United States

Customer development

Customers

At December 31, 2022, the United States operating segment (T‑Mobile US) had 113.6 million customers, compared to 108.7 million customers at December 31, 2021. Net customer additions were 6.8 million in 2022, compared to 5.8 million in 2021 due to the factors described below.

Postpaid net customer additions reached a record 6.4 million in 2022, compared to 5.5 million in 2021 and again exceeded the high end of the company’s most recently increased annual guidance range. This increase resulted from higher postpaid other net customer additions, primarily due to an increase in High Speed Internet net customer additions and other connected devices, partially offset by lower net additions from mobile internet devices. In addition, the increase resulted from higher postpaid phone net customer additions, primarily due to lower churn, partially offset by lower gross additions driven by industry switching activity normalizing closer to pre Pandemic levels. High Speed Internet net customer additions included in postpaid other net customer additions were 1.8 million and 546 thousand in 2022 and 2021, respectively.

Prepaid net customer additions were 338 thousand in 2022, compared to 342 thousand in 2021. This decrease was primarily due to the continued industry shift to postpaid plans, partially offset by the introduction of our High Speed Internet offering and lower churn. High Speed Internet net customer additions included in prepaid net customer additions were 236 thousand in 2022. Our prepaid High Speed Internet launch was in the first quarter of 2022. Therefore, there were no prepaid High Speed Internet net customer additions in 2021.

Development of operations

Revenue, service revenue

Total revenue for the United States operating segment of EUR 75.4 billion in 2022 increased by 11.3 percent, compared to EUR 67.8 billion in 2021. In U.S. dollars, T‑Mobile US’ total revenues decreased slightly during the same period. Total revenues decreased primarily due to lower equipment revenues, mostly offset by higher service revenues. The components of these changes are described below.

Service revenues increased in 2022 by 20.4 percent to EUR 58.2 billion. In organic terms, service revenues increased by 4.9 percent year-on-year. This increase resulted from higher postpaid revenues primarily from higher average postpaid accounts and higher postpaid ARPA (Average Revenue per Account). In addition, service revenues increased due to higher prepaid revenues primarily from higher average prepaid customers. This increase was partially offset by lower wholesale and other service revenues primarily from lower advertising, MVNO and Wireline revenues, partially offset by higher Lifeline revenues.

Equipment revenues decreased in 2022 primarily from a decrease in lease revenues and customer purchases of leased devices primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to equipment installment plans (EIP). In addition, equipment revenues decreased due to a decrease in the number of devices sold primarily driven by lower prepaid sales, partially offset by higher upgrade volume for Sprint customers to facilitate their migration to the T‑Mobile US’ network. In addition, equipment revenues decreased due to slightly lower average revenue per device sold, primarily driven by higher promotions, which included promotions for Sprint customers to facilitate their migration to the T‑Mobile US’ network, and an increase in contra-revenue primarily driven by higher imputed interest rates on EIP.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 12.9 percent to EUR 25.6 billion in 2022, compared to EUR 22.7 billion in 2021. The adjusted EBITDA AL margin increased to 34.0 percent in 2022, compared to 33.5 percent in 2021. In U.S. dollars, adjusted EBITDA AL remained relatively flat during the same period. Adjusted EBITDA AL increased primarily due to higher service revenue as discussed above, lower cost of equipment sales and cost of services excluding Sprint Merger-related costs and higher realized synergies. This increase was offset by lower equipment revenues, higher bad debt expense and losses from sales of receviables driven by higher receivable balances, as well as normalization relative to muted pandemic levels in 2021 and estimated potential future macroeconomic impacts and higher costs related to outsourced functions. In U.S. dollars, lease revenues decreased as a result of the continued strategic shift in device financing from leasing to EIP by 57.2 percent in 2022.

Adjusted core EBITDA AL increased by 21.9 percent to EUR 24.3 billion in 2022, compared to EUR 19.9 billion in 2021. In U.S. dollars, adjusted core EBITDA AL increased by 8.4 percent during the same period. The change was primarily due to the fluctuation in adjusted EBITDA AL, discussed above, excluding the change in lease revenues.

EBITDA AL in 2022, included special factors of EUR -5.9 billion compared to EUR -2.6 billion in 2021. The change in special factors was primarily due to higher Merger-related costs, expenses related to the agreed sale of the Wireline Business, higher legal-related expenses (net of recoveries) including the settlement of certain litigation associated with the August 2021 cyberattack, and higher impairment expense due to the non-cash impairment of certain Wireline Business related right-of use assets during 2022. The change in special factors is also impacted by other special items including certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Sprint Merger. Special factors include Merger-related costs predominantly associated with the integration of Sprint and are comprised of integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T‑Mobile US’ network and mitigate the impact of legal matters assumed as part of the Sprint Merger. In addition, Merger-related special factors include restructuring costs, including severance, store rationalization and network decommissioning as well as transaction costs, including legal and professional services related to the completion of transactions. Overall, EBITDA AL decreased by 2.0 percent to EUR 19.7 billion in 2022, compared to EUR 20.1 billion in 2021, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT increased by 3.5 percent to EUR 7.5 billion in 2022, compared to EUR 7.2 billion in 2021. In U.S. dollars, EBIT decreased by 8.3 percent during the same period primarily due to lower EBITDA AL, partially offset by lower depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses decreased 6.6 percent primarily due to lower depreciation expense on leased devices, resulting from a lower number of total customer devices under lease and certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks and lower amortization expense on certain intangible assets acquired in the Sprint Merger. These decreases were partially offset by the non-cash impairments of certain wireline network assets in 2022 and higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network.

Cash capex (before spectrum investment), cash capex

Cash capex (before spectrum investment) increased by 29.4 percent to EUR 13.4 billion in 2022, compared to EUR 10.3 billion in 2021. In U.S. dollars, cash capex (before spectrum investment) increased by 15.0 percent due to increase in purchases of property and equipment from the accelerated build-out of our nationwide 5G network, including from network integration related to the Sprint Merger.

Cash capex decreased by 12.1 percent to EUR 16.3 billion in 2022, compared to EUR 18.6 billion in 2021. In U.S. dollars, cash capex decreased by 21.3 percent primarily from a decrease 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, compared to USD 2.8 billion paid for spectrum licenses won at the conclusion of Auction 110 in February 2022 and USD 0.3 billion paid in total for spectrum licenses won at the conclusion of Auction 108 in September 2022. These decreases were partially offset by the fluctuation in cash capex (before spectrum investments) discussed above.