United States

Customer development

Customers

At December 31, 2023, the United States operating segment (T‑Mobile US) had 119.7 million customers, compared to 113.6 million customers at December 31, 2022. Net customer additions were 5.9 million in 2023, compared to 6.8 million in 2022 due to the factors described below.

Postpaid net customer additions were 5.7 million in 2023, compared to 6.4 million in 2022. Postpaid net customer additions decreased primarily from lower postpaid other net customer additions, primarily due to deactivations from mobile internet devices in the educational sector that were originally activated during the coronavirus pandemic and no longer needed, and lower net additions from wearables. This decrease was partially offset by higher net additions from other connected devices and higher High Speed Internet net customer additions, primarily due to continued growth in gross additions driven by increasing customer demand, partially offset by increased deactivations from a growing customer base. High Speed Internet net customer additions included in postpaid other net customer additions were 1.9 million and 1.8 million in 2023 and 2022, respectively.

Prepaid net customer additions were 282 thousand in 2023, compared to 338 thousand in 2022. This decrease was primarily due to continued moderation of industry growth and continued industry migration of prepaid to postpaid, partially offset by growth in High Speed Internet. High Speed Internet net customer additions included in prepaid net customer additions were 252 thousand and 236 thousand in 2023 and 2022, respectively.

Development of operations

Revenue, service revenue

Total revenue for the United States operating segment of EUR 72.4 billion in 2023 decreased by 4.0 percent, compared to EUR 75.4 billion in 2022. In U.S. dollars, T‑Mobile US’ total revenues decreased 1.3 percent during the same period. Total revenues decreased primarily due to lower equipment revenues, partially offset by higher service revenues. The components of these changes are described below.

Service revenues increased in 2023 by 0.5 percent to EUR 58.5 billion. This increase resulted from higher postpaid revenues, primarily due to higher average postpaid accounts and higher postpaid Average Revenue per Account (ARPA). This increase was partially offset by lower wholesale and other service revenues, primarily from lower Wireline revenues due to the sale of the Wireline Business on May 1, 2023, and lower MVNO revenues, primarily due to the migration by Verizon of legacy TracFone customers off of the T‑Mobile US network and as DISH services more of its Boost customers with their standalone network, partially offset by growth in other MVNO partners.

Equipment revenues decreased in 2023 primarily from a decrease in the number of devices sold, primarily driven by higher postpaid upgrades in the prior year period related to facilitating the migration of Sprint customers to the T‑Mobile US network and longer device lifecycles, as well as lower prepaid device sales and device sales associated with government assistance programs. In addition, equipment revenues decreased due to a decrease in lease revenues and a decrease in 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). Equipment revenues also decreased due to a decrease in accessory revenue, primarily due to a decrease in the number of associated devices sold. The decrease in equipment revenues was partially offset by slightly higher average revenue per device sold, primarily driven by an increase in the high-end phone mix, including from the impact of a decrease in sales of low-end devices associated with government assistance programs and higher promotions in the prior year period, which included promotions for Sprint customers to facilitate their migration to the T‑Mobile US network.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 3.1 percent to EUR 26.4 billion in 2023, compared to EUR 25.6 billion in 2022. The adjusted EBITDA AL margin increased to 36.5 percent in 2023, compared to 34.0 percent in 2022. In U.S. dollars, adjusted EBITDA AL increased 5.9 percent during the same period. Adjusted EBITDA AL increased primarily due to higher service revenues as discussed above, lower equipment costs as a result of lower number of devices and accessories sold, primarily driven by longer device lifecycles, as well as lower prepaid device sales and lower device sales associated with government assistance programs, higher realized Sprint Merger-related synergies and lower costs due to the sale of the Wireline Business on May 1, 2023. The increase in adjusted EBITDA AL was partially offset by lower equipment revenues as described above, slightly higher average cost per device sold driven by an increase in the high-end phone mix, including from the impact of a decrease in sales of low-end devices associated with government assistance programs and higher site costs related to the continued build-out of our nationwide 5G network. In U.S. dollars, lease revenues decreased as a result of the continued strategic shift in device financing from leasing to EIP by 78.7 percent in 2023.

In euros, adjusted core EBITDA AL increased by 7.6 percent to EUR 26.1 billion in 2023, compared to EUR 24.3 billion in 2022. In U.S. dollars, adjusted core EBITDA AL increased by 10.6 percent during the same period. The change was primarily due to the fluctuation in adjusted EBITDA AL as discussed above, excluding the change in lease revenues.

EBITDA AL in 2023 included special factors of EUR -1.6 billion compared to EUR -5.9 billion in 2022. The change in special factors was primarily due to lower Sprint Merger-related costs, lower losses related to the sale of the Wireline Business, lower legal-related expenses, net of recoveries, including for the proposed settlement of certain litigation associated with the cyberattack on T Mobile US in August 2021 and lower impairment expense due to the non-cash impairment of certain Wireline Business-related right-of-use assets recognized during 2022. These lower expenses were partially offset by higher severance and related costs associated with the August 2023 workforce reduction. Special factors include Sprint 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 billing systems and the impact of legal matters assumed as part of the Sprint Merger. In addition, Sprint 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 increased by 26.3 percent to EUR 24.8 billion in 2023, compared to EUR 19.7 billion in 2022, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT increased to EUR 14.5 billion in 2023, compared to EUR 7.5 billion in 2022. In U.S. dollars, EBIT increased by 98.9 percent during the same period primarily due to higher EBITDA AL and lower depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses decreased by 17.0 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 in 2022. These decreases were partially offset by higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network and higher amortization of capitalized software driven by increased in-service internally developed and purchased software.

Cash capex (before spectrum investment), cash capex

Cash capex (before spectrum investment) decreased by 32.2 percent to EUR 9.1 billion in 2023, compared to EUR 13.4 billion in 2022. In U.S. dollars, cash capex (before spectrum investment) decreased by 30.2 percent due to a decrease in purchases of property and equipment, primarily due to increased capital efficiencies from accelerated investments in the T‑Mobile US nationwide 5G network in 2022.

Cash capex decreased by 38.5 percent to EUR 10.1 billion in 2023, compared to EUR 16.3 billion in 2022. In U.S. dollars, cash capex decreased by 37.4 percent primarily due to lower purchases of property and equipment as discussed above and 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, compared to no spectrum licenses won during 2023, partially offset by higher relocation costs associated with C-band spectrum licenses acquired in Auction 107 in 2021.