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United States

Customer development

thousands

 

 

 

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Change

Change
%

Dec. 31, 2019

Customers

108,719

102,064

6,655

6.5

67,895

Postpaid customers

87,663

81,350

6,313

7.8

47,034

Postpaid phone customersa, b

70,262

66,618

3,644

5.5

40,346

Other postpaid customersa, b

17,401

14,732

2,669

18.1

6,689

Prepaid customersa, c

21,056

20,714

342

1.7

20,860

Adjustments of the customer base

thousands

 

 

 

 

 

Total adjustments of the customer base in
2020

Adjustment of customer definition for Sprint’s prepaid business as of
July 1, 2020c

Adjustment of customer definition at Sprint as of
Apr. 1, 2020a

Sprint additions as of
April 1, 2020

Customers

28,354

(9,393)

(4,853)

42,600

Postpaid customers

28,830

0

(5,514)

34,344

Postpaid phone customers

24,055

0

(1,861)

25,916

Other postpaid customers

4,775

0

(3,653)

8,428

Prepaid customers

(476)

(9,393)

661

8,256

a

Includes customers acquired in connection with the Sprint Merger and certain customer base adjustments on April 1, 2020.

b

In the first quarter of 2021, we acquired 11,000 postpaid phone customers and 1,000 postpaid other customers through our acquisition of an affiliate. In the third quarter of 2021, we acquired 716,000 postpaid phone customers and 90,000 postpaid other customers through the acquisition of wireless assets from Shentel.

c

In connection with obtaining regulatory approval for the Sprint Merger, on July 1, 2020, substantially all prepaid customers acquired were subsequently acquired by DISH. Upon closing of the transaction with DISH, we entered into a Master Network Service Agreement to provide network services to customers of their prepaid business for a period of up to seven years. As a result, we included a base adjustment to reduce prepaid customers by 9.4 million in the third quarter of 2020. The prepaid customers included in our total customers as of June 30, 2020 include the customers subsequently acquired by DISH and are expected to be different than the customers included under the Master Network Service Agreement, and classified as wholesale customers, due to differences in customer reporting policies.

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

millions of €

 

 

 

 

 

 

 

 

2021

2020

Change

Change
%

2019

Total revenue

 

68,359

61,208

7,151

11.7

40,420

Service revenuea

 

48,929

44,271

4,658

10.5

n.a.

Profit (loss) from operations (EBIT)

 

7,217

9,187

(1,970)

(21.4)

5,488

EBIT margin

%

10.6

15.0

 

 

13.6

Depreciation, amortization and impairment losses

 

(18,338)

(15,665)

(2,673)

(17.1)

(7,777)

EBITDA

 

25,555

24,852

703

2.8

13,265

Special factors affecting EBITDA

 

(1,836)

(270)

(1,566)

n.a.

(544)

EBITDA (adjusted for special factors)

 

27,392

25,122

2,270

9.0

13,809

EBITDA AL

 

20,060

20,628

(568)

(2.8)

10,590

Special factors affecting EBITDA AL

 

(2,637)

(370)

(2,267)

n.a.

(544)

EBITDA AL (adjusted for special factors)

 

22,697

20,997

1,700

8.1

11,134

Core EBITDA AL (adjusted for special factors)b

 

19,912

17,366

2,546

14.7

n.a.

EBITDA AL margin (adjusted for special factors)

%

33.2

34.3

 

 

27.5

Cash capex

 

(18,594)

(10,394)

(8,200)

(78.9)

(6,369)

a

The definition of “service revenue” was not applied consistently Group-wide for the years prior to 2020.

b

Adjusted core EBITDA AL is distinguished by excluding revenue from terminal equipment leases from adjusted EBITDA AL, thereby presenting operational development undistorted by the withdrawal from the terminal equipment lease business.

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.

5G
New communications standard (launched from 2020), which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
MVNO – Mobile Virtual Network Operator
Company that offers mobile minutes at relatively low prices without subsidized handsets. A mobile virtual network operator does not have its own wireless network, but uses the infrastructure of another mobile operator to provide its services.
Glossary
Postpaid
Customers who pay for communication services after receiving them (usually on a monthly basis).
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Glossary
Wholesale
Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing.
Glossary