United States

Customer development

Customers

At September 30, 2021, the United States operating segment (T‑Mobile US) had 106.9 million customers, compared to 102.1 million customers at December 31, 2020. Net customer additions were 4.0 million in the nine months ended September 30, 2021, compared to 4.1 million net customer additions in the nine months ended September 30, 2020, due to the factors described below.

Postpaid net customer additions were 3.7 million in the nine months ended September 30, 2021, compared to 3.9 million postpaid net customer additions in the nine months ended September 30, 2020. The decrease was primarily from lower postpaid other net customer additions due to elevated gross additions in the prior period related to the public and educational sector and higher disconnects in the current period from an increased customer base. This decrease was partially offset by higher postpaid phone net customer additions due to increased retail store traffic in the current period versus coronavirus pandemic induced store closures in the prior period, partially offset by higher churn.

Prepaid net customer additions were 293 thousand in the nine months ended September 30, 2021, compared to 247 thousand prepaid net customer losses in the nine months ended September 30, 2020. The increase was primarily due to lower churn.

Development of operations

Total revenue

Total revenue for the United States operating segment of EUR 49.9 billion in the nine months ended September 30, 2021, increased by 13.4 %, compared to EUR 44.0 billion in the nine months ended September 30, 2020. In U.S. dollars, T‑Mobile US’ total revenues increased by 20.4 % year-on-year primarily due to increased service revenues as well as increased equipment revenues. The components of these changes are described below.

Service revenues increased in the nine months ended September 30, 2021 primarily due to higher average postpaid accounts, higher postpaid ARPA (Average Revenue per Account), higher wholesale revenues primarily from our Master Network Service Agreement with DISH and the success of our other MVNO relationships, and higher other service revenues primarily from the inclusion of wireline operations acquired in the Sprint Merger.

Equipment revenues increased in the nine months ended September 30, 2021 primarily due to an increase in device sales, excluding purchased leased devices primarily due to an increase in the number of devices sold from switching activity returning to more normalized levels compared to the muted conditions from the coronavirus pandemic in the prior year and the planned shift in device financing from leasing to EIP. Device sales revenue, excluding purchased leased devices, also increased due to higher average revenue per device sold driven by a higher mix of phone versus other devices partially offset by an increase in promotional activities. In addition, equipment revenues increased due to an increase in liquidation revenues primarily from an increase in the high-end device mix and a higher volume of returned devices and an increase in sales of accessories due to increased retail store traffic due to closures arising from the coronavirus pandemic in the prior period. Furthermore, equipment revenues increased due to the Sprint Merger including increases in sales of accessories due to a larger customer base and increases in purchased leased devices, primarily due to a larger base of leased devices. These increases were partially offset by a decrease in lease revenues due to a lower number of customer devices under lease due to the planned shift in device financing from leasing to EIP.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 11.4 % to EUR 17.2 billion in the nine months ended September 30, 2021, compared to EUR 15.5 billion in the nine months ended September 30, 2020. The adjusted EBITDA AL margin decreased to 34.5 % in the nine months ended September 30, 2021, compared to 35.1 % in the nine months ended September 30, 2020. In U.S. dollars, adjusted EBITDA AL increased by 18.2 % during the same period. Adjusted EBITDA AL increased primarily due to higher service and equipment revenues as discussed above. These increases were partially offset by higher cost of equipment sales, higher cost of services, and higher selling, general and administrative expenses. The increase of cost of equipment sales is primarily from an increase in device cost of equipment sales, excluding purchased leased devices, primarily from an increase in the number of devices sold due to a larger customer base as a result of the Sprint Merger, switching activity returning to more normalized levels relative to the muted conditions from the coronavirus pandemic in the prior year and the planned shift in device financing from leasing to EIP. Device cost of equipment sales, excluding purchased leased devices, also increased due to higher average costs per device sold due to a higher mix of phone versus other devices. In addition, cost of equipment sales increased primarily from an increase in costs related to the liquidation of a higher volume of returned devices, an increase in cost of accessories, due to increased retail store traffic due to closures arising from the coronavirus pandemic in the prior period and a larger customer base as result of the Sprint Merger, and an increase in leased device cost of equipment sales, primarily due to a larger base of leased devices as a result of the Sprint Merger. The increase of cost of services is primarily from an increase in expenses associated with leases and backhaul agreements acquired in the Sprint Merger and the continued build-out of our nationwide 5G network, including a new tower master lease agreement in 2020 and higher employee-related and benefit-related costs primarily due to increased headcount as a result of the Sprint Merger. The increase of selling, general and administrative expenses is primarily from higher advertising, external labor and professional services, and lease expenses primarily from the Sprint Merger, and higher employee-related costs due to an increase in the number of employees primarily from the Sprint Merger; partially offset by lower bad debt expense.

EBITDA AL in the nine months ended September 30, 2021, included special factors of EUR -1.6 billion compared to EUR -1.4 billion in the nine months ended September 30, 2020. The change in special factors was primarily due to increased Merger-related costs during the nine months ended September 30, 2021, partially offset by special factors recognized in the nine months ended September 30, 2020 including supplemental employee payroll, third-party commissions and cleaning-related expenses associated with the coronavirus pandemic and a postpaid billing system disposal partially offset by a transaction fee received from SoftBank. Special factors include Merger-related costs associated with the Merger and acquisitions of affiliates comprised of transaction costs, including legal and professional services related to the completion of transactions; restructuring costs, including severance, store rationalization and network decommissioning; and integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T‑Mobile US network and the impact of legal matters assumed as part of the Sprint Merger. Overall, EBITDA AL increased by 11.5 % to EUR 15.7 billion in the nine months ended September 30, 2021, compared to EUR 14.1 billion in the nine months ended September 30, 2020, due to the factors described above, including special factors.

EBIT

EBIT increased to EUR 6.0 billion in the nine months ended September 30, 2021, compared to EUR 5.9 billion in the nine months ended September 30, 2020. In U.S. dollars, EBIT increased by 8.2 % during the same period primarily due to higher EBITDA AL. In U.S. dollars, depreciation and amortization increased by 30.5 % primarily from the continued build-out of our nationwide 5G network, higher depreciation expense on leased devices resulting from a larger base of leased devices as a result of the Sprint Merger, and higher amortization from intangible assets.

Cash capex

Cash capex increased to EUR 16.0 billion in the nine months ended September 30, 2021, compared to EUR 7.1 billion in the nine months ended September 30, 2020. In U.S. dollars, cash capex increased by USD 11.1 billion primarily from an increase 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, network integration related to the Sprint Merger and the continued build-out of our nationwide 5G network.