United States

Customer development

Customers

At December 31, 2021, the United States operating segment (T‑Mobile US) had 108.7 million customers, compared to 102.1 million customers at December 31, 2020. Excluding the customers that we acquired through acquisitions during the year, net customer additions were 5.8 million in 2021, compared to the same number of net customer additions in 2020, due to the factors described below.

Postpaid net customer additions were 5.5 million in 2021 and exceeded the high end of the company’s annual guidance range. Compared to the prior year postpaid net customer additions were essentially flat and primarily impacted by higher postpaid phone net customer additions, primarily due to increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the coronavirus pandemic, partially offset by higher churn. This increase was offset by lower postpaid other net customer additions, primarily due to elevated gross additions in the prior year related to the public and educational sector resulting from the coronavirus pandemic and higher disconnects from an increased customer base, partially offset by growth in high-speed internet. High-speed internet net customer additions were 546 thousand and 87 thousand for the years ended December 31, 2021 and 2020, respectively.

Prepaid net customer additions were 342 thousand in 2021, compared to 331 thousand prepaid net customer additions in 2020. The increase was primarily due to lower churn.

Development of operations

Total revenue, service revenue

Total revenue for the United States operating segment of EUR 68.4 billion in 2021 increased by 11.7 %, compared to EUR 61.2 billion in 2020. In U.S. dollars, T‑Mobile US’ total revenues increased by 15.2 % year-over-year primarily due to increased service revenues and equipment revenues. The components of these changes are described below.

Service revenues increased in 2021 by 10.5 % to EUR 48.9 billion primarily due to higher postpaid revenues primarily from higher average postpaid accounts, including the impact of accounts acquired in the Sprint Merger, higher postpaid ARPA (Average Revenue per Account) and higher wholesale revenues primarily from our Master Network Service Agreement with DISH, which went into effect on July 1, 2020, and the success of our other MVNO relationships. In addition, service revenues increased due to higher prepaid revenues primarily from higher prepaid ARPU (Average Revenue per User) and higher average prepaid customers. Furthermore, service revenues increased due to higher other service revenues primarily from higher Lifeline revenues, primarily associated with operations acquired in the Sprint Merger and the inclusion of wireline operations acquired in the Sprint Merger.

Equipment revenues increased in 2021 primarily due to an increase in device sales revenue (excluding purchased leased devices) primarily due to an increase in the number of devices sold due to a larger customer base as a result of the Merger, switching activity returning to more normalized levels compared to the muted conditions from the coronavirus pandemic in the prior year a higher upgrade rate and the planned shift in device financing from leasing to EIP. Device sales revenue (excluding purchased leased devices) also increased due to higher average revenue per device sold driven by an increased mix of phone versus other devices, partially offset by an increase in promotional activities. In addition, equipment revenues increased due to an increase in sales of accessories, primarily from increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the coronavirus pandemic and a larger customer base as a result of the Sprint Merger. Furthermore, equipment revenues increased due to an increase in liquidation revenues, primarily due to a higher volume of returned devices and an increase in the high-end device mix. These increases were partially offset by a decrease in lease revenues due to a lower number of customer devices under lease as a result of the planned shift in device financing from leasing to EIP.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 8.1 % to EUR 22.7 billion in 2021, compared to EUR 21.0 billion in 2019. The adjusted EBITDA AL margin decreased to 33.2 % in 2021, compared to 34.3 % in 2020. In U.S. dollars, adjusted EBITDA AL increased by 11.8 % during the same period. Adjusted EBITDA AL increased primarily due to higher service revenues and equipment revenues (excluding lease revenues) as discussed above. These increases were partially offset by higher device cost of equipment sales (excluding purchased leased devices) primarily from an increase in the number of devices sold due to a larger customer base as a result of the Sprint Merger, switching activity returning to more normalized levels relative to the muted conditions from the coronavirus pandemic in the prior year, a higher upgrade rate and the planned shift in device financing from leasing to EIP. Device cost of equipment sales (excluding purchased leased devices) also increased due to higher average costs per device sold due to an increased mix of phone versus other devices. In addition, there were higher expenses associated with cost of accessories, due to increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the coronavirus pandemic and a larger customer base as result of the Sprint Merger. Furthermore, there were higher expenses associated with leases and utilities primarily due to the Sprint Merger and the continued build-out of our nationwide 5G network, including a new tower master lease agreement in 2020 and higher employee-related and benefit-related costs primarily due to increased average headcount as a result of the Sprint Merger. In addition, there were higher costs associated with advertising relative to the muted coronavirus pandemic-driven conditions in the prior period, external labor and professional services primarily from the Sprint Merger and higher commissions primarily due to compensation structure changes and higher customer addition volumes. These increases in costs were partially offset by higher realized Sprint Merger synergies, including a decrease in expenses associated with backhaul agreements due to the termination of certain agreements acquired in the Sprint Merger, and lower bad debt expense due to the release of estimated bad debt reserves established in the prior year associated with macro-economic impacts of the coronavirus pandemic.

Adjusted core EBITDA AL increased by 14.7 % to EUR 19.9 billion in 2021, compared to EUR 17.4 billion in 2020. In U.S. dollars, adjusted core EBITDA AL increased by 18.6 % during the same period. The change was primarily due to the fluctuation in adjusted EBITDA AL, discussed above, excluding the change in lease revenues. In U.S. dollars, lease revenues decreased as a result of the planned shift in device financing from leasing to EIP by 20.6 % in 2021.

EBITDA AL in 2021, included special factors of EUR -2.6 billion compared to EUR -0.4 billion in 2020. The change in special factors was primarily due to special factors recognized in 2020 including the EUR 1.6 billion spectrum impairment reversal and transaction fee received from SoftBank, partially offset by supplemental employee payroll, third-party commissions and cleaning-related expenses associated with the coronavirus pandemic and a postpaid billing system disposal. In addition, special factors increased due to higher Merger-related costs during 2021. Special factors include Merger-related costs associated with the Merger and acquisitions of affiliates comprised of transaction costs, including legal and professional services related to the completion of transactions; restructuring costs, including severance, store rationalization and network decommissioning; and integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T‑Mobile US’ network and the impact of legal matters assumed as part of the Sprint Merger. Overall, EBITDA AL decreased by 2.8 % to EUR 20.1 billion in 2021, compared to EUR 20.6 billion in 2020, primarily due to the factors described above, including special factors.

EBIT

EBIT decreased by 21.4 % to EUR 7.2 billion in 2021, compared to EUR 9.2 billion in 2020. In U.S. dollars, EBIT decreased by 19.0 % during the same period primarily due to higher depreciation and amortization and lower EBITDA AL. In U.S. dollars, depreciation and amortization increased by 20.7 % primarily due to higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network, accelerated depreciation expense on certain assets due to our Sprint Merger integration, and higher amortization from intangible assets, primarily due to a full year of amortization of intangible assets acquired in the Sprint Merger.

Cash capex

Cash capex increased to EUR 18.7 billion in 2021, compared to EUR 10.4 billion in 2020. In U.S. dollars, cash capex increased by 84.2 % primarily from an increase in spectrum purchases, primarily due to USD 8.9 billion paid for spectrum licenses won at the conclusion of the C-band auction in March 2021, network integration related to the Sprint Merger and the continued build-out of our nationwide 5G network.