United States

Customer development

Branded customers

At June 30, 2020, the United States operating segment (T‑Mobile US) had 107.7 million customers, compared to 67.9 million customers at December 31, 2019, primarily due to customers acquired in the Sprint Merger. Net customer additions were 2.1 million for the first half of 2020, compared to 2.3 million net customer additions for the first half of 2019, due to the factors described below.

Postpaid net customer additions were 1.9 million for the first half of 2020, compared to 2.1 million postpaid net customer additions for the first half of 2019. The decrease resulted from lower postpaid phone net customer additions primarily due to lower switching activity in the industry from social distancing rules and temporary retail store closures due to the coronavirus pandemic and an increase in churn from the inclusion of the customer base acquired in the Sprint Merger; partially offset by higher postpaid other net customer additions primarily due to higher gross additions from connected devices primarily due to educational institution additions and lower churn.

Prepaid net customer additions were 190 thousand for the first half of 2020, compared to 200 thousand prepaid net customer additions for the first half of 2019. The decrease for the retained prepaid customer additions (excluding Sprint prepaid business sold on July 1, 2020 to DISH) was primarily due to lower switching activity in the industry from social distancing rules and temporary retail store closures due to the coronavirus pandemic, partially offset by lower churn and promotional activity in the marketplace.

Development of operations

Total revenue

Total revenue for the United States operating segment of EUR 27.5 billion in the first half of 2020, increased by 39.9 percent, compared to EUR 19.6 billion in the first half of 2019. In U.S. dollars, T‑Mobile US’ total revenues increased by 36.4 percent year-over year primarily due to increased service revenues driven by customers acquired in the Sprint Merger, the growing success of new customer segments and rate plans as well as continued growth in existing and Greenfield markets and higher postpaid phone Average Revenue per User (ARPU). The increase in total revenues was also driven by increased equipment revenues due to a higher number of customer devices under lease, primarily from leases acquired in the Sprint Merger as well as higher roaming and other service revenues primarily from the inclusion of wireline operations acquired in the Sprint Merger.

EBITDA AL, adjusted EBITDA AL

In euros, adjusted EBITDA AL increased by 70.5 percent to EUR 9.5 billion in the first half of 2020, compared to EUR 5.6 billion in the first half of 2019. Adjusted EBITDA AL margin increased to 34.5 percent in the first half of 2020, compared to 28.3 percent in the first half of 2019. In U.S. dollars, adjusted EBITDA AL increased by 66.3 percent during the same period. Adjusted EBITDA AL increased due primarily to higher service revenues and equipment revenues as further discussed above. These increases were partially offset by higher employee-related and benefit-related costs primarily due to increased headcount as a result of the Sprint Merger, an increase in expenses associated with leases backhaul agreements and tower expenses acquired in the Sprint Merger and the continued build out of our 5G network, higher costs related to the liquidation of returned devices as a result of the Sprint Merger, an increase in leased device costs of equipment sales, primarily due to an increase purchased leased devices as a result of the Sprint Merger, higher commission expense primarily due to an increase in our retail workforce from the Sprint Merger, higher legal-related expenses for risk provisioning and commitments associated with the Sprint Merger, higher bad debt expense primarily due to customers acquired as a result of the Sprint Merger and incremental bad debt for the estimated macro-economic impacts of the coronavirus pandemic, an increase in repair and maintenance costs, primarily due to the Sprint Merger and costs associated with wireline operations acquired in the Sprint Merger. The impact from commission costs capitalization and amortization, including a benefit from new costs capitalized as result of the Sprint Merger, reduced adjusted EBITDA AL by USD 87 million in the first half of 2020 compared to the first half of 2019.

EBITDA AL for the first half of 2020, included special factors of EUR -1.2 billion compared to special factors of EUR -0,3 billion for the first half of 2019. The change in special factors was primarily due to an increase of EUR 0.5 billion in Merger-related costs, EUR 0.4 billion in third-party commissions and cleaning expenses associated with the coronavirus pandemic, and EUR 0.2 billion from the derecognition of a postpaid billing system; partially offset by the EUR 0.3 billion transaction fee received from SoftBank. Overall, EBITDA AL increased by 58.0 percent to EUR 8.3 billion in the first half of 2020, compared to EUR 5.3 billion in the first half of 2019, due to the factors described above, including special factors.

EBIT

EBIT increased to EUR 3.5 billion in the first half of 2020, compared to EUR 2.8 billion in the first half of 2019. In U.S. dollars, EBIT increased by 18.9 percent during the same period primarily driven by higher EBITDA AL. In U.S. dollars, depreciation and amortization increased by 75.7 percent primarily driven by higher depreciation expense from assets acquired in the Sprint Merger, excluding leased devices, and network expansion from the continued build-out of our nationwide 5G network, higher depreciation expense on leased devices resulting froma higher total number of customer devices under lease, primarily from customers acquired in the Sprint Merger, and higher amortization from intangible assets acquired in the Sprint Merger.

Cash capex

Cash capex increased to EUR 4.4 billion in the first half of 2020, compared to EUR 4.0 billion in the first half of 2019. In U.S. dollars, cash capex increased by 7.2 percent primarily driven by network integration related to the Sprint Merger and the continued build-out of our nationwide 5G network.