United States

Customer development

Customers

At March 31, 2021, the United States operating segment (T‑Mobile US) had 103.4 million customers, compared to 102.1 million customers at December 31, 2020. Net customer additions were 1.4 million in the first quarter of 2021, compared to 0.6 million net customer additions in the first quarter of 2020, due to the factors described below.

Postpaid net customer additions were 1.2 million in the first quarter of 2021, compared to 777 thousand postpaid net customer additions in the first quarter of 2020. The increase resulted from higher postpaid phone and postpaid other net customer additions, primarily due to expanded retail presence as a result of the Sprint Merger, increased retail store traffic due to closures arising from the coronavirus pandemic in the prior period, as well as increased growth from T‑Mobile for Business, higher gross additions from connected devices, and lower postpaid other churn. This increase was partially offset by higher postpaid phone churn from customers acquired in the Sprint Merger.

Prepaid net customer additions were 151 thousand in the first quarter of 2021, compared to 128 thousand prepaid net customer losses in the first quarter of 2020. The increase was primarily due to lower churn.

Development of operations

Total revenue

Total revenue for the United States operating segment of EUR 16.5 billion in the first quarter of 2021, increased by 62.3 %, compared to EUR 10.2 billion in the first quarter of 2020. In U.S. dollars, T‑Mobile US’ total revenues increased by 77.4 % year-on-year primarily due to increased service revenues as well as increased equipment revenues. The components of these changes are described below.

Service revenues increased in the first quarter of 2021 primarily due to higher average postpaid phone 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, along with promotional activities. In addition, higher average postpaid other customers, primarily from customers acquired in the Sprint Merger and growth in other connected devices, primarily related to public and educational sector customers increased service revenues. The increase in service revenues was also driven by higher postpaid phone ARPU as a result of customers acquired in the Sprint Merger and higher roaming and other service revenues primarily from the inclusion of wireline operations acquired in the Sprint Merger.

Equipment revenues increased in the first quarter of 2021 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 sales of leased devices, primarily due to a larger base of leased devices, and an increase in revenues primarily related to the liquidation of returned devices.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 80.6 % to EUR 5.7 billion in the first quarter of 2021, compared to EUR 3.2 billion in the first quarter of 2020. The adjusted EBITDA AL margin increased to 34.6 % in the first quarter of 2021, compared to 31.1 % in the first quarter of 2020. In U.S. dollars, adjusted EBITDA AL increased by 97.4 % 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 device cost of equipment sales, excluding purchased leased devices, leases, backhaul agreements, other network expenses, employee-related and benefit-related costs primarily due to increased headcount, external labor and professional services, 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 a larger base of leased devices, costs related to the liquidation of a higher volume of returned devices, and repair and maintenance costs. 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, higher commission expense primarily due to higher gross customer additions, and repair and maintenance costs primarily due to severe weather occurring in the first quarter of 2021.

EBITDA AL in the first quarter of 2021, included special factors of EUR -0.3 billion on a par with EUR -0.3 billion in the first quarter of 2020. The change in special factors was primarily due to supplemental employee payroll, third-party commissions and cleaning-related expenses associated with the coronavirus pandemic in the first quarter of 2020 and changes in exchange rate between the first quarter of 2021 and 2020. These decreases in special factor expenses were offset by an increase of Merger-related costs including transaction costs, including legal and professional services related to the completion of the Merger and acquisitions of affiliates; restructuring costs, including severance, store rationalization and network decommissioning; and integration costs to achieve synergies in network, retail, IT, and back office operations. Overall, EBITDA AL increased by 88.7 % to EUR 5.4 billion in the first quarter of 2021, compared to EUR 2.9 billion in the first quarter of 2020, due to the factors described above, including special factors.

EBIT

EBIT increased to EUR 2.1 billion in the first quarter of 2021, compared to EUR 1.5 billion in the first quarter of 2020. In U.S. dollars, EBIT increased by 55.4 % during the same period primarily due to higher EBITDA AL. In U.S. dollars, depreciation and amortization increased by USD 3.2 billion primarily due to higher depreciation expense from assets acquired in the Sprint Merger, excluding leased devices, and 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 larger base of leased devices as a result of the Sprint Merger, and higher amortization from intangible assets acquired in the Sprint Merger.

Cash capex

Cash capex increased to EUR 10.5 billion in the first quarter of 2021, compared to EUR 1.7 billion in the first quarter of 2020. In U.S. dollars, cash capex increased by USD 10.7 billion primarily driven by 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.