United States

Customer development

Customers

At March 31, 2022, the United States operating segment (T‑Mobile US) had 109.5 million customers, compared to 108.7 million customers at December 31, 2021. Net customer additions were 1.4 million in the first quarter of 2022, slightly up compared to net customer additions in the first quarter of 2021, due to the factors described below.

Postpaid net customer additions were 1.3 million in the first quarter of 2022, compared to 1.2 million in the first quarter of 2021. This increase resulted from higher postpaid other net customer additions, primarily due to an increase in High Speed Internet customers, connected devices and wearables. This increase was partially offset by lower postpaid phone net customer additions driven by a focus on deepening Sprint customer relationships in the prior year in order to decrease churn, as Sprint customers historically had fewer lines per account, partially offset by higher industry switching activity and lower churn. High Speed Internet net customer additions included in postpaid other net customer additions were 329 thousand and 93 thousand in the first quarter of 2022 and 2021, respectively.

Prepaid net customer additions were 62 thousand in the first quarter of 2022, compared to 151 thousand prepaid net customer additions in the first quarter of 2021. This decrease was associated with the continued industry shift to postpaid plans, partially offset by lower churn. High Speed Internet net customer additions included in prepaid net customer additions were 9 thousand in the first quarter of 2022. There were no prepaid High Speed Internet customer additions in the first quarter of 2021.

Development of operations

Total revenue, service revenue

Total revenue for the United States operating segment of EUR 18.0 billion in the first quarter of 2022 increased by 9.5 %, compared to EUR 16.5 billion in the first quarter of 2021. In U.S. dollars, T‑Mobile US’ total revenues increased by 1.9 % year-over year primarily due to increased service revenues. This increase was partially offset by lower equipment revenues. The components of these changes are described below.

Service revenues increased in the first quarter of 2022 by 16.7 % to EUR 13.6 billion. In organic terms service revenues increased by 6.7 % year-on-year. The 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 prepaid ARPU (Average Revenue per User) and higher average prepaid customers.

Equipment revenues decreased in the first quarter of 2022 primarily due to a decrease in lease revenues and 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 from device financing from leasing to EIP. In addition, equipment revenues decreased due to lower average revenue per device sold primarily due to higher promotions, which included promotions for Sprint customers to facilitate the migration to the T‑Mobile US’ network, partially offset by an increase in the high-end phone mix. This decrease was partially offset by an increase in the number of devices sold, including higher upgrade volume.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 8.2 % to EUR 6.2 billion in the first quarter of 2022, compared to EUR 5.7 billion in the first quarter of 2021. The adjusted EBITDA AL margin decreased to 34.2 % in the first quarter of 2022, compared to 34.6 % in the first quarter of 2021. In U.S. dollars, adjusted EBITDA AL increased by 0.7 % during the same period. Adjusted EBITDA AL increased primarily due to higher service revenue as discussed above and lower cost of services, excluding Merger-related costs. This increase was partially offset by higher bad debt expense primarily due to estimated credit losses normalizing from muted pandemic levels, as well as higher Equipment Installment Plan receivables driven by higher equipment sales and a mix shift in device financing, partially offset by higher realized Merger synergies. In U.S. dollars, lease revenues decreased as a result of the continued strategic shift from device financing from leasing to EIP by 54.3 % in the first quarter of 2022.

Adjusted core EBITDA AL increased by 18.9 % to EUR 5.7 billion in the first quarter of 2022, compared to EUR 4.8 billion in the first quarter of 2021. In U.S. dollars, adjusted core EBITDA AL increased by 10.7 % 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 the first quarter of 2022, included special factors of EUR -1.3 billion compared to EUR -0.3 billion in the first quarter of 2021. The change in special factors was primarily due to higher Merger-related costs during the first quarter of 2022. 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; restructuring costs, including severance, store rationalization and network decommissioning; and transaction costs, including legal and professional services related to the completion of transactions. Overall, EBITDA AL decreased by 9.8 % to EUR 4.9 billion in the first quarter of 2022, compared to EUR 5.4 billion in the first quarter of 2021, primarily due to the factors described above, including special factors.

EBIT

EBIT decreased by 4.7 % to EUR 2.0 billion in the first quarter of 2022, compared to EUR 2.1 billion in the first quarter of 2021. In U.S. dollars, EBIT decreased by 11.1 % during the same period primarily due to lower EBITDA AL, partially offset by lower depreciation and amortization. In U.S. dollars, depreciation and amortization decreased by 6.4 % 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. This decrease was partially offset by higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network.

Cash capex

Cash capex decreased to EUR 5.5 billion in the first quarter of 2022, compared to EUR 10.5 billion in the first quarter of 2021. In U.S. dollars, cash capex decreased by 50.3 % predominantly 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. This decrease was partially offset by an increase in purchases of property and equipment from network integration related to the Merger and the accelerated build-out of our nationwide 5G network.