[October 27, 2014] |
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T-Mobile US Investor Factbook Q3 2014: T-Mobile US Reports Third Quarter 2014 Results
BELLEVUE, Wash. --(Business Wire)--
T-Mobile US, Inc. (NYSE:TMUS):
Third Quarter 2014 Highlights:
-
Biggest growth quarter in T-Mobile's history:
-
Best quarter ever of branded postpaid net adds - 1.4 million
-
Branded postpaid phone net adds more than doubled
quarter-over-quarter to 1.2 million
-
Branded prepaid net adds up more than four times
quarter-over-quarter to 411,000
-
10 million total customers added over the last 6 quarters - 2.3
million in the third quarter alone
-
Service revenues grew 10.6% year-over-year to $5.7 billion
-
Best ever Average Billings Per User (ABPU) of $61.59, up 4.2%
year-over-year
-
Adjusted EBITDA of $1.35 billion, flat year-over-year, impacted by
record customer growth
-
With the fastest nationwide 4G LTE network:
-
Already reached year-end goal of covering 250 million Americans -
targeting 300 million in 2015
-
Aggressively rolling out Wideband LTE and 4G LTE on 700 MHz
A-Block and 1900 MHz PCS spectrum
-
Continue to lead the industry in innovation:
-
Un-carrier 7.0 - Wi-Fi Un-leashed: first US carrier to adopt Wi-Fi
calling across all its new smartphones
-
iPhone 6: T-Mobile's biggest device launch ever
-
Expect strong finish in 2014:
-
Guidance range for branded postpaid net adds increased
significantly to 4.3 to 4.7 million
-
Guidance range for Adjusted EBITDA unchanged at $5.6 to $5.8
billion
CUSTOMER METRICS
Branded Postpaid Customers
-
Branded postpaid net customer additions were 1,379,000 in the
third quarter of 2014 compared to 908,000 in the second quarter of
2014 and 648,000 in the third quarter of 2013. The third quarter of
2014 was the best quarter ever in terms of branded postpaid net
additions due to the continued success of the Un-carrier
initiatives and strong uptake of promotions for services and devices.
-
T-Mobile again led the industry in branded postpaid phone net
customer additions with 1,175,000 in the third quarter of 2014,
more than doubling the 579,000 reported in the second quarter of 2014
and up from 643,000 in the third quarter of 2013. Sequentially and
year-over-year, the increase was primarily due to higher gross
additions, which were up 47% compared to the second quarter of 2014
and up 46% compared to the third quarter of 2013.
-
Branded postpaid mobile broadband net customer additions (including
tablets) were 204,000 in the third quarter of 2014, compared to
329,000 in the second quarter of 2014 and 5,000 in the third quarter
of 2013. Sequentially, the decline was primarily a result of lower
gross additions due to few new product introductions in the category.
-
Branded postpaid phone churn was 1.6% in the third quarter of
2014, up 10 basis points compared to the second quarter of 2014 and
down 10 basis points compared to the third quarter of 2013.
Sequentially, the increase in phone churn was primarily due to
seasonal factors as the second half of the calendar year typically
experiences a higher rate of churn. Year-over-year, the decrease in
phone churn was primarily due to the continued success of the
Company's Un-carrier initiatives.
Branded Prepaid Customers
-
T-Mobile is expected to again lead the industry in branded prepaid
net customer additions with 411,000 in the third quarter of 2014,
quadrupling the 102,000 reported in the second quarter of 2014 and up
from 24,000 in the third quarter of 2013. Sequentially and
year-over-year, the increase was primarily due to the continued
strength of the MetroPCS brand, expansion to additional markets, and
the successful execution of promotional programs.
-
Migrations to branded postpaid plans reduced branded prepaid
net customer additions in the third quarter of 2014 by approximately
110,000, up from 85,000 in the second quarter of 2014, but down from
150,000 in the third quarter of 2013.
-
Branded prepaid churn was 4.8% in the third quarter of 2014, up
30 basis points from 4.5% in the second quarter of 2014 and down 20
basis points from 5.0% in the third quarter of 2013. Sequentially, the
increase in churn was primarily due to higher deactivations as a
result of the competitive environment in the prepaid market and
seasonal factors as the second half of the calendar year typically
experiences a higher rate of churn. Year-over-year, the decrease in
churn was primarily due to the growth of MetroPCS customers, which
historically have lower rates of churn than T-Mobile branded prepaid
customers.
Total Branded Customers
-
Total branded net customer additions were 1,790,000 in the
third quarter of 2014 compared to 1,010,000 in the second quarter of
2014 and 672,000 in the third quarter of 2013. This was the third
consecutive quarter in which branded customer net additions surpassed
the one million milestone, and was also the best quarter ever in terms
of total branded net customer additions.
Wholesale Customers
-
Total wholesale net customer additions were 555,000 in the
third quarter of 2014 compared to 460,000 in the second quarter of
2014 and 351,000 in the third quarter of 2013.
-
MVNO net customer additions were 333,000 in the third quarter
of 2014 compared to 235,000 in the second quarter of 2014 and 344,000
in the third quarter of 2013.
-
M2M net customer additions were 222,000 in the third quarter of
2014 compared to 225,000 in the second quarter of 2014 and 7,000 in
the third quarter of 2013.
Total Customers
-
Total net customer additions were 2,345,000 in the third
quarter of 2014 compared to 1,470,000 in the second quarter of 2014
and 1,023,000 in the third quarter of 2013. This was the second
quarter in 2014 with total net customer additions in excess of two
million.
-
T-Mobile has added 10 million total customers over the last 6
quarters, since the launch of the Un-carrier initiatives.
-
Total customers at the end of the third quarter of 2014 were 52.9
million.
NETWORK
Network Modernization Update
-
T-Mobile's 4G LTE network now covers 250 million people, already
reaching its year-end goal. The company expects to cover more than
260 million people with 4G LTE by year-end 2014.
-
T-Mobile is upgrading its remaining 2G only footprint by adding 4G
LTE, and expects to cover more than 280 million people with 4G LTE
by mid-2015.
-
The Company is targeting a 4G LTE population coverage of 300
million people by year-end 2015.
-
T-Mobile has rolled out 10+10 MHz 4G LTE in 43 of the Top 50 markets. Wideband
LTE, which refers to markets that have bandwidth of at least 15+15 MHz
dedicated to 4G LTE, is currently available in 19 markets and is
expected to be available in at least 26 markets by year-end 2014.
Customers in Wideband LTE markets are regularly observing peak speeds
in the 70 Mbps range, with maximum real-world speeds in excess of 145
Mbps.
Network Speed
-
T-Mobile has the fastest nationwide 4G LTE network in the U.S.
based on download speed from millions of user generated test results.
This is the third consecutive quarter that T-Mobile has led the
industry in download speeds.
-
In the third quarter of 2014, T-Mobile's average 4G LTE download
speed was 18.8 Mbps compared to Verizon at 16.8 Mbps, AT&T at 14.3
Mbps, and Sprint at 9.6 Mbps.
-
T-Mobile's average 4G LTE download speed in the third quarter of 2014
was 12% faster than Verizon, 31% faster than AT&T, and nearly twice as
fast as Sprint.
Spectrum
-
T-Mobile currently owns an average of 82 MHz of spectrum across
the top 25 markets in the U.S. This is comprised of 9 MHz in the 700
MHz band, 30 MHz in the 1900 MHz PCS band, and 43 MHz in the AWS band.
-
The Company expects to be a participant in future FCC spectrum
auctions including the AWS-3 spectrum auction and the broadcast
incentive auction.
A-Block Update
-
T-Mobile owns or has agreements to own 700 MHz A-Block spectrum
covering 176 million people or approximately 55% of the U.S. population
and more than 70% of the Company's existing customer base. The
spectrum covers 9 of the Top 10 metro areas and 22 of the Top 30 metro
areas in the U.S.
-
The first 700 MHz sites are already on air and several Band 12
capable handsets are available in the market, including the Samsung
Note 4. The Company will continue to aggressively roll-out new 700
MHz sites going forward. More Band 12 capable handsets will become
available in the remainder of 2014 and first half of 2015.
-
More than 50% of the markets covered by the Company's A-Block spectrum
are free and clear and ready to be deployed. The remaining markets are
encumbered by Channel 51 broadcasts, generally limiting T-Mobile's
ability to use the spectrum until after the incumbent broadcasters are
relocated. However, the Company has already entered into agreements to
relocate broadcasters to new frequencies in 6 markets covering more
than 17 million people, making those markets available for launch in
2015.
-
T-Mobile has also entered into several agreements with multiple
parties to acquire A-Block spectrum in additional markets covering 18
million people since completing the Verizon A-Block spectrum
transaction in April 2014, bringing the total coverage to 176 million
people.
METROPCS
Integration and Expansion
-
The MetroPCS customer base continues to rapidly migrate off the legacy
CDMA network. At the end of the third quarter of 2014, 78% of the
total MetroPCS customer base was already on the T-Mobile network
compared to 67% and the end of the second quarter of 2014.
-
Approximately 63% of the MetroPCS spectrum on a MHz/POP basis has
already been re-farmed and integrated into the T-Mobile network at
the end of the third quarter of 2014 compared to 60% at the end of the
second quarter of 2014.
-
MetroPCS expanded into an additional 10 markets in the third
quarter of 2014, bringing the total market count to 55. New MetroPCS
markets include Chicago, St. Louis, Minneapolis, Kansas City, and Salt
Lake City.
-
MetroPCS added 900 new points of sale in the third quarter of
2014, bringing the total to 4,000 in the 40 expansion markets and
nearly 11,000 MetroPCS points of sale nationwide.
Synergies and Integration Costs
-
At the time the business combination with MetroPCS was announced, the
original projected synergy target called for $1.5 billion in annual
run-rate synergies to be realized by the fifth year after the
transaction close. The Company remains confident that the realized
synergies will come in ahead of the original schedule.
-
In July 2014, T-Mobile decommissioned the CDMA portion of the
MetroPCS networks in Boston, Hartford, and Las Vegas, over two
years ahead of the initial plan. The Company shut down the CDMA
portion of the MetroPCS network in Philadelphia early in the fourth
quarter, and will potentially de-commission several additional markets
by the end of the year. These network shutdowns will provide the CDMA
customers of MetroPCS with access to a faster 4G LTE network, free up
spectrum that can be re-used to further improve the speed and quality
of the T-Mobile network, and enable the Company to realize the
synergies from running a single network structure.
-
T-Mobile expects to incur network decommissioning costs between
$250 million and $300 million in 2014, of which $97 million were
recognized in the third quarter of 2014. Network decommissioning costs
primarily relate to the accelerated recognition of future lease costs
for cell sites, and will be excluded from Adjusted EBITDA.
-
The Company will provide a full financial update on the realized and
targeted synergies when it reports its full year 2014 results.
UN-CARRIER INITIATIVES
-
At the end of the third quarter of 2014, 84% of the branded
postpaid customer base was on a Simple Choice plan, up from 80% at
the end of the second quarter of 2014 and 61% at the end of the third
quarter of 2013.
-
At the end of the third quarter of 2014, 8.0 million customers were
enrolled in the JUMP! program, up from 6.7 million at the end of
the second quarter of 2014 and 2.2 million at the end of the third
quarter of 2013.
Un-carrier 7.0
-
Introduced in September 2014, "Wi-Fi Unleashed" makes voice and
texting available to customers worldwide, anywhere a Wi-Fi connection
is available. The program also offers postpaid customers a Personal
CellSpot device free of charge to boost coverage in more areas, and
also enables free in-flight texting in a partnership with Gogo.
-
T-Mobile is the first U.S. carrier to adopt Wi-Fi calling across all
new smartphones as well as the first to introduce nationwide Voice
over LTE ("VoLTE"). Customers can experience these ground-breaking
technologies, including seamless handover between the two, on both the
iPhone 6 and iPhone 6 Plus.
DEVICES
-
Total device sales were 7.7 million units in the third quarter
of 2014 compared to 6.9 million units in the second quarter of 2014
and 6.3 million units in the third quarter of 2013.
-
Total smartphone sales were 6.9 million units in the third
quarter of 2014 compared to 6.2 million units in the second quarter of
2014 and 5.6 million units in the third quarter of 2013. Smartphones
comprised 93% of total phone unit sales in the third quarter of 2014.
-
At the end of the third quarter of 2014, 84% of the total branded
postpaid phone customer base used smartphones, flat compared to
the second quarter of 2014, and up from 77% in the third quarter of
2013.
-
At the end of the third quarter of 2014, 84% of the total branded
prepaid phone customer base used smartphones, up from 83% in the
second quarter of 2014 and 80% in the third quarter of 2013.
-
The upgrade rate for branded postpaid customers was approximately 9%
in the third quarter of 2014 compared to approximately 8% in the
second quarter of 2014 and approximately 9% in the third quarter of
2013.
-
T-Mobile has seen tremendous demand for the new iPhones. The launch of
the iPhone 6 and iPhone 6 Plus was T-Mobile's biggest launch ever.
EQUIPMENT INSTALLMENT PLANS (EIP)
-
T-Mobile financed $1.317 billion of equipment sales on EIP in
the third quarter of 2014, down 1.9% from $1.342 billion in the second
quarter of 2014 and up 30.3% from $1.011 billion in the third quarter
of 2013.
-
Customers on Simple Choice plans had associated EIP billings of
$967 million in the third quarter of 2014, up 19.4% from the $810
million reported in the second quarter of 2014 and up 122.3% from the
$435 million reported in the third quarter of 2013.
-
Total EIP receivables, net of deferred interest and allowances for
credit losses, were $3.963 billion at the end of the third quarter
of 2014 compared to $3.583 billion at the end of the second quarter of
2014 and $1.867 billion at the end of the third quarter of 2013. The
$380 million sequential increase in total EIP receivables, net in the
third quarter of 2014 was lower than the sequential increase of $497
million in the second quarter of 2014, and represents the third
consecutive quarter in which the sequential increase in the total EIP
receivable has declined.
CUSTOMER QUALITY
-
EIP receivables classified as Prime were 53% of total gross EIP
receivables at the end of the third quarter of 2014, flat compared
to the end of the second quarter of 2014 and the third quarter of 2013.
-
Total bad debt expense was $85 million in the third quarter of
2014 compared to $87 million in the second quarter of 2014 and $120
million in the third quarter of 2013. Service bad debt in the third
quarter of 2014 was flat sequentially and down 84% year-over-year. The
year-over-year decrease was primarily due to the sale of service
receivables under a factoring arrangement, which no longer results in
service bad debt for receivables sold. EIP bad debt in the third
quarter of 2014 decreased by 3% sequentially and increased by 48%
year-over-year. The year-over-year increase was primarily due to a
large expansion in the EIP program.
-
The net expense from the factoring arrangement was $67 million
in the third quarter of 2014 compared to $77 million in the second
quarter of 2014. The net expense from the factoring arrangement
represents losses from the sale of receivables as well as transaction
fees.
-
Total bad debt and net expense from the factoring arrangement was
$152 million in the third quarter of 2014 compared to $164 million
in the second quarter of 2014 and $120 million in the third quarter of
2013. Year-over-year, the increase was primarily due to an increase in
bad debt related to growth in the EIP program.
AVERAGE BILLINGS PER USER (ABPU) and AVERAGE REVENUE PER USER (ARPU)
Branded Postpaid ABPU
-
Branded postpaid ABPU was $61.59 in the third quarter of 2014,
up 3.0% from $59.79 in the second quarter of 2014 and up 4.2% from
$59.08 in the third quarter of 2013. ABPU in the third quarter of 2014
was the highest in the Company's history. Year-over-year, the
increase was primarily due to growth in EIP billings on a per user
basis, offset in part by a lower branded postpaid phone ARPU. The 4.2%
year-over-year increase represents a significant improvement from the
1.8% year-over-year growth rate in the second quarter of 2014.
Branded Postpaid Phone ARPU
-
Branded postpaid phone ARPU was $49.84 in the third quarter of
2014, up 1.1% from $49.32 in the second quarter of 2014 and down 5.3%
from $52.62 in the third quarter of 2013. Branded postpaid phone ARPU
in the second quarter of 2014 was impacted by a reduction in certain
regulatory surcharges and a revenue adjustment for expected customer
refunds on premium SMS charges. Excluding the $0.61 impact resulting
from these non-recurring factors, branded postpaid phone ARPU
stabilized from the second quarter of 2014 to the third quarter of 2014.
-
Sequentially, branded postpaid phone ARPU was supported by the fact
that most of the customer base has already converted to Simple Choice
plans, and by recent pricing actions including changes in
requalification for corporate discount programs and the increase in
pricing for unlimited data. These increases were partially offset by
some dilution caused by promotions for services, including the "4 for
$100" offer.
-
Year-over-year, branded postpaid phone ARPU decreased primarily due to
the continued growth of Simple Choice plans and promotions for
services, including the "4 for $100" offer. Changes in requalification
for corporate discounts programs positively impacted branded postpaid
phone ARPU in the third quarter of 2014. The decrease in branded
postpaid phone ARPU of 5.3% year-over-year was a significant
improvement from the 7.6% year-over-year decline in the second quarter
of 2014, excluding the non-recurring factors described above.
Branded Prepaid ARPU
-
Branded prepaid ARPU was $37.59 in the third quarter of 2014,
up 1.2% from $37.16 in the second quarter of 2014 and up 5.3% from
$35.71 in the third quarter of 2013. Sequentially and year-over-year,
the increase in ARPU was primarily due to growth in the MetroPCS
customer base, which generates higher ARPU than T-Mobile's other
branded prepaid customers
REVENUES
Service Revenues
-
T-Mobile again led the industry in year-over-year service revenue
growth and registered the sixth consecutive quarter of sequential
growth.
-
Service revenues were $5.684 billion in the third quarter of
2014, up 3.6% from $5.484 billion in the second quarter of 2014 and up
10.6% from $5.138 billion in the third quarter of 2013. The
year-over-year growth rate of 10.6% in the third quarter of 2014
showed a further acceleration from the 7.1% pro forma combined
year-over-year growth rate reported in the second quarter of 2014 and
the 4.5% pro forma combined year-over-year growth rate reported in the
first quarter of 2014.
-
Sequentially, the increase in service revenues was primarily due to
growth in the customer base.
-
Year-over-year, the increase in service revenues was primarily due to
growth in the customer base and increased adoption of insurance and
upgrade programs such as JUMP!, partially offset by lower ARPU due to
increased adoption of Simple Choice plans.
Equipment Sales Revenues
-
Equipment sales revenues were $1.561 billion in the third
quarter of 2014, down 2.4% from $1.600 billion in the second quarter
of 2014 and up 6.4% from $1.467 billion in the third quarter of 2013.
-
Sequentially, the decrease in equipment sales revenues was primarily
due to revenue reductions from the reimbursement of other carriers'
ETFs and a lower average revenue per unit sold. These decreases were
partially offset by growth in the number of devices and accessories
sold and higher device upgrade volumes.
-
Year-over-year, the increase in equipment sales revenues was primarily
due to growth in the number of devices sold and higher upgrade
volumes. The increases were partially offset by reductions to
equipment sales revenues from the reimbursement of other carrier's
ETFs and a lower average revenue per unit sold.
Total Revenues
-
T-Mobile again led the industry in year-over-year total revenue
growth.
-
Total revenues were $7.350 billion in the third quarter of
2014, up 2.3% from $7.185 billion in the second quarter of 2014 and up
9.9% from $6.688 billion in the third quarter of 2013.
OPERATING EXPENSES
Cost of Services
-
Cost of services was $1.488 billion in the third quarter of
2014, up 2.4% from $1.453 billion in the second quarter of 2014 and up
3.0% from $1.444 billion in the third quarter of 2013. The sequential
and year-over-year increases were primarily due to higher lease
expense relating to spectrum license lease agreements.
-
While cost of services was up slightly compared to the second quarter
of 2014, it declined as a percentage of service revenues by 30 basis
points sequentially and by 190 basis points year-over-year.
Cost of Equipment Sales
-
Cost of equipment sales was $2.308 billion in the third quarter
of 2014, up 4.2% from $2.215 billion in the second quarter of 2014 and
up 14.5% from $2.015 billion in the third quarter of 2013. The
sequential and year-over-year increases were primarily due to growth
in the number of devices and accessories sold and higher device
upgrade volumes. These increases were offset in part by a lower
average device cost.
Selling, General and Admin. ("SG&A") Expenses
-
SG&A expenses were $2.283 billion in the third quarter of
2014, up 6.1% from $2.151 billion in the second quarter of 2014 and up
18.1% from $1.933 billion in the third quarter of 2013. The sequential
and year-over-year increases were primarily due to higher commission
expenses driven by increased gross customer additions and higher
promotional costs. Additional year-over-year increases resulted from
higher employee-related expenses associated with an increase in the
number of retail and customer support employees.
ADJUSTED EBITDA
-
Adjusted EBITDA was $1.346 billion in the third quarter of
2014, down 7.2% from $1.451 billion in the second quarter of 2014 and
flat compared to the $1.344 billion reported in the third quarter of
2013. Sequentially, Adjusted EBITDA decreased primarily due to higher
costs associated with a record level of customer additions in the
third quarter of 2014 relative to the second quarter of 2014,
including higher SG&A expenses and losses on equipment sales.
-
Adjusted EBITDA margin was 24% in the third quarter of 2014
compared to 26% in the second quarter of 2014 and 26% in the third
quarter of 2013.
EARNINGS PER SHARE
-
Diluted earnings per share was a loss of $0.12 in the third
quarter of 2014 compared to earnings of $0.48 in the second quarter of
2014 and a loss of $0.05 in the third quarter of 2013. The sequential
decrease in earnings per share was primarily due to a non-cash gain of
$731 million recognized in the second quarter of 2014 related to
spectrum license transactions. Year-over-year, the loss increased
partially due to higher MetroPCS business combination costs due to the
shutdown of the CDMA portion of the MetroPCS network in Boston and Las
Vegas.
CAPITAL EXPENDITURES
-
Cash capital expenditures for property and equipment were $1.131
billion in the third quarter of 2014 compared to $940 million in
the second quarter of 2014 and $1.017 billion in the third quarter of
2013. The sequential and year-over-year increase was primarily due to
the timing of network spend in connection with T-Mobile's
modernization program as well as commencing the rollout of 4G LTE on
the 700 MHz A-Block and 1900 MHz PCS spectrum.
SIMPLE FREE CASH FLOW
-
Simple free cash flow was $215 million in the third quarter of
2014 compared to $511 million in the second quarter of 2014 and $327
million in the third quarter of 2013. Sequentially, the decrease was
primarily due to lower Adjusted EBITDA and higher cash capital
expenditures. Year-over-year, the decrease was primarily due to higher
capital expenditures.
CAPITAL STRUCTURE
-
Net debt excluding tower obligations at the end of the third quarter
of 2014 was $17.3 billion.
-
Total debt excluding tower obligations at the end of the third quarter
of 2014 was $23.1 billion and was comprised of short-term debt of $1.2
billion, long-term debt to affiliates of $5.6 billion, and long-term
debt of $16.3 billion.
-
The ratio of net debt to Adjusted EBITDA for the trailing last
twelve month ("LTM") period was 3.4x at the end of the third
quarter of 2014 compared to 3.4x at the end of the second quarter of
2014 and 2.9x at the end of the third quarter of 2013.
-
The Company's cash position remains strong with $5.8 billion in
cash at the end of the third quarter of 2014. This was reduced by
approximately $1.0 billion in early October due to the redemption of
the 7.875% Senior Notes due 2018.
GUIDANCE
-
T-Mobile expects to drive further momentum while continuing to invest
in profitable growth. With the success of T-Mobile's Simple Choice
plan and the continued evolution of the Un-carrier value proposition, branded
postpaid net additions for 2014 are now expected to be between 4.3 and
4.7 million, up significantly from the prior guidance of 3.0 to
3.5 million.
-
For the full year of 2014, T-Mobile expects Adjusted EBITDA to be
in the range of $5.6 to $5.8 billion, which is unchanged from
prior guidance. Given the expected customer growth momentum, the
Company anticipates an Adjusted EBITDA at the very low end of the
range.
-
Cash capital expenditures are expected to be in the range of $4.3
to $4.6 billion, which is unchanged from prior guidance.
-
With this growth and rate plan migrations, the penetration of
Simple Choice plans in the branded postpaid base is projected to be
between 85% and 90% by the end of 2014, also unchanged from prior
guidance.
-
In the fourth quarter of 2014, T-Mobile expects branded postpaid phone
ARPU will be down approximately 2.5% on a sequential basis primarily
due to two factors. First, the Company saw incremental growth well
beyond the expectations it provided previously, driven partially from
lower-ARPU but very successful, NPV positive one-time promotions,
including the "4 for $100" promotion. This incremental growth is
estimated to reduce branded postpaid phone ARPU in the fourth quarter
of 2014 by approximately 1.7%. Second, the Company is expected to see
a reduction in certain regulatory surcharges, which are estimated to
reduce branded postpaid phone ARPU in the fourth quarter of 2014 by
approximately 0.8%. The reduction from regulatory surcharges will not
affect EBITDA, since these are pass-through charges. When normalizing
for this EBITDA-neutral item and for the incremental high quality
growth beyond the forecasts T-Mobile provided previously, the Company
is right on track for branded postpaid phone ARPU stabilization. The
Company expects branded postpaid phone ARPU to increase sequentially
in the first quarter of 2015, demonstrating the short-term nature of
these effects in the fourth quarter of 2014.
OTHER EVENTS
Debt Issuance
-
In September 2014, T-Mobile USA, Inc. issued $3.0 billion aggregate
principal amount of notes in a registered public offering, consisting
of $1.3 billion aggregate principal amount of 6.000% Senior Notes due
2023 and $1.7 billion aggregate principal amount of 6.375% Senior
Notes due 2025.
-
On October 6, 2014, T-Mobile used approximately $1.0 billion of the
proceeds from the debt issuance to redeem its outstanding 7.875%
Senior Notes due 2018.
-
T-Mobile expects to use the balance of the offering proceeds for
general corporate purposes, which may include capital investments and
the acquisition of spectrum.
UPCOMING EVENTS (All dates and attendance tentative)
-
Wells Fargo Technology, Media and Telecom Conference, November
12-13, 2014, New York, NY
-
UBS 42nd Annual Global Media and
Communications Conference, December 8-10, 2014, New York, NY
-
CITI 25th Annual Global Internet, Media
and Telecom Conference, January 5-7, 2015, Las Vegas, NV
-
T-Mobile US, Inc. Q4 2014 Earnings Report, February 19, 2015
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T-Mobile US, Inc.
|
Condensed Consolidated Balance Sheets
|
(Unaudited)
|
|
(in millions, except share and per share amounts)
|
|
September 30,
2014
|
|
December 31,
2013
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,787
|
|
|
$
|
5,891
|
|
Accounts receivable, net of deferred interest and allowances of $465
and $381
|
|
4,433
|
|
|
3,619
|
|
Accounts receivable from affiliates
|
|
82
|
|
|
41
|
|
Inventory
|
|
674
|
|
|
586
|
|
Current portion of deferred tax assets, net
|
|
950
|
|
|
839
|
|
Other current assets
|
|
1,369
|
|
|
1,252
|
|
Total current assets
|
|
13,295
|
|
|
12,228
|
|
Property and equipment, net of accumulated depreciation of $21,410
and $19,649
|
|
15,798
|
|
|
15,349
|
|
Goodwill
|
|
1,683
|
|
|
1,683
|
|
Spectrum licenses
|
|
21,689
|
|
|
18,122
|
|
Other intangible assets, net of accumulated amortization of $726 and
$476
|
|
956
|
|
|
1,204
|
|
Other assets
|
|
1,694
|
|
|
1,367
|
|
Total assets
|
|
$
|
55,115
|
|
|
$
|
49,953
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
6,057
|
|
|
$
|
4,567
|
|
Current payables to affiliates
|
|
315
|
|
|
199
|
|
Short-term debt
|
|
1,168
|
|
|
244
|
|
Deferred revenue
|
|
452
|
|
|
445
|
|
Other current liabilities
|
|
613
|
|
|
353
|
|
Total current liabilities
|
|
8,605
|
|
|
5,808
|
|
Long-term debt to affiliates
|
|
5,600
|
|
|
5,600
|
|
Long-term debt
|
|
16,284
|
|
|
14,345
|
|
Long-term financial obligation
|
|
2,510
|
|
|
2,496
|
|
Deferred tax liabilities
|
|
4,744
|
|
|
4,645
|
|
Deferred rents
|
|
2,289
|
|
|
2,113
|
|
Other long-term liabilities
|
|
558
|
|
|
701
|
|
Total long-term liabilities
|
|
31,985
|
|
|
29,900
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Preferred stock, par value $0.00001 per share, 100,000,000 shares
authorized; no shares issued and outstanding
|
|
-
|
|
|
-
|
|
Common stock, par value $0.00001 per share, 1,000,000,000 shares
authorized; 808,680,349 and 803,262,309 shares issued, 807,297,844
and 801,879,804 shares outstanding
|
|
-
|
|
|
-
|
|
Additional paid-in capital
|
|
37,466
|
|
|
37,330
|
|
Treasury stock, at cost, 1,382,505 and 1,382,505 shares issued
|
|
-
|
|
|
-
|
|
Accumulated other comprehensive income
|
|
1
|
|
|
3
|
|
Accumulated deficit
|
|
(22,942
|
)
|
|
(23,088
|
)
|
Total stockholders' equity
|
|
14,525
|
|
|
14,245
|
|
Total liabilities and stockholders' equity
|
|
$
|
55,115
|
|
|
$
|
49,953
|
|
|
T-Mobile US, Inc.
|
Condensed Consolidated Statements of Comprehensive Income (Loss)
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
September 30,
|
(in millions, except shares and per share amounts)
|
|
September 30,
2014
|
|
June 30,
2014
|
|
September 30,
2013
|
|
2014
|
|
2013
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid revenues
|
|
$
|
3,670
|
|
|
$
|
3,511
|
|
|
$
|
3,302
|
|
|
$
|
10,628
|
|
|
$
|
9,849
|
|
Branded prepaid revenues
|
|
1,790
|
|
|
1,736
|
|
|
1,594
|
|
|
5,174
|
|
|
3,339
|
|
Total branded revenues
|
|
5,460
|
|
|
5,247
|
|
|
4,896
|
|
|
15,802
|
|
|
13,188
|
|
Wholesale revenues
|
|
171
|
|
|
172
|
|
|
157
|
|
|
517
|
|
|
449
|
|
Roaming and other service revenues
|
|
53
|
|
|
65
|
|
|
85
|
|
|
186
|
|
|
262
|
|
Total service revenues
|
|
5,684
|
|
|
5,484
|
|
|
5,138
|
|
|
16,505
|
|
|
13,899
|
|
Equipment sales
|
|
1,561
|
|
|
1,600
|
|
|
1,467
|
|
|
4,609
|
|
|
3,452
|
|
Other revenues
|
|
105
|
|
|
101
|
|
|
83
|
|
|
296
|
|
|
242
|
|
Total revenues
|
|
7,350
|
|
|
7,185
|
|
|
6,688
|
|
|
21,410
|
|
|
17,593
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, exclusive of depreciation and amortization shown
separately below
|
|
1,488
|
|
|
1,453
|
|
|
1,444
|
|
|
4,405
|
|
|
3,880
|
|
Cost of equipment sales
|
|
2,308
|
|
|
2,215
|
|
|
2,015
|
|
|
6,809
|
|
|
4,837
|
|
Selling, general and administrative
|
|
2,283
|
|
|
2,151
|
|
|
1,933
|
|
|
6,530
|
|
|
5,286
|
|
Depreciation and amortization
|
|
1,138
|
|
|
1,129
|
|
|
987
|
|
|
3,322
|
|
|
2,630
|
|
Cost of MetroPCS business combination
|
|
97
|
|
|
22
|
|
|
12
|
|
|
131
|
|
|
51
|
|
Gains on disposal of spectrum licenses
|
|
(13
|
)
|
|
(747
|
)
|
|
-
|
|
|
(770
|
)
|
|
-
|
|
Other, net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
52
|
|
Total operating expenses
|
|
7,301
|
|
|
6,223
|
|
|
6,391
|
|
|
20,427
|
|
|
16,736
|
|
Operating income
|
|
49
|
|
|
962
|
|
|
297
|
|
|
983
|
|
|
857
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense to affiliates
|
|
(83
|
)
|
|
(85
|
)
|
|
(183
|
)
|
|
(186
|
)
|
|
(586
|
)
|
Interest expense
|
|
(260
|
)
|
|
(271
|
)
|
|
(151
|
)
|
|
(807
|
)
|
|
(311
|
)
|
Interest income
|
|
97
|
|
|
83
|
|
|
50
|
|
|
255
|
|
|
125
|
|
Other income (expense), net
|
|
(14
|
)
|
|
(12
|
)
|
|
(7
|
)
|
|
(32
|
)
|
|
105
|
|
Total other expense, net
|
|
(260
|
)
|
|
(285
|
)
|
|
(291
|
)
|
|
(770
|
)
|
|
(667
|
)
|
Income (loss) before income taxes
|
|
(211
|
)
|
|
677
|
|
|
6
|
|
|
213
|
|
|
190
|
|
Income tax expense (benefit)
|
|
(117
|
)
|
|
286
|
|
|
42
|
|
|
67
|
|
|
135
|
|
Net income (loss)
|
|
$
|
(94
|
)
|
|
$
|
391
|
|
|
$
|
(36
|
)
|
|
$
|
146
|
|
|
$
|
55
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain on cross currency interest rate swaps, net of tax effect of
$0, $0, $0, $0, and $13
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23
|
|
Net loss on foreign currency translation, net of tax effect of $0,
$0, $0, $0, and ($37)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(62
|
)
|
Unrealized gain (loss) on available-for-sale securities, net of tax
effect of $0, $0, $0, ($1), and $0
|
|
1
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
(39
|
)
|
Total comprehensive income (loss)
|
|
$
|
(93
|
)
|
|
$
|
391
|
|
|
$
|
(36
|
)
|
|
$
|
144
|
|
|
$
|
16
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.12
|
)
|
|
$
|
0.49
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.18
|
|
|
$
|
0.09
|
|
Diluted
|
|
(0.12
|
)
|
|
0.48
|
|
|
(0.05
|
)
|
|
0.18
|
|
|
0.09
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
807,221,761
|
|
|
803,923,913
|
|
|
726,877,458
|
|
|
804,572,685
|
|
|
642,957,645
|
|
Diluted
|
|
807,221,761
|
|
|
813,556,137
|
|
|
726,877,458
|
|
|
813,507,827
|
|
|
645,520,524
|
|
|
T-Mobile US, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
September 30,
|
(in millions)
|
|
September 30,
2014
|
|
June 30,
2014
|
|
September 30,
2013
|
|
2014
|
|
2013
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,062
|
|
|
$
|
970
|
|
|
$
|
826
|
|
|
$
|
2,791
|
|
|
$
|
2,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
(1,131
|
)
|
|
(940
|
)
|
|
(1,017
|
)
|
|
(3,018
|
)
|
|
(3,143
|
)
|
Purchases of spectrum licenses and other intangible assets
|
|
(23
|
)
|
|
(2,367
|
)
|
|
(1
|
)
|
|
(2,390
|
)
|
|
(52
|
)
|
Short term affiliate loan receivable, net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
300
|
|
Cash and cash equivalents acquired in MetroPCS business combination
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,144
|
|
Change in restricted cash equivalents
|
|
-
|
|
|
-
|
|
|
(100
|
)
|
|
-
|
|
|
(100
|
)
|
Investments in unconsolidated affiliates, net
|
|
(10
|
)
|
|
(9
|
)
|
|
(22
|
)
|
|
(30
|
)
|
|
(22
|
)
|
Other, net
|
|
(1
|
)
|
|
6
|
|
|
10
|
|
|
(2
|
)
|
|
5
|
|
Net cash used in investing activities
|
|
(1,165
|
)
|
|
(3,310
|
)
|
|
(1,130
|
)
|
|
(5,440
|
)
|
|
(868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
2,993
|
|
|
-
|
|
|
498
|
|
|
2,993
|
|
|
498
|
|
Proceeds from issuance of short-term debt for purchases of inventory
|
|
100
|
|
|
-
|
|
|
-
|
|
|
100
|
|
|
-
|
|
Repayments of short-term debt for purchases of inventory, property
and equipment
|
|
(283
|
)
|
|
(5
|
)
|
|
(194
|
)
|
|
(514
|
)
|
|
(194
|
)
|
Repayments related to a variable interest entity
|
|
-
|
|
|
-
|
|
|
(40
|
)
|
|
-
|
|
|
(80
|
)
|
Distribution to affiliate
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(41
|
)
|
Proceeds from exercise of stock options
|
|
2
|
|
|
9
|
|
|
44
|
|
|
25
|
|
|
116
|
|
Taxes paid related to net share settlement of stock awards
|
|
-
|
|
|
(72
|
)
|
|
-
|
|
|
(72
|
)
|
|
-
|
|
Excess tax benefit from stock-based compensation
|
|
1
|
|
|
33
|
|
|
1
|
|
|
34
|
|
|
4
|
|
Other, net
|
|
(3
|
)
|
|
(16
|
)
|
|
(2
|
)
|
|
(21
|
)
|
|
(5
|
)
|
Net cash provided by (used in) financing activities
|
|
2,810
|
|
|
(51
|
)
|
|
307
|
|
|
2,545
|
|
|
298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
2,707
|
|
|
(2,391
|
)
|
|
3
|
|
|
(104
|
)
|
|
1,971
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
3,080
|
|
|
5,471
|
|
|
2,362
|
|
|
5,891
|
|
|
394
|
|
End of period
|
|
$
|
5,787
|
|
|
$
|
3,080
|
|
|
$
|
2,365
|
|
|
$
|
5,787
|
|
|
$
|
2,365
|
|
|
T-Mobile US, Inc. Supplementary Operating and Financial Data
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in thousands)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Customers, end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid phone customers
|
|
|
19,668
|
|
|
|
20,355
|
|
|
|
20,997
|
|
|
|
21,797
|
|
|
|
23,054
|
|
|
|
23,633
|
|
|
|
24,807
|
|
|
|
20,997
|
|
|
|
24,807
|
|
Branded postpaid mobile broadband customers
|
|
|
426
|
|
|
|
428
|
|
|
|
433
|
|
|
|
502
|
|
|
|
568
|
|
|
|
897
|
|
|
|
1,102
|
|
|
|
433
|
|
|
|
1,102
|
|
Total branded postpaid customers
|
|
|
20,094
|
|
|
|
20,783
|
|
|
|
21,430
|
|
|
|
22,299
|
|
|
|
23,622
|
|
|
|
24,530
|
|
|
|
25,909
|
|
|
|
21,430
|
|
|
|
25,909
|
|
Branded prepaid customers
|
|
|
6,028
|
|
|
|
14,935
|
|
|
|
14,960
|
|
|
|
15,072
|
|
|
|
15,537
|
|
|
|
15,639
|
|
|
|
16,050
|
|
|
|
14,960
|
|
|
|
16,050
|
|
Total branded customers
|
|
|
26,122
|
|
|
|
35,718
|
|
|
|
36,390
|
|
|
|
37,371
|
|
|
|
39,159
|
|
|
|
40,169
|
|
|
|
41,959
|
|
|
|
36,390
|
|
|
|
41,959
|
|
M2M customers
|
|
|
3,290
|
|
|
|
3,423
|
|
|
|
3,430
|
|
|
|
3,602
|
|
|
|
3,822
|
|
|
|
4,047
|
|
|
|
4,269
|
|
|
|
3,430
|
|
|
|
4,269
|
|
MVNO customers
|
|
|
4,556
|
|
|
|
4,875
|
|
|
|
5,219
|
|
|
|
5,711
|
|
|
|
6,094
|
|
|
|
6,329
|
|
|
|
6,662
|
|
|
|
5,219
|
|
|
|
6,662
|
|
Total wholesale customers
|
|
|
7,846
|
|
|
|
8,298
|
|
|
|
8,649
|
|
|
|
9,313
|
|
|
|
9,916
|
|
|
|
10,376
|
|
|
|
10,931
|
|
|
|
8,649
|
|
|
|
10,931
|
|
Total customers, end of period
|
|
|
33,968
|
|
|
|
44,016
|
|
|
|
45,039
|
|
|
|
46,684
|
|
|
|
49,075
|
|
|
|
50,545
|
|
|
|
52,890
|
|
|
|
45,039
|
|
|
|
52,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in thousands)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Net customer additions (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid phone customers
|
|
|
(190
|
)
|
|
|
685
|
|
|
|
643
|
|
|
|
800
|
|
|
|
1,256
|
|
|
|
579
|
|
|
|
1,175
|
|
|
|
1,138
|
|
|
|
3,010
|
|
Branded postpaid mobile broadband customers
|
|
|
(9
|
)
|
|
|
3
|
|
|
|
5
|
|
|
|
69
|
|
|
|
67
|
|
|
|
329
|
|
|
|
204
|
|
|
|
(1
|
)
|
|
|
600
|
|
Total branded postpaid customers
|
|
|
(199
|
)
|
|
|
688
|
|
|
|
648
|
|
|
|
869
|
|
|
|
1,323
|
|
|
|
908
|
|
|
|
1,379
|
|
|
|
1,137
|
|
|
|
3,610
|
|
Branded prepaid customers
|
|
|
202
|
|
|
|
(10
|
)
|
|
|
24
|
|
|
|
112
|
|
|
|
465
|
|
|
|
102
|
|
|
|
411
|
|
|
|
216
|
|
|
|
978
|
|
Total branded customers
|
|
|
3
|
|
|
|
678
|
|
|
|
672
|
|
|
|
981
|
|
|
|
1,788
|
|
|
|
1,010
|
|
|
|
1,790
|
|
|
|
1,353
|
|
|
|
4,588
|
|
M2M customers
|
|
|
200
|
|
|
|
133
|
|
|
|
7
|
|
|
|
172
|
|
|
|
220
|
|
|
|
225
|
|
|
|
222
|
|
|
|
340
|
|
|
|
667
|
|
MVNO customers
|
|
|
376
|
|
|
|
319
|
|
|
|
344
|
|
|
|
492
|
|
|
|
383
|
|
|
|
235
|
|
|
|
333
|
|
|
|
1,039
|
|
|
|
951
|
|
Total wholesale customers
|
|
|
576
|
|
|
|
452
|
|
|
|
351
|
|
|
|
664
|
|
|
|
603
|
|
|
|
460
|
|
|
|
555
|
|
|
|
1,379
|
|
|
|
1,618
|
|
Total net customer additions
|
|
|
579
|
|
|
|
1,130
|
|
|
|
1,023
|
|
|
|
1,645
|
|
|
|
2,391
|
|
|
|
1,470
|
|
|
|
2,345
|
|
|
|
2,732
|
|
|
|
6,206
|
|
Acquired customers
|
|
|
-
|
|
|
|
8,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,918
|
|
|
|
-
|
|
Note: Certain customer numbers may not add due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Branded postpaid phone churn
|
|
|
1.9
|
%
|
|
|
1.5
|
%
|
|
|
1.7
|
%
|
|
|
1.6
|
%
|
|
|
1.5
|
%
|
|
|
1.5
|
%
|
|
|
1.6
|
%
|
|
|
1.7
|
%
|
|
|
1.5
|
%
|
Branded prepaid churn
|
|
|
7.0
|
%
|
|
|
5.4
|
%
|
|
|
5.0
|
%
|
|
|
5.1
|
%
|
|
|
4.3
|
%
|
|
|
4.5
|
%
|
|
|
4.8
|
%
|
|
|
5.5
|
%
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile US, Inc. Supplementary Operating and Financial Data
(continued)
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Service revenues (in millions)
|
|
$
|
4,005
|
|
|
$
|
4,756
|
|
|
$
|
5,138
|
|
|
$
|
5,169
|
|
|
$
|
5,337
|
|
|
$
|
5,484
|
|
|
$
|
5,684
|
|
|
$
|
13,899
|
|
|
$
|
16,505
|
|
Total revenues (in millions)
|
|
$
|
4,677
|
|
|
$
|
6,228
|
|
|
$
|
6,688
|
|
|
$
|
6,827
|
|
|
$
|
6,875
|
|
|
$
|
7,185
|
|
|
$
|
7,350
|
|
|
$
|
17,593
|
|
|
$
|
21,410
|
|
Adjusted EBITDA (in millions)
|
|
$
|
1,178
|
|
|
$
|
1,124
|
|
|
$
|
1,344
|
|
|
$
|
1,239
|
|
|
$
|
1,088
|
|
|
$
|
1,451
|
|
|
$
|
1,346
|
|
|
$
|
3,646
|
|
|
$
|
3,885
|
|
Adjusted EBITDA margin
|
|
|
29
|
%
|
|
|
24
|
%
|
|
|
26
|
%
|
|
|
24
|
%
|
|
|
20
|
%
|
|
|
26
|
%
|
|
|
24
|
%
|
|
|
26
|
%
|
|
|
24
|
%
|
Net Income (loss) (in millions)
|
|
$
|
107
|
|
|
$
|
(16
|
)
|
|
$
|
(36
|
)
|
|
$
|
(20
|
)
|
|
$
|
(151
|
)
|
|
$
|
391
|
|
|
$
|
(94
|
)
|
|
$
|
55
|
|
|
$
|
146
|
|
Cash Capex - Property & Equipment (in millions)
|
|
$
|
1,076
|
|
|
$
|
1,050
|
|
|
$
|
1,017
|
|
|
$
|
882
|
|
|
$
|
947
|
|
|
$
|
940
|
|
|
$
|
1,131
|
|
|
$
|
3,143
|
|
|
$
|
3,018
|
|
Branded postpaid phone ARPU
|
|
$
|
54.50
|
|
|
$
|
54.04
|
|
|
$
|
52.62
|
|
|
$
|
51.13
|
|
|
$
|
50.48
|
|
|
$
|
49.32
|
|
|
$
|
49.84
|
|
|
$
|
53.70
|
|
|
$
|
49.87
|
|
Branded postpaid ABPU
|
|
$
|
57.28
|
|
|
$
|
58.72
|
|
|
$
|
59.08
|
|
|
$
|
58.78
|
|
|
$
|
59.54
|
|
|
$
|
59.79
|
|
|
$
|
61.59
|
|
|
$
|
58.38
|
|
|
$
|
60.34
|
|
Branded prepaid ARPU
|
|
$
|
28.25
|
|
|
$
|
34.78
|
|
|
$
|
35.71
|
|
|
$
|
35.84
|
|
|
$
|
36.09
|
|
|
$
|
37.16
|
|
|
$
|
37.59
|
|
|
$
|
34.02
|
|
|
$
|
36.96
|
|
Smartphone sales volume (in millions)
|
|
|
2.2
|
|
|
|
4.3
|
|
|
|
5.6
|
|
|
|
6.2
|
|
|
|
6.9
|
|
|
|
6.2
|
|
|
|
6.9
|
|
|
|
12.1
|
|
|
|
20.0
|
|
Smartphone sales / phone sales
|
|
|
75
|
%
|
|
|
86
|
%
|
|
|
88
|
%
|
|
|
91
|
%
|
|
|
92
|
%
|
|
|
93
|
%
|
|
|
93
|
%
|
|
|
85
|
%
|
|
|
92
|
%
|
Branded postpaid handset upgrade rate
|
|
|
5
|
%
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
7
|
%
|
|
|
8
|
%
|
|
|
9
|
%
|
|
|
24
|
%
|
|
|
24
|
%
|
EIP financed (in millions)
|
|
$
|
298
|
|
|
$
|
811
|
|
|
$
|
1,011
|
|
|
$
|
1,207
|
|
|
$
|
1,249
|
|
|
$
|
1,342
|
|
|
$
|
1,317
|
|
|
$
|
2,120
|
|
|
$
|
3,908
|
|
EIP billings (in millions)
|
|
$
|
194
|
|
|
$
|
314
|
|
|
$
|
435
|
|
|
$
|
528
|
|
|
$
|
657
|
|
|
$
|
810
|
|
|
$
|
967
|
|
|
$
|
943
|
|
|
$
|
2,434
|
|
EIP receivables (net) (in millions)
|
|
$
|
774
|
|
|
$
|
1,292
|
|
|
$
|
1,867
|
|
|
$
|
2,546
|
|
|
$
|
3,086
|
|
|
$
|
3,583
|
|
|
$
|
3,963
|
|
|
$
|
1,867
|
|
|
$
|
3,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Certain customer numbers may not add due to rounding
|
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
This Investor Factbook includes non-GAAP financial measures. The
non-GAAP financial measures should be considered in addition to, but not
as a substitute for, the information provided in accordance with GAAP.
Reconciliations for the non-GAAP financial measures to the most directly
comparable GAAP financial measures are provided below.
Adjusted EBITDA is reconciled to net income (loss) as follows:
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in millions)
|
|
Q1
2013
|
|
Q2
2013
|
|
Q3
2013
|
|
Q4
2013
|
|
Q1
2014
|
|
Q2
2014
|
|
Q3
2014
|
|
2013
|
|
2014
|
Net income (loss)
|
|
$
|
107
|
|
|
$
|
(16
|
)
|
|
$
|
(36
|
)
|
|
$
|
(20
|
)
|
|
$
|
(151
|
)
|
|
$
|
391
|
|
|
$
|
(94
|
)
|
|
$
|
55
|
|
|
$
|
146
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense to affiliates
|
|
178
|
|
|
225
|
|
|
183
|
|
|
92
|
|
|
18
|
|
|
85
|
|
|
83
|
|
|
586
|
|
|
186
|
|
Interest expense
|
|
51
|
|
|
109
|
|
|
151
|
|
|
234
|
|
|
276
|
|
|
271
|
|
|
260
|
|
|
311
|
|
|
807
|
|
Interest income
|
|
(35
|
)
|
|
(40
|
)
|
|
(50
|
)
|
|
(64
|
)
|
|
(75
|
)
|
|
(83
|
)
|
|
(97
|
)
|
|
(125
|
)
|
|
(255
|
)
|
Other expense (income), net
|
|
6
|
|
|
(118
|
)
|
|
7
|
|
|
16
|
|
|
6
|
|
|
12
|
|
|
14
|
|
|
(105
|
)
|
|
32
|
|
Income tax expense (benefit)
|
|
72
|
|
|
21
|
|
|
42
|
|
|
(119
|
)
|
|
(102
|
)
|
|
286
|
|
|
(117
|
)
|
|
135
|
|
|
67
|
|
Operating income (loss)
|
|
379
|
|
|
181
|
|
|
297
|
|
|
139
|
|
|
(28
|
)
|
|
962
|
|
|
49
|
|
|
857
|
|
|
983
|
|
Depreciation and amortization
|
|
755
|
|
|
888
|
|
|
987
|
|
|
997
|
|
|
1,055
|
|
|
1,129
|
|
|
1,138
|
|
|
2,630
|
|
|
3,322
|
|
Cost of MetroPCS business combination
|
|
13
|
|
|
26
|
|
|
12
|
|
|
57
|
|
|
12
|
|
|
22
|
|
|
97
|
|
|
51
|
|
|
131
|
|
Stock-based compensation
|
|
-
|
|
|
6
|
|
|
48
|
|
|
46
|
|
|
49
|
|
|
63
|
|
|
45
|
|
|
54
|
|
|
157
|
|
Gains on disposal of spectrum licenses (1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(731
|
)
|
|
11
|
|
|
-
|
|
|
(720
|
)
|
Other, net (1)
|
|
31
|
|
|
23
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6
|
|
|
6
|
|
|
54
|
|
|
12
|
|
Adjusted EBITDA
|
|
$
|
1,178
|
|
|
$
|
1,124
|
|
|
$
|
1,344
|
|
|
$
|
1,239
|
|
|
$
|
1,088
|
|
|
$
|
1,451
|
|
|
$
|
1,346
|
|
|
$
|
3,646
|
|
|
$
|
3,885
|
|
Adjusted EBITDA of MetroPCS (2)
|
|
291
|
|
|
141
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
432
|
|
|
-
|
|
Pro Forma Combined Adjusted EBITDA
|
|
$
|
1,469
|
|
|
$
|
1,265
|
|
|
$
|
1,344
|
|
|
$
|
1,239
|
|
|
$
|
1,088
|
|
|
$
|
1,451
|
|
|
$
|
1,346
|
|
|
$
|
4,078
|
|
|
$
|
3,885
|
|
(1) Gains on disposal of spectrum licenses and other, net transactions
may not agree in total to the gains on disposal of spectrum licenses and
other, net in the condensed consolidated statements of comprehensive
income (loss) primarily due to certain routine operating activities,
such as insignificant routine spectrum license exchanges that would be
expected to reoccur, and are therefore included in Adjusted EBITDA.
(2) The Adjusted EBITDA of MetroPCS for the second quarter of 2013
reflects the Adjusted EBITDA of MetroPCS for April 2013 and is included
for informational purposes to allow for a comparison of T-Mobile's
Adjusted EBITDA for periods following the completion of the business
combination of T-Mobile USA and MetroPCS to pro forma combined Adjusted
EBITDA for periods prior to the completion of the business combination.
For the first quarter of 2013, the Adjusted EBITDA of MetroPCS reflects
the amounts previously reported by MetroPCS.
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures (continued)
(Unaudited)
The following schedule reflects the branded postpaid phone ARPU
calculation and provides a reconciliation to total branded postpaid
service revenues reported in T-Mobile's condensed consolidated
statements of comprehensive income.
|
|
Quarter
|
|
Nine Months Ended September 30,
|
(in millions, except average number of branded postpaid phone
customers and branded postpaid phone ARPU)
|
|
Q1
2013
|
|
Q2
2013
|
|
Q3
2013
|
|
Q4
2013
|
|
Q1
2014
|
|
Q2
2014
|
|
Q3
2014
|
|
2013
|
|
2014
|
Branded postpaid service revenues
|
|
$
|
3,263
|
|
|
$
|
3,284
|
|
|
$
|
3,302
|
|
|
$
|
3,317
|
|
|
$
|
3,447
|
|
|
$
|
3,511
|
|
|
$
|
3,670
|
|
|
$
|
9,849
|
|
|
$
|
10,628
|
|
Less: Branded postpaid mobile broadband revenues
|
|
(44
|
)
|
|
(42
|
)
|
|
(41
|
)
|
|
(42
|
)
|
|
(47
|
)
|
|
(54
|
)
|
|
(68
|
)
|
|
(127
|
)
|
|
(169
|
)
|
Branded postpaid phone service revenues
|
|
$
|
3,219
|
|
|
$
|
3,242
|
|
|
$
|
3,261
|
|
|
$
|
3,275
|
|
|
$
|
3,400
|
|
|
$
|
3,457
|
|
|
$
|
3,602
|
|
|
$
|
9,722
|
|
|
$
|
10,459
|
|
Divided by: Average number of branded postpaid phone customers (in
thousands) and number of months in period
|
|
19,689
|
|
|
19,999
|
|
|
20,657
|
|
|
21,352
|
|
|
22,447
|
|
|
23,368
|
|
|
24,091
|
|
|
20,115
|
|
|
23,302
|
|
Branded postpaid phone ARPU
|
|
$
|
54.50
|
|
|
$
|
54.04
|
|
|
$
|
52.62
|
|
|
$
|
51.13
|
|
|
$
|
50.48
|
|
|
$
|
49.32
|
|
|
$
|
49.84
|
|
|
$
|
53.70
|
|
|
$
|
49.87
|
|
The following schedule reflects the branded postpaid ABPU calculation
and provides a reconciliation of the billings for branded postpaid
customers used for the branded postpaid ABPU calculation to total
branded postpaid service revenues reported in T-Mobile's condensed
consolidated statements of comprehensive income.
|
|
Quarter
|
|
Nine Months Ended September 30,
|
(in millions, except average number of branded postpaid customers
and branded postpaid ABPU)
|
|
Q1
2013
|
|
Q2
2013
|
|
Q3
2013
|
|
Q4
2013
|
|
Q1
2014
|
|
Q2
2014
|
|
Q3
2014
|
|
2013
|
|
2014
|
Branded postpaid service revenues
|
|
$
|
3,263
|
|
|
$
|
3,284
|
|
|
$
|
3,302
|
|
|
$
|
3,317
|
|
|
$
|
3,447
|
|
|
$
|
3,511
|
|
|
$
|
3,670
|
|
|
$
|
9,849
|
|
|
$
|
10,628
|
Add: EIP billings
|
|
194
|
|
|
314
|
|
|
435
|
|
|
528
|
|
|
657
|
|
|
810
|
|
|
967
|
|
|
943
|
|
|
2,434
|
Total billings for branded postpaid customers
|
|
$
|
3,457
|
|
|
$
|
3,598
|
|
|
$
|
3,737
|
|
|
$
|
3,845
|
|
|
$
|
4,104
|
|
|
$
|
4,321
|
|
|
$
|
4,637
|
|
|
$
|
10,792
|
|
|
$
|
13,062
|
Divided by: Average number of branded postpaid customers (in
thousands) and number of months in period
|
|
20,117
|
|
|
20,425
|
|
|
21,084
|
|
|
21,805
|
|
|
22,975
|
|
|
24,092
|
|
|
25,095
|
|
|
20,542
|
|
|
24,054
|
Branded postpaid ABPU
|
|
$
|
57.28
|
|
|
$
|
58.72
|
|
|
$
|
59.08
|
|
|
$
|
58.78
|
|
|
$
|
59.54
|
|
|
$
|
59.79
|
|
|
$
|
61.59
|
|
|
$
|
58.38
|
|
|
$
|
60.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Combined Results
The following pages contain certain pro forma combined financial and
other operating data for periods through the second quarter of 2013 that
are presented solely for informational purposes to provide comparative
customer and financial trends since the business combination of T-Mobile
USA and MetroPCS was completed for the combined company. The pro forma
combined amounts for periods through and including the second quarter of
2013 were created by combining certain financial results and other
operating data of the individual entities for the relevant periods. The
pro forma combined financial data have not been determined in accordance
with the requirements of Article 11 of Regulation S-X. The following
pages also include reconciliations for certain additional non-GAAP
financial measures to the most directly comparable GAAP financial
measures.
|
T-Mobile US, Inc. Supplementary Pro Forma Combined Operating and
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in thousands)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Customers, end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid phone customers
|
|
|
19,668
|
|
|
|
20,355
|
|
|
|
20,997
|
|
|
|
21,797
|
|
|
|
23,054
|
|
|
|
23,633
|
|
|
|
24,807
|
|
|
|
20,997
|
|
|
|
24,807
|
|
Branded postpaid mobile broadband customers
|
|
|
426
|
|
|
|
428
|
|
|
|
433
|
|
|
|
502
|
|
|
|
568
|
|
|
|
897
|
|
|
|
1,102
|
|
|
|
433
|
|
|
|
1,102
|
|
Total branded postpaid customers
|
|
|
20,094
|
|
|
|
20,783
|
|
|
|
21,430
|
|
|
|
22,299
|
|
|
|
23,622
|
|
|
|
24,530
|
|
|
|
25,909
|
|
|
|
21,430
|
|
|
|
25,909
|
|
Branded prepaid customers
|
|
|
15,023
|
|
|
|
14,935
|
|
|
|
14,960
|
|
|
|
15,072
|
|
|
|
15,537
|
|
|
|
15,639
|
|
|
|
16,050
|
|
|
|
14,960
|
|
|
|
16,050
|
|
Total branded customers
|
|
|
35,117
|
|
|
|
35,718
|
|
|
|
36,390
|
|
|
|
37,371
|
|
|
|
39,159
|
|
|
|
40,169
|
|
|
|
41,959
|
|
|
|
36,390
|
|
|
|
41,959
|
|
M2M customers
|
|
|
3,290
|
|
|
|
3,423
|
|
|
|
3,430
|
|
|
|
3,602
|
|
|
|
3,822
|
|
|
|
4,047
|
|
|
|
4,269
|
|
|
|
3,430
|
|
|
|
4,269
|
|
MVNO customers
|
|
|
4,556
|
|
|
|
4,875
|
|
|
|
5,219
|
|
|
|
5,711
|
|
|
|
6,094
|
|
|
|
6,329
|
|
|
|
6,662
|
|
|
|
5,219
|
|
|
|
6,662
|
|
Total wholesale customers
|
|
|
7,846
|
|
|
|
8,298
|
|
|
|
8,649
|
|
|
|
9,313
|
|
|
|
9,916
|
|
|
|
10,376
|
|
|
|
10,931
|
|
|
|
8,649
|
|
|
|
10,931
|
|
Total customers, end of period
|
|
|
42,963
|
|
|
|
44,016
|
|
|
|
45,039
|
|
|
|
46,684
|
|
|
|
49,075
|
|
|
|
50,545
|
|
|
|
52,890
|
|
|
|
45,039
|
|
|
|
52,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in thousands)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Net customer additions (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded postpaid phone customers
|
|
|
(190
|
)
|
|
|
685
|
|
|
|
643
|
|
|
|
800
|
|
|
|
1,256
|
|
|
|
579
|
|
|
|
1,175
|
|
|
|
1,138
|
|
|
|
3,010
|
|
Branded postpaid mobile broadband customers
|
|
|
(9
|
)
|
|
|
3
|
|
|
|
5
|
|
|
|
69
|
|
|
|
67
|
|
|
|
329
|
|
|
|
204
|
|
|
|
(1
|
)
|
|
|
600
|
|
Total branded postpaid customers
|
|
|
(199
|
)
|
|
|
688
|
|
|
|
648
|
|
|
|
869
|
|
|
|
1,323
|
|
|
|
908
|
|
|
|
1,379
|
|
|
|
1,137
|
|
|
|
3,610
|
|
Branded prepaid customers
|
|
|
310
|
|
|
|
(87
|
)
|
|
|
24
|
|
|
|
112
|
|
|
|
465
|
|
|
|
102
|
|
|
|
411
|
|
|
|
247
|
|
|
|
978
|
|
Total branded customers
|
|
|
111
|
|
|
|
601
|
|
|
|
672
|
|
|
|
981
|
|
|
|
1,788
|
|
|
|
1,010
|
|
|
|
1,790
|
|
|
|
1,384
|
|
|
|
4,588
|
|
M2M customers
|
|
|
200
|
|
|
|
133
|
|
|
|
7
|
|
|
|
172
|
|
|
|
220
|
|
|
|
225
|
|
|
|
222
|
|
|
|
340
|
|
|
|
667
|
|
MVNO customers
|
|
|
376
|
|
|
|
319
|
|
|
|
344
|
|
|
|
492
|
|
|
|
383
|
|
|
|
235
|
|
|
|
333
|
|
|
|
1,039
|
|
|
|
951
|
|
Total wholesale customers
|
|
|
576
|
|
|
|
452
|
|
|
|
351
|
|
|
|
664
|
|
|
|
603
|
|
|
|
460
|
|
|
|
555
|
|
|
|
1,379
|
|
|
|
1,618
|
|
Total net customer additions
|
|
|
687
|
|
|
|
1,053
|
|
|
|
1,023
|
|
|
|
1,645
|
|
|
|
2,391
|
|
|
|
1,470
|
|
|
|
2,345
|
|
|
|
2,763
|
|
|
|
6,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Certain Customer numbers may not add due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
Nine Months Ended
September 30,
|
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Branded postpaid phone churn
|
|
|
1.9
|
%
|
|
|
1.5
|
%
|
|
|
1.7
|
%
|
|
|
1.6
|
%
|
|
|
1.5
|
%
|
|
|
1.5
|
%
|
|
|
1.6
|
%
|
|
|
1.7
|
%
|
|
|
1.5
|
%
|
Branded prepaid churn
|
|
|
4.4
|
%
|
|
|
4.9
|
%
|
|
|
5.0
|
%
|
|
|
5.1
|
%
|
|
|
4.3
|
%
|
|
|
4.5
|
%
|
|
|
4.8
|
%
|
|
|
4.8
|
%
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All historical and current porting activity between the T-Mobile and
MetroPCS brands has been removed from deactivations and treated as
migration activity between brands/products, consistent with the
treatment of the combined business. The effect of this treatment
lowers the churn rates for both branded postpaid and branded prepaid
customer bases.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile US, Inc. Supplementary Pro Forma Combined Operating
and Financial Data (continued)
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
|
2014
|
|
Service revenues (in millions)
|
|
$
|
5,106
|
|
|
$
|
5,122
|
|
|
$
|
5,138
|
|
|
$
|
5,169
|
|
|
$
|
5,337
|
|
|
$
|
5,484
|
|
|
$
|
5,684
|
|
|
$
|
15,366
|
|
|
$
|
16,505
|
|
Thereof, branded postpaid revenues (in millions)
|
|
$
|
3,263
|
|
|
$
|
3,284
|
|
|
$
|
3,302
|
|
|
$
|
3,317
|
|
|
$
|
3,447
|
|
|
$
|
3,511
|
|
|
$
|
3,670
|
|
|
$
|
9,849
|
|
|
$
|
10,628
|
|
Thereof, branded prepaid revenues (in millions)
|
|
$
|
1,604
|
|
|
$
|
1,608
|
|
|
$
|
1,594
|
|
|
$
|
1,606
|
|
|
$
|
1,648
|
|
|
$
|
1,736
|
|
|
$
|
1,790
|
|
|
$
|
4,806
|
|
|
$
|
5,174
|
|
Total revenues (in millions)
|
|
$
|
5,964
|
|
|
$
|
6,651
|
|
|
$
|
6,688
|
|
|
$
|
6,827
|
|
|
$
|
6,875
|
|
|
$
|
7,185
|
|
|
$
|
7,350
|
|
|
$
|
19,303
|
|
|
$
|
21,410
|
|
Adjusted EBITDA (in millions)
|
|
$
|
1,469
|
|
|
$
|
1,265
|
|
|
$
|
1,344
|
|
|
$
|
1,239
|
|
|
$
|
1,088
|
|
|
$
|
1,451
|
|
|
$
|
1,346
|
|
|
$
|
4,078
|
|
|
$
|
3,885
|
|
Adjusted EBITDA margin
|
|
|
29
|
%
|
|
|
25
|
%
|
|
|
26
|
%
|
|
|
24
|
%
|
|
|
20
|
%
|
|
|
26
|
%
|
|
|
24
|
%
|
|
|
27
|
%
|
|
|
24
|
%
|
Cash Capex - Property & Equipment (in millions)
|
|
$
|
1,230
|
|
|
$
|
1,111
|
|
|
$
|
1,017
|
|
|
$
|
882
|
|
|
$
|
947
|
|
|
$
|
940
|
|
|
$
|
1,131
|
|
|
$
|
3,358
|
|
|
$
|
3,018
|
|
Branded postpaid phone ARPU
|
|
$
|
54.50
|
|
|
$
|
54.04
|
|
|
$
|
52.62
|
|
|
$
|
51.13
|
|
|
$
|
50.48
|
|
|
$
|
49.32
|
|
|
$
|
49.84
|
|
|
$
|
53.70
|
|
|
$
|
49.87
|
|
Branded prepaid ARPU
|
|
$
|
35.87
|
|
|
$
|
35.97
|
|
|
$
|
35.71
|
|
|
$
|
35.84
|
|
|
$
|
36.09
|
|
|
$
|
37.16
|
|
|
$
|
37.59
|
|
|
$
|
35.85
|
|
|
$
|
36.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions, except net debt ratio)
|
|
Jun 30,
2013
|
|
Sep 30,
2013
|
|
Dec 31,
2013
|
|
Mar 31,
2014
|
|
Jun 30,
2014
|
|
Sep 30,
2014
|
Net Debt (excluding Tower Obligations) to Last Twelve Months
Adjusted EBITDA Ratio
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
210
|
|
|
$
|
195
|
|
|
$
|
244
|
|
|
$
|
151
|
|
|
$
|
272
|
|
|
$
|
1,168
|
|
Long-term debt to affiliates
|
|
|
11,200
|
|
|
|
11,200
|
|
|
|
5,600
|
|
|
|
5,600
|
|
|
|
5,600
|
|
|
|
5,600
|
|
Long-term debt
|
|
|
6,276
|
|
|
|
6,761
|
|
|
|
14,345
|
|
|
|
14,331
|
|
|
|
14,369
|
|
|
|
16,284
|
|
Less: Cash and cash equivalents
|
|
|
(2,362
|
)
|
|
|
(2,365
|
)
|
|
|
(5,891
|
)
|
|
|
(5,471
|
)
|
|
|
(3,080
|
)
|
|
|
(5,787
|
)
|
Net Debt (excluding Tower Obligations)
|
|
$
|
15,324
|
|
|
$
|
15,791
|
|
|
$
|
14,298
|
|
|
$
|
14,611
|
|
|
$
|
17,161
|
|
|
$
|
17,265
|
|
Last twelve months Adjusted EBITDA *
|
|
|
5,781
|
|
|
|
5,433
|
|
|
|
5,317
|
|
|
|
4,936
|
|
|
|
5,122
|
|
|
|
5,124
|
|
Net Debt (excluding Tower Obligations) to Last Twelve Months
Adjusted EBITDA Ratio
|
|
|
2.7
|
|
|
|
2.9
|
|
|
|
2.7
|
|
|
|
3.0
|
|
|
|
3.4
|
|
|
|
3.4
|
|
* Pro Forma Combined EBITDA
|
|
|
|
Pro Forma Combined Reconciliations
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in millions)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
2014
|
Service Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile (1)
|
|
$
|
4,005
|
|
$
|
4,756
|
|
$
|
5,138
|
|
$
|
5,169
|
|
$
|
5,337
|
|
$
|
5,484
|
|
$
|
5,684
|
|
$
|
13,899
|
|
$
|
16,505
|
MetroPCS
|
|
|
1,101
|
|
|
366
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,467
|
|
|
-
|
Total service revenues
|
|
$
|
5,106
|
|
$
|
5,122
|
|
$
|
5,138
|
|
$
|
5,169
|
|
$
|
5,337
|
|
$
|
5,484
|
|
$
|
5,684
|
|
$
|
15,366
|
|
$
|
16,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile (1)
|
|
$
|
3,766
|
|
$
|
4,526
|
|
$
|
4,896
|
|
$
|
4,923
|
|
$
|
5,095
|
|
$
|
5,247
|
|
$
|
5,460
|
|
$
|
13,188
|
|
$
|
15,802
|
MetroPCS
|
|
|
1,101
|
|
|
366
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,467
|
|
|
-
|
Total branded revenues
|
|
$
|
4,867
|
|
$
|
4,892
|
|
$
|
4,896
|
|
$
|
4,923
|
|
$
|
5,095
|
|
$
|
5,247
|
|
$
|
5,460
|
|
$
|
14,655
|
|
$
|
15,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded Prepaid Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile (1)
|
|
$
|
503
|
|
$
|
1,242
|
|
$
|
1,594
|
|
$
|
1,606
|
|
$
|
1,648
|
|
$
|
1,736
|
|
$
|
1,790
|
|
$
|
3,339
|
|
$
|
5,174
|
MetroPCS
|
|
|
1,101
|
|
|
366
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,467
|
|
|
-
|
Total branded prepaid revenues
|
|
$
|
1,604
|
|
$
|
1,608
|
|
$
|
1,594
|
|
$
|
1,606
|
|
$
|
1,648
|
|
$
|
1,736
|
|
$
|
1,790
|
|
$
|
4,806
|
|
$
|
5,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile (1)
|
|
$
|
4,677
|
|
$
|
6,228
|
|
$
|
6,688
|
|
$
|
6,827
|
|
$
|
6,875
|
|
$
|
7,185
|
|
$
|
7,350
|
|
$
|
17,593
|
|
$
|
21,410
|
MetroPCS
|
|
|
1,287
|
|
|
423
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,710
|
|
|
-
|
Total revenues
|
|
$
|
5,964
|
|
$
|
6,651
|
|
$
|
6,688
|
|
$
|
6,827
|
|
$
|
6,875
|
|
$
|
7,185
|
|
$
|
7,350
|
|
$
|
19,303
|
|
$
|
21,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in millions)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
2014
|
Cash Capex - Property & Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T-Mobile (1)
|
|
$
|
1,076
|
|
$
|
1,050
|
|
$
|
1,017
|
|
$
|
882
|
|
$
|
947
|
|
$
|
940
|
|
$
|
1,131
|
|
$
|
3,143
|
|
$
|
3,018
|
MetroPCS
|
|
|
154
|
|
|
61
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
215
|
|
|
-
|
Total Cash Capex - Property & Equipment
|
|
$
|
1,230
|
|
$
|
1,111
|
|
$
|
1,017
|
|
$
|
882
|
|
$
|
947
|
|
$
|
940
|
|
$
|
1,131
|
|
$
|
3,358
|
|
$
|
3,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The second quarter of 2013 represents the results for T-Mobile
USA for April, 2013 and the results for T-Mobile USA and MetroPCS on
a combined basis for May and June 2013, as the business combination
was completed on April 30, 2013.
|
|
|
Quarter
|
|
Nine Months Ended
September 30,
|
(in millions)
|
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
|
2013
|
|
|
2014
|
Simple Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Combined Adjusted EBITDA
|
|
$
|
1,469
|
|
$
|
1,265
|
|
$
|
1,344
|
|
$
|
1,239
|
|
$
|
1,088
|
|
$
|
1,451
|
|
$
|
1,346
|
|
$
|
4,078
|
|
$
|
3,885
|
Pro Forma Combined Total Cash Capex - Property & Equipment
|
|
|
1,230
|
|
|
1,111
|
|
|
1,017
|
|
|
882
|
|
|
947
|
|
|
940
|
|
|
1,131
|
|
|
3,358
|
|
|
3,018
|
Simple Free Cash Flow
|
|
$
|
239
|
|
$
|
154
|
|
$
|
327
|
|
$
|
357
|
|
$
|
141
|
|
$
|
511
|
|
$
|
215
|
|
$
|
720
|
|
$
|
867
|
Forward-Looking Statements
This Investor Factbook includes "forward-looking statements" within the
meaning of the U.S. federal securities laws. Any statements made herein
that are not statements of historical fact, including statements
about T-Mobile US, Inc.'s plans, outlook, beliefs, opinion, projections,
guidance, strategy, integration of MetroPCS, expected network
modernization and other advancements, are forward-looking statements.
Generally, forward-looking statements may be identified by words such as
"anticipate," "expect," "suggests," "plan," "project," "believe,"
"intend," "estimates," "targets," "views," "may," "will," "forecast,"
and other similar expressions. The forward-looking statements speak only
as of the date made, are based on current assumptions and expectations,
and involve a number of risks and uncertainties. Important factors that
could affect future results and cause those results to differ materially
from those expressed in the forward-looking statements include, among
others, the following: T-Mobile's ability to compete in the highly
competitive U.S. wireless telecommunications industry; adverse
conditions in the U.S. and international economies and markets;
significant capital commitments and the capital expenditures required to
effect T-Mobile's business plan; T-Mobile's ability to adapt to future
changes in technology, enhance existing offerings, and introduce new
offerings to address customers' changing demands; changes in legal and
regulatory requirements, including any change or increase in
restrictions on T-Mobile's ability to operate its network; T-Mobile's
ability to successfully maintain and improve its network, and the
possibility of incurring additional costs in doing so; major equipment
failures; severe weather conditions or other force majeure events; and
other risks described in T-Mobile's filings with the Securities and
Exchange Commission, including those described in T-Mobile's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on February 25, 2014. You should not place undue reliance on
these forward-looking statements. T-Mobile does not undertake to update
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
About T-Mobile US, Inc.
As America's Un-carrier, T-Mobile US, Inc. (NYSE: TMUS) is redefining
the way consumers and businesses buy wireless services through leading
product and service innovation. The Company's advanced nationwide 4G LTE
network delivers outstanding wireless experiences to approximately 53
million customers who are unwilling to compromise on quality and value.
Based in Bellevue, Washington, T-Mobile US, Inc. provides services
through its subsidiaries and operates its flagship brands, T-Mobile and
MetroPCS. For more information, please visit: http://www.T-Mobile.com.
Definitions of Terms
Operating and financial measures are utilized by T-Mobile's management
to evaluate its operating performance and, in certain cases, its ability
to meet liquidity requirements. Although companies in the wireless
industry may not define measures in precisely the same way, T-Mobile
believes the measures facilitate key operating performance comparisons
with other companies in the wireless industry.
1. Customer - SIM card with a unique T-Mobile mobile identity number
which generates revenue. Branded customers generally include customers
that are qualified either for postpaid service, where they generally pay
after incurring service, or prepaid service, where they generally pay in
advance. Wholesale customers include Machine-to-Machine ("M2M") and
Mobile Virtual Network Operator ("MVNO") customers that operate on
T-Mobile's network, but are managed by wholesale partners.
2. Churn - Number of customers whose service was discontinued as a
percentage of the average number of customers during the specified
period. T-Mobile believes churn provides management with useful
information to evaluate customer retention and loyalty.
3. Average Revenue Per User ("ARPU") - Average monthly service revenue
earned from customers. Service revenues for the specified period divided
by the average customers during the period, further divided by the
number of months in the period. T-Mobile believes ARPU provides
management with useful information to assess its per-customer service
revenue realization and to assist in forecasting its future service
revenues, and evaluate the average monthly service revenues generated
from its customer base.
Branded Postpaid Average Billings per User ("ABPU") - Average monthly
branded postpaid service revenue earned from customers plus equipment
installment plan ("EIP") billings divided by the average branded
postpaid customers during the period, further divided by the number of
months in the period. T-Mobile believes ABPU provides management,
investors, and analysts with useful information to evaluate average
per-branded postpaid customer billings as it approximates the expected
cash collections, including equipment installments, from T-Mobile's
customers each month.
Service revenues - Branded postpaid, including handset insurance,
branded prepaid, wholesale, and roaming and other service revenues.
4. Cost of services - Costs to operate and maintain T-Mobile's networks,
including direct switch and cell site costs, such as rent, fixed line
costs, utilities, maintenance, and labor costs associated with network
employees; long distance costs; regulatory fees; roaming fees paid to
other carriers; fixed and variable costs paid to third parties for the
use of proprietary data applications.
Cost of equipment sales - Costs to sell T-Mobile's equipment, including
equipment, accessories, inventory adjustments, shipping, and warranty
expenses.
Selling, general and administrative expenses - Salaries and wages and
benefits not directly attributable to a service or product; bad debt
charges; taxes other than income taxes; advertising and sales commission
costs; customer billing; call center and information technology costs;
regulatory fees, professional service fees; and rent and utilities for
administrative space.
5. Adjusted EBITDA - Earnings before interest expense (net of interest
income), tax, depreciation, amortization, stock-based compensation and
expenses not reflective of T-Mobile's ongoing operating performance.
Adjusted EBITDA margin is Adjusted EBITDA divided by service revenues.
Adjusted EBITDA is a non-GAAP financial measure utilized by T-Mobile's
management to monitor the financial performance of its operations.
T-Mobile uses Adjusted EBITDA internally as a metric to evaluate and
compensate its personnel and management for their performance, and as a
benchmark to evaluate T-Mobile's operating performance in comparison to
its competitors. Management also uses Adjusted EBITDA to measure its
ability to provide cash flows to meet future debt service, capital
expenditures and working capital requirements, and to fund future
growth. T-Mobile believes analysts and investors use Adjusted EBITDA as
a supplemental measure to evaluate overall operating performance and
facilitate comparisons with other wireless communications companies.
Adjusted EBITDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for income from operations,
net income, or any other measure of financial performance reported in
accordance with GAAP. The reconciliation of Adjusted EBITDA to net
income (loss) is detailed in the Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures schedule.
6. Cash capital expenditures - Amounts paid for construction and the
purchase of property and equipment.
7. Smartphones - UMTS/HSPA/HSPA+ 21/HSPA+ 42/4G LTE enabled converged
devices, which integrate voice and data services.
8. Simple Free Cash Flow - Adjusted EBITDA less cash capital
expenditures. Simple Free Cash Flow is utilized by management as a
measure of liquidity and an indicator of how much cash is generated from
the ordinary course of business operations. Simple free cash flow should
not be construed as an alternative to cash flows from operating
activities as determined in accordance with GAAP.
9. Net debt - Short-term debt, long-term debt to affiliates, and
long-term debt (excluding tower obligations), less cash and cash
equivalents.
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