United States For information on changes in the organizational structure, please refer to the section “Group organization, strategy, and management.” Customer Development (XLS:) Download thousands Sept. 30, 2018 June 30, 2018 Change Sept. 30, 2018/June 30, 2018% Dec. 31, 2017 Change Sept. 30, 2018/Dec. 31, 2017% Sept. 30, 2017 Change Sept. 30, 2018/Sept. 30, 2017% a Due to certain acquisitions by T-Mobile US at the beginning of 2018, the number of branded postpaid customers as of the first quarter of 2018 included an adjustment of 13 thousand and the number of branded prepay customers as of the first quarter of 2018 included an adjustment of 9 thousand. b T-Mobile US believes current and future regulatory changes have made the Lifeline program offered by T-Mobile US’ wholesale partners uneconomical. T-Mobile US will continue to support its wholesale partners offering the Lifeline program, but has excluded the Lifeline customers from the reported wholesale subscriber base resulting in the removal of 160 thousand and 4,368 thousand reported wholesale customers as of the beginning of the third quarter of 2017 and the beginning of the second quarter of 2017, respectively. Mobile customers 77,249 75,619 2.2 72,585 6.4 70,731 9.2 Branded customersa 62,163 61,049 1.8 58,715 5.9 57,494 8.1 Branded postpaida 41,161 40,082 2.7 38,047 8.2 36,975 11.3 Branded prepaya 21,002 20,967 0.2 20,668 1.6 20,519 2.4 Wholesale customersb 15,086 14,570 3.5 13,870 8.8 13,237 14.0 Total Customers At September 30, 2018, the United States operating segment (T-Mobile US) had 77.2 million customers, compared to 72.6 million customers at December 31, 2017. Net customer additions were 4.6 million for the nine months ended September 30, 2018, compared to 3.8 million net customer additions for the nine months ended September 30, 2017, due to the factors described below. Branded Customers. Branded postpaid net customer additions were 3,101 thousand for the nine months ended September 30, 2018, compared to 2,548 thousand branded postpaid net customer additions for the nine months ended September 30, 2017. The increase in branded postpaid net customer additions was due primarily to higher gross customer additions from connected devices, specifically the Apple watch, lower churn, continued growth in existing and greenfield markets, and the growing success of new customer segments such as T-Mobile for Business, T-Mobile ONETM Unlimited 55+, T-Mobile ONE Military, and T-Mobile Essentials. These increases were partially offset by the impact from more aggressive service promotions and the launch of Un-carrier Next – All Unlimited (with taxes and fees) in the first quarter of 2017. Branded prepay net customer additions were 325 thousand for the nine months ended September 30, 2018, compared to 706 thousand branded prepay net customer additions for the nine months ended September 30, 2017. The decrease was due primarily to increased competitive activity in the marketplace, partially offset by lower migrations to branded postpaid plans. Wholesale Customers. Wholesale net customer additions were 1,216 thousand for the nine months ended September 30, 2018, compared to 550 thousand for the nine months ended September 30, 2017. The increase was due primarily to lower deactivations driven by the removal of Lifeline program customers during 2017. Development of operations (XLS:) Download millions of € Q1 2018 Q2 2018 Q3 2018 Q3 2017 Change % Q1–Q3 2018 Q1–Q3 2017 Change % FY 2017 TOTAL REVENUE 8,455 8,821 9,227 8,466 9.0 26,504 26,684 (0.7) 35,736 Profit from operations (EBIT) 1,137 1,201 1,252 2,804 (55.3) 3,591 5,135 (30.1) 5,930 EBIT margin % 13.4 13.6 13.6 33.1 13.5 19.2 16.6 Depreciation, amortization and impairment losses (1,223) (1,321) (1,358) (1,130) (20.2) (3,901) (3,825) (2.0) (5,019) EBITDA 2,360 2,522 2,610 3,934 (33.7) 7,492 8,960 (16.4) 10,949 Special factors affecting EBITDA 28 (32) (55) 1,647 n. a. (59) 1,647 n. a. 1,633 EBITDA (ADJUSTED FOR SPECIAL FACTORS) 2,332 2,553 2,665 2,288 16.5 7,551 7,313 3.3 9,316 EBITDA margin (adjusted for special factors) % 27.6 28.9 28.9 27.0 28.5 27.4 26.1 CASH CAPEX (1,143) (1,353) (1,158) (1,243) 6.8 (3,653) (11,148) 67.2 (11,932) Total revenue Total revenue for the United States operating segment of EUR 26.5 billion in the first nine months of 2018 decreased by 0.7 percent, compared to EUR 26.7 billion in the first nine months of 2017. In U.S. dollars, T-Mobile US’ total revenues increased by 6.7 percent year-on-year due primarily to growth in service revenue from increases in T-Mobile US’ average branded customer base primarily from the continued growth in existing and greenfield markets, the growing success of new customer segments, along with lower postpaid churn in the first nine months of 2018, and higher connected devices. Additionally, the increase in equipment revenues from a higher average revenue per device sold due to an increase in the high-end device mix and a positive impact from IFRS 15 also contributed to the increase in total revenues. EBITDA, adjusted EBITDA In euros, adjusted EBITDA increased by 3.3 percent to EUR 7.6 billion in the first nine months of 2018, compared to EUR 7.3 billion in the first nine months of 2017. The adjusted EBITDA margin increased to 28.5 percent in the first nine months of 2018, compared to 27.4 percent in the first nine months of 2017. In U.S. dollars, adjusted EBITDA increased by 11.0 percent during the same period. Adjusted EBITDA increased due primarily to higher total revenues as discussed above, the positive impact of the reimbursements from our insurance carriers, net of costs incurred related to hurricanes, for the first nine months of 2018 of USD 265 million, compared to costs incurred related to hurricanes for the first nine months of 2017 of USD 148 million, as well as from the positive impact from IFRS 15. These increases were partially offset by higher employee-related costs, costs related to managed services, commissions, costs related to the proposed Sprint transaction, higher costs associated with network expansion, an increase in net losses on equipment sales, and lower gains on disposal of spectrum licenses. EBITDA for the first nine months of 2018 included special factors of EUR -0.1 billion compared to special factors of EUR 1.6 billion for the first nine months of 2017. The decrease in special factors was primarily due to a spectrum impairment reversal in the first nine months of 2017. Overall, EBITDA decreased by 16.4 percent to EUR 7.5 billion in the first nine months of 2018, compared to EUR 9.0 billion in the first nine months of 2017, due to the factors described above, including special factors. EBIT EBIT decreased to EUR 3.6 billion in the first nine months of 2018 compared to EUR 5.1 billion in the first nine months of 2017, driven by lower EBITDA. Cash capex Cash capex decreased to EUR 3.7 billion in the first nine months of 2018, compared to EUR 11.1 billion in the first nine months of 2017. In U.S. dollars, cash capex decreased to USD 4.4 billion, compared to USD 12.3 billion during the same period, due primarily to a decrease in spectrum licenses acquired in the first nine months of 2018. For further details, please refer to our (PDF:) IR Backup (PDF).
