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United States

Customer development

thousands

 

 

 

 

 

 

 

 

June 30, 2022

Mar. 31, 2022

Change
June 30, 2022/
Mar. 31, 2022 
%

Dec. 31, 2021

Change
June 30, 2022/
Dec. 31, 2021 
%

June 30, 2021

Change
June 30, 2022/
June 30, 2021 
%

Customers

110,023

109,541

0.4

108,719

1.2

104,789

5.0

Postpaid customers

88,787

88,423

0.4

87,663

1.3

83,848

5.9

Postpaid phone customersa, b

71,053

70,656

0.6

70,262

1.1

68,029

4.4

Other postpaid customersa, b

17,734

17,767

(0.2)

17,401

1.9

15,819

12.1

Prepaid customers

21,236

21,118

0.6

21,056

0.9

20,941

1.4

a

The total base adjustment in the second quarter of 2022 was a reduction of 1.32 million total customers. Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile US UMTS networks have been excluded from our customer base resulting in the removal of 212 thousand postpaid phone customers and 349 thousand postpaid other customers in the first quarter of 2022 and 284 thousand postpaid phone customers, 946 thousand postpaid other customers and 28 thousand prepaid customers in the second quarter of 2022. In connection with our acquisition of companies, we included a base adjustment in the first quarter of 2022 to increase postpaid phone customers by 17 thousand and reduce postpaid other customers by 14 thousand. Certain customers now serviced through reseller contracts were removed from our reported postpaid customer base resulting in the removal of 42 thousand postpaid phone customers and 20 thousand postpaid other customers in the second quarter of 2022.

b

In the first quarter of 2021, we acquired 11 thousand postpaid phone customers and 1 thousand postpaid other customers through our acquisition of an affiliate.

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

millions of €

 

 

 

 

 

 

 

 

 

 

 

H1
2022

H1
2021

Change
%

Q1 2022

Q2 2022

Q2 2021

Change
%

FY 2021

Total revenue

 

36,673

33,126

10.7

18,048

18,626

16,643

11.9

68,359

Service revenue

 

28,163

23,604

19.3

13,624

14,539

11,929

21.9

48,929

Profit (loss) from operations (EBIT)

 

2,962

4,291

(31.0)

2,044

918

2,147

(57.2)

7,217

EBIT margin

%

8.1

13.0

 

11.3

4.9

12.9

 

10.6

Depreciation, amortization and impairment losses

 

(10,046)

(9,062)

(10.9)

(4,604)

(5,443)

(4,484)

(21.4)

(18,338)

EBITDA

 

13,008

13,353

(2.6)

6,647

6,361

6,632

(4.1)

25,555

Special factors affecting EBITDA

 

(2,124)

(424)

n.a.

(820)

(1,304)

(272)

n.a.

(1,836)

EBITDA (adjusted for special factors)

 

15,132

13,777

9.8

7,467

7,665

6,904

11.0

27,392

EBITDA AL

 

9,055

10,694

(15.3)

4,914

4,141

5,248

(21.1)

20,060

Special factors affecting EBITDA AL

 

(3,454)

(750)

n.a.

(1,258)

(2,196)

(489)

n.a.

(2,637)

EBITDA AL (adjusted for special factors)

 

12,509

11,444

9.3

6,172

6,337

5,737

10.5

22,697

Core EBITDA AL (adjusted for special factors)a

 

11,717

9,796

19.6

5,741

5,976

4,967

20.3

19,912

EBITDA AL margin (adjusted for special factors)

%

34.1

34.5

 

34.2

34.0

34.5

 

33.2

Cash capex

 

(9,003)

(13,237)

32.0

(5,535)

(3,468)

(2,725)

(27.3)

(18,594)

a

 

Adjusted core EBITDA AL is distinguished by excluding revenue from terminal equipment leases from adjusted EBITDA AL, thereby presenting operational development undistorted by the withdrawal from the terminal equipment lease business.

 

 

 

 

 

 

 

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.

4G
Refers to the fourth-generation mobile communications standard that supports higher transmission rates (see LTE).
Glossary
5G
New communications standard (launched from 2020), which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
LTE – Long-Term Evolution
4G mobile communications technology that uses, for example, wireless spectrum on the 800 MHz band freed up by the digitalization of television. Powerful TV frequencies enable large areas to be covered with far fewer radio masts. LTE supports speeds of over 100 Mbit/s downstream and 50 Mbit/s upstream.
Glossary
Postpaid
Customers who pay for communication services after receiving them (usually on a monthly basis).
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Glossary
Wholesale
Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing.
Glossary