United States

Customer development

Branded customers

At December 31, 2020, the United States operating segment (T‑Mobile US) had 102.1 million customers, compared to 67.9 million customers at December 31, 2019. Net customer additions were 5.8 million in 2020, compared to 4.9 million net customer additions in 2019, due to the factors described below.

Postpaid net customer additions were 5.5 million in 2020 – the most in company history – compared to 4.5 million postpaid net customer additions in 2019. The increase resulted from higher postpaid other net customer additions primarily due to higher gross additions from connected devices primarily due to educational institution additions and lower churn, partially offset by lower switching activity in the industry from reduced store traffic due to retail store closures arising from the coronavirus pandemic. This increase was partially offset by lower postpaid phone net customer additions primarily due to higher churn from customers acquired in the Sprint Merger and lower switching activity in the industry from reduced store traffic due to retail store closures arising from the coronavirus pandemic.

Prepaid net customer additions were 331 thousand in 2020, compared to 339 thousand prepaid net customer additions in 2019. The decrease was primarily due to lower prepaid gross customer additions, partially offset by lower churn due to lower switching activity in the industry from reduced store traffic due to retail store closures arising from the coronavirus pandemic.

Development of operations

Total revenue

Total revenue for the United States operating segment of EUR 61.2 billion in 2020, increased by 51.4 %, compared to EUR 40.4 billion in 2019. In U.S. dollars, T‑Mobile US’ total revenues increased by 55.0 % year-over year primarily due to increased service revenues as well as increased equipment revenues. The components of these changes are described below.

Service revenues primarily due to higher average postpaid customers driven by customers acquired in the Sprint Merger, the success of new customer segments and rate plans as well as continued growth in existing and new markets, growth in other connected devices (tablets and wearable products), and growth in educational institution customers. The increase in service revenues was also driven by higher postpaid phone ARPU as a result of customers acquired in the Merger and higher roaming and other service revenues primarily from the inclusion of wireline operations acquired in the Sprint Merger.

Equipment revenues increased in 2020 primarily due to an increase in device sales revenue, excluding purchased leased devices. In addition, equipment revenues increased due to the Sprint Merger including increases in lease revenues due to a higher number of customer devices under lease, an increase in revenues primarily related to the liquidation of returned devices, and an increase in sales of leased devices, primarily due to an increase in purchased leased devices.

Other revenues were essentially flat in 2020.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 88.6 % to EUR 21.0 billion in 2020, compared to EUR 11.1 billion in 2019. The adjusted EBITDA AL margin increased to 34.3 % in 2020, compared to 27.5 % in 2019. In U.S. dollars, adjusted EBITDA AL increased by 92.8 % during the same period. Adjusted EBITDA AL increased primarily due to higher service revenues and equipment revenues as discussed above. These increases were partially offset by increases in expenses primarily due to the Sprint Merger including those associated with backhaul agreements, other tower expenses, employee-related and benefit-related costs primarily due to increased headcount, external labor and professional services, lease costs, and advertising. Additional increases in expenses primarily due to the Sprint Merger include those associated with leased device cost of equipment sales, primarily due to an increase in purchased leased devices, costs related to the liquidation of returned devices, repair and maintenance costs, regulatory and roaming costs, and legal related expenses for risk provisioning and commitments. In addition to these costs primarily due to the Sprint Merger, were increases in expenses primarily due to the continued build-out of our nationwide 5G network, costs associated with our restructuring activities, device cost of equipment sales, excluding purchased leased devices, bad debt primarily due to the estimated macro-economic impacts of the coronavirus pandemic, commission expense primarily due to higher gross customer additions, and inventory repair expense as a result of an increase in the high-end device mix to fulfill insurance claims. The impact from commission costs capitalization and amortization, including a net benefit from costs capitalized as result of the Sprint Merger, reduced adjusted EBITDA AL by USD 45 million in 2020 compared to 2019.

EBITDA AL in 2020, included special factors of EUR -0.4 billion compared to special factors of EUR -0.5 billion in 2019. The change in special factors was primarily due to an increase of EUR 1.2 billion in Merger-related costs including transaction costs, including legal and professional services related to the completion of the Merger; EUR 1.0 billion of restructuring costs, including severance, store rationalization and network decommissioning; and integration costs to achieve synergies in network, retail, IT, and back office operations. Also, EUR 0.4 billion in third-party commissions and cleaning-related expenses associated with the coronavirus pandemic and EUR 0.2 billion postpaid billing system disposal. These increases in special factor expenses were offset by the EUR 1.6 billion spectrum impairment reversal and the EUR 0.3 billion transaction fee received from SoftBank. Overall, EBITDA AL increased by 94.8 % to EUR 20.6 billion in 2020, compared to EUR 10.6 billion in 2019, due to the factors described above, including special factors.

EBIT

EBIT increased by 67.4 % to EUR 9.2 billion in 2020, compared to EUR 5.5 billion in 2019. In U.S. dollars, EBIT increased by 72.6 % during the same period primarily due to higher EBITDA AL. In U.S. dollars, depreciation and amortization increased by 106.5 % primarily due to higher depreciation expense from assets acquired in the Sprint Merger, excluding leased devices, and network expansion from the continued build-out of our nationwide 5G network. In addition depreciation and amortization increased due to higher depreciation expense on leased devices resulting from a higher total number of customer devices under lease, primarily from customers acquired in the Sprint Merger, and higher amortization from intangible assets acquired in the Sprint Merger.

Cash capex

Cash capex increased by 63.2 % to EUR 10.4 billion in 2020, compared to EUR 6.4 billion in 2019. In U.S. dollars, cash capex increased by 67.3 % primarily driven by network integration related to the Sprint Merger, the continued build-out of our nationwide 5G network and an increase in spectrum purchases.