United States

Customer development

Customers

At June 30, 2022, the United States operating segment (T‑Mobile US) had 110.0 million customers, compared to 108.7 million customers at December 31, 2021. Net customer additions were 3.2 million in the first half of 2022, compared to 2.7 million in the first half of 2021 due to the factors described below.

Postpaid net customer additions were 3.0 million in the first half of 2022, compared to 2.5 million in the first half of 2021. This increase resulted from higher postpaid other net customer additions, primarily due to an increase in High Speed Internet net customer additions, 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 lower churn. High Speed Internet net customer additions included in postpaid other net customer additions were 826 thousand and 188 thousand in the first half of 2022 and 2021, respectively.

Prepaid net customer additions were 208 thousand in the first half of 2022, compared to 227 thousand prepaid net customer additions in the first half of 2021. This decrease was associated with 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 72 thousand in the first half of 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 the first half of 2021.

Development of operations

Total revenue, service revenue

Total revenue for the United States operating segment of EUR 36.7 billion in the first half of 2022 increased by 10.7 %, compared to EUR 33.1 billion in the first half of 2021. In U.S. dollars, T‑Mobile US’ total revenues remained relatively flat during the same period. Total revenues increased primarily due to increased service revenues, offset by lower equipment revenues. The components of these changes are described below.

Service revenues increased in the first half of 2022 by 19.3 % to EUR 28.2 billion. In organic terms, service revenues increased by 6.2 % 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. This increase was partially offset by lower wholesale and other service revenues primarily from lower advertising and wireline revenues, partially offset by higher Lifeline revenues.

Equipment revenues decreased in the first half of 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 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 device mix. These decreases were partially offset by an increase in the number of devices sold, including to facilitate the migration of Sprint customers to the T‑Mobile US network.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 9.3 % to EUR 12.5 billion in the first half of 2022, compared to EUR 11.4 billion in the first half of 2021. The adjusted EBITDA AL margin decreased to 34.1 % in the first half of 2022, compared to 34.5 % in the first half of 2021. In U.S. dollars, adjusted EBITDA AL was relatively flat during the same period. Adjusted EBITDA AL decreased primarily due to higher bad debt expense driven by higher receivable balances, as well as normalization relative to muted Pandemic levels and estimated potential future macroeconomic impacts. This decrease was offset by higher service revenue as discussed above, lower cost of equipment sales and cost of services excluding Merger-related costs, and 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 56.3 % in the first half of 2022.

Adjusted core EBITDA AL increased by 19.6 % to EUR 11.7 billion in the first half of 2022, compared to EUR 9.8 billion in the first half of 2021. In U.S. dollars, adjusted core EBITDA AL increased by 8.5 % 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 half of 2022, included special factors of EUR -3.5 billion compared to EUR -0.8 billion in the first half of 2021. The change in special factors was primarily due to higher Merger-related costs, higher legal-related expenses, including the settlement of certain litigation associated with the cyberattack on T‑Mobile US of EUR 0.4 billion, and higher impairment expense due to the non-cash impairment of certain wireline operating lease right-of use assets during the first half 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 15.3 % to EUR 9.1 billion in the first half of 2022, compared to EUR 10.7 billion in the first half of 2021, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT decreased by 31.0 % to EUR 3.0 billion in the first half of 2022, compared to EUR 4.3 billion in the first half of 2021. In U.S. dollars, EBIT decreased by 36.6 % during the same period primarily due to lower EBITDA AL and higher depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses remained relatively flat primarily due to the non-cash impairment of certain wireline network assets recorded during the first half of 2022 and higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network. These increases were offset by 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.

Cash capex

Cash capex decreased by 32.0 % to EUR 9.0 billion in the first half of 2022, compared to EUR 13.2 billion in the first half of 2021. In U.S. dollars, cash capex decreased by 37.3 % 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. This decrease was partially offset by an 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.