service revenue percentage growth. The negative impact from hurricanes was $31 million in Q3 2017.
• Total revenues increased 8% in Q3 2017 to $10.0 billion which is expected to mark the 17th time in the last 18 quarters that T-Mobile has led the industry in total revenue percentage growth year-over-year. The negative impact from hurricanes was $39 million in Q3 2017.
• Branded postpaid phone Average Revenue per User (ARPU) was $46.93 in Q3 2017, down 0.3% from Q2 2017 and down 2.5% from Q3 2016 primarily due to the continued adoption of T-Mobile ONE including taxes and fees, dilution from promotional activities and negative hurricane related impacts of $0.19, partially offset by the impact of the MVNO transaction and Data Stash for the year-over-year period. T-Mobile continues to expect that branded postpaid phone ARPU in full-year 2017 will be generally stable compared to full-year 2016, with some quarterly variations driven by the actual migrations to T-Mobile ONE rate plans, inclusive of Un-carrier Next.
• Branded prepaid ARPU was a record-high $38.93 in Q3 2017, up 2.4% from Q3 2016, primarily due to continued growth of MetroPCS customers who generate higher ARPU, partially offset by negative hurricane related impacts of $0.18.
• Net income increased 50% year-over-year in Q3 2017 to $550 million. Net income as a percentage of service revenue was 7% in Q3 2017, up from 5% in Q3 2016. The negative impact on net income from hurricane related losses in Texas, Florida and Puerto Rico from lost revenue, assets damaged or destroyed and other costs incurred was $90 million in Q3 2017. As of September 30, 2017, our assessment of losses is ongoing and we expect additional expenses to be incurred and customer activity to be impacted in Q4 2017 primarily related to our operations in Puerto Rico. We have not recognized any potential insurance recoveries related to those hurricane losses as we continue to assess the damage and work with our insurance carriers.
• Diluted EPS increased 50% year-over-year in Q3 2017 to $0.63. The negative impact from hurricanes for Q3 2017 was $0.10.
• Adjusted EBITDA increased 5% year-over-year in Q3 2017 to a Q3 record-high of $2.8 billion primarily from higher service revenues and lower losses on equipment, partially offset by higher SG&A costs, higher cost of services expense, lower gains on disposal of spectrum licenses and a $148 million negative impact from hurricanes. Excluding spectrum gains from all periods, Adjusted EBITDA growth was 12% year-over-year. Adjusted EBITDA margin as a percentage of service revenue was 37% in Q3 2017, down from 38% in Q3 2016. The decrease was primarily driven by lower gains on disposal of spectrum licenses compared to prior year period.
• Cash purchases of property and equipment increased 24% year-over-year in Q3 2017 to $1.4 billion and included capitalized interest of $29 million in Q3 2017 compared to $17 million in Q3 2016.
• Net cash provided by operating activities increased 36% year-over-year in Q3 2017 to $2.4 billion. The increase was primarily due to higher net income and higher non-cash adjustments to net income and a lower net use from working capital changes.
• Free cash flow increased 59% year-over-year in Q3 2017 to a record $921 million. The increase was primarily due to the increase in net cash provided by operating activities, partially offset by an increase in cash purchases of property and equipment.