United States

Customer development

For information on changes in the organizational structure, please refer to the section “Group organization”.

Total

At December 31, 2018, the United States operating segment (T-Mobile US) had 79.7 million customers, compared to 72.6 million customers at December 31, 2017. Net customer additions were 7.0 million for the year ended December 31, 2018, compared to 5.7 million net customer additions for the year ended December 31, 2017 due to the factors described below.

Branded customers. Branded postpaid net customer additions were 4,459 thousand for the year ended December 31, 2018, compared to 3,620 thousand branded postpaid net customer additions for the year ended December 31, 2017. The increase in branded postpaid net customer additions was due primarily to higher gross customer additions from wearables, specifically the Apple watch, lower churn, continued growth in existing and greenfield markets, and the growing success of new customer segments such as T-Mobile ONE™ Unlimited 55+, T-Mobile ONE Military and T-Mobile for Business. These increases were partially offset by the impact from more aggressive service promotions and the launch of Un-carrier Next – All Unlimited (with taxes and fees) in the first quarter of 2017.

Branded prepay net customer additions were 460 thousand for the year ended December 31, 2018, compared to 855 thousand branded prepay net customer additions for the year ended December 31, 2017. The decrease was due primarily to increased competitive activity in the marketplace, partially offset by lower migrations to branded postpaid plans.

Wholesale customers. Wholesale net customer additions were 2,125 thousand for the year ended December 31, 2018, compared to 1,183 thousand for the year ended December 31, 2017. The increase was due primarily to lower deactivations driven by the removal of Lifeline program customers during 2017.

Development of operations

Total revenue

Total revenue for the United States operating segment of EUR 36.5 billion in 2018 increased by 2.2 percent, compared to EUR 35.7 billion in 2017. In U.S. dollars, T-Mobile US’ total revenues increased by 6.8 percent year-on-year due primarily to growth in service revenue from increases in T-Mobile US’ average branded customer base primarily from the continued growth in existing and greenfield markets, the growing success of new customer segments such as T-Mobile ONE^TM Unlimited 55+, T-Mobile ONE Military, and T-Mobile for Business, along with lower postpaid churn in 2018, and higher connected devices, partially offset by lower branded postpaid Average Revenue per User (ARPU). Additionally, the increase in equipment revenues from a higher average revenue per device sold due to an increase in the high-end device mix and a positive impact from IFRS 15 since January 1, 2018, partially offset by a decrease in the number of devices sold and lower volumes of purchased leased devices at the end of the lease term, also contributed to the increase in total revenues.

EBITDA, adjusted EBITDA

In euros, adjusted EBITDA increased by 8.3 percent to EUR 10.1 billion in 2018, compared to EUR 9.3 billion in 2017. Adjusted EBITDA margin increased to 27.6 percent in 2018, compared to 26.1 percent in 2017. In U.S. dollars, adjusted EBITDA increased by 13.6 percent during the same period. Adjusted EBITDA increased due primarily to higher total revenues as discussed above, the positive impact of the reimbursements from our insurance carriers, net of costs incurred related to hurricanes, for 2018 of USD 247 million, compared to costs incurred related to hurricanes for 2017 of USD 294 million, as well as from the positive impact from IFRS 15 and lower losses on equipment sales. These increases were partially offset by higher employee-related costs, costs related to managed services, higher lease, employee-related and repair and maintenance costs associated with network expansion, higher commissions, and lower gains on the disposal of spectrum.

EBITDA for 2018 included special factors of EUR -0.2 billion compared to special factors of EUR 1.6 billion for 2017. Special factors in 2018 mainly included costs related to the proposed Sprint transaction. The decrease in special factors was primarily due to a spectrum impairment reversal in 2017. Overall, EBITDA decreased by 9.3 percent to EUR 9.9 billion in 2018, compared to EUR 10.9 billion in 2017, due to the factors described above, including special factors.

EBIT

EBIT decreased to EUR 4.6 billion in 2018 compared to EUR 5.9 billion in 2017 driven by lower EBITDA and higher depreciation related to the continued build-out of our 4G LTE network, and the implementation of the first component of our new billing system.

Cash capex

Cash capex decreased to EUR 4.7 billion in 2018, compared to EUR 11.9 billion in 2017. In U.S. dollars, cash capex decreased to USD 5.5 billion compared to USD 13.2 billion in 2017, due primarily to spectrum licenses acquired in 2017. Excluding the effects of spectrum acquisitions, the increase in cash capex from 2017 to 2018 was not significant. Cash capex in 2018 was related to network build and the continued deployment of 600 MHz.