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United States

Customer development

thousands

 

 

 

 

 

 

 

 

Sept. 30, 2022

June 30, 2022

Change
Sept. 30, 2022/
June 30, 2022
%

Dec. 31, 2021

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

Sept. 30, 2021

Change
Sept. 30, 2022/
Sept. 30, 2021
%

Customers

111,755

110,023

1.6

108,719

2.8

106,920

4.5

Postpaid customers

90,414

88,787

1.8

87,663

3.1

85,913

5.2

Postpaid phone customersa, b

71,907

71,053

1.2

70,262

2.3

69,418

3.6

Other postpaid customersa, b

18,507

17,734

4.4

17,401

6.4

16,495

12.2

Prepaid customers

21,341

21,236

0.5

21,056

1.4

21,007

1.6

a

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. In the third quarter of 2021, we acquired 716 thousand postpaid phone customers and 90 postpaid other customers through the acquisition of wireless assets from Shentel.

Customers

At September 30, 2022, the United States operating segment (T‑Mobile US) had 111.8 million customers, compared to 108.7 million customers at December 31, 2021. Net customer additions were 4.9 million in the nine months ended September 30, 2022, compared to 4.0 million in the nine months ended September 30, 2021 due to the factors described below.

Postpaid net customer additions were 4.6 million in the nine months ended September 30, 2022, compared to 3.7 million in the nine months ended September 30, 2021. This increase resulted from higher postpaid other net customer additions, primarily due to an increase in High Speed Internet net customer additions and wearables, partially offset by lower net additions from mobile internet devices. In addition, the increase resulted from higher postpaid phone net customer additions, primarily due to lower churn and higher gross additions driven by growth in new customer account relationships. High Speed Internet net customer additions included in postpaid other net customer additions were 1.3 million and 322 thousand for the nine months ended September 30, 2022 and 2021, respectively.

Prepaid net customer additions were 313 thousand in the nine months ended September 30, 2022, compared to 293 thousand in the nine months ended September 30, 2021. This increase was primarily due to the introduction of our High Speed Internet offering, partially offset by the continued industry shift to postpaid plans. High Speed Internet net customer additions included in prepaid net customer additions were 162 thousand for the nine months ended September 30, 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 for the nine months ended September 30, 2021.

Development of operations

millions of €

 

 

 

 

 

 

 

 

 

 

 

 

Q1-Q3 2022

Q1-Q3 2021

Change
%

Q1 2022

Q2 2022

Q3 2022

Q3 2021

Change
%

FY
2021

Total revenue

 

55,636

49,516

12.4

17,880

18,440

19,316

16,664

15.9

67,791

Service revenue

 

43,035

35,553

21.0

13,456

14,353

15,226

12,223

24.6

48,361

Profit (loss) from operations (EBIT)

 

4,480

5,971

(25.0)

2,044

918

1,518

1,680

(9.6)

7,217

EBIT margin

%

8.1

12.1

 

11.4

5.0

7.9

10.1

 

10.6

Depreciation, amortization and impairment losses

 

(15,008)

(13,801)

(8.7)

(4,604)

(5,443)

(4,962)

(4,740)

(4.7)

(18,338)

EBITDA

 

19,488

19,772

(1.4)

6,647

6,361

6,479

6,419

0.9

25,555

Special factors affecting EBITDA

 

(3,642)

(962)

n.a.

(820)

(1,304)

(1,518)

(539)

n.a.

(1,836)

EBITDA (adjusted for special factors)

 

23,130

20,735

11.6

7,467

7,665

7,998

6,958

14.9

27,392

EBITDA AL

 

13,872

15,660

(11.4)

4,914

4,141

4,817

4,966

(3.0)

20,060

Special factors affecting EBITDA AL

 

(5,327)

(1,555)

n.a.

(1,258)

(2,196)

(1,873)

(805)

n.a.

(2,637)

EBITDA AL
(adjusted for special factors)

 

19,198

17,215

11.5

6,172

6,337

6,690

5,771

15.9

22,697

Core EBITDA AL
(adjusted for special factors)a

 

18,101

14,976

20.9

5,741

5,976

6,384

5,180

23.2

19,912

EBITDA AL margin
(adjusted for special factors)

%

34.5

34.8

 

34.5

34.4

34.6

34.6

 

33.5

Cash capex

 

(13,008)

(16,041)

18.9

(5,535)

(3,468)

(4,005)

(2,804)

(42.8)

(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 55.6 billion in the nine months ended September 30, 2022 increased by 12.4 %, compared to EUR 49.5 billion in the nine months ended September 30, 2021. In U.S. dollars, T‑Mobile US’ total revenues remained relatively flat during the same period. Total revenues decreased primarily due to lower equipment revenues, offset by higher service revenues. The components of these changes are described below.

Service revenues increased in the nine months ended September 30, 2022 by 21.0 % to EUR 43.0 billion. In organic terms, service revenues increased by 5.4 % 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 average prepaid customers and higher prepaid ARPU (Average Revenue per User). This increase was partially offset by lower wholesale and other service revenues primarily from lower advertising, wireline and MVNO revenues, partially offset by higher Lifeline revenues.

Equipment revenues decreased in the nine months ended September 30, 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 driven by higher promotions, which included promotions for Sprint customers to facilitate their migration to the T‑Mobile US network and an increase in contra-revenue primarily driven by higher imputed interest rates on equipment installment plans. These decreases were partially offset by an increase in the number of devices sold, including higher upgrade volume for Sprint customers to facilitate their migration to the T‑Mobile US network, partially offset by lower prepaid upgrades.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 11.5 % to EUR 19.2 billion in the nine months ended September 30, 2022, compared to EUR 17.2 billion in the nine months ended September 30, 2021. The adjusted EBITDA AL margin slightly decreased to 34.5 % in the nine months ended September 30, 2022, compared to 34.8 % in the nine months ended September 30, 2021. In U.S. dollars, adjusted EBITDA AL decreased slightly 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 56.2 % in the nine months ended September 30, 2022.

Adjusted core EBITDA AL increased by 20.9 % to EUR 18.1 billion in the nine months ended September 30, 2022, compared to EUR 15.0 billion in the nine months ended September 30, 2021. In U.S. dollars, adjusted core EBITDA AL increased by 7.4 % 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 nine months ended September 30, 2022, included special factors of EUR -5.3 billion compared to EUR -1.6 billion in the nine months ended September 30, 2021. The change in special factors was primarily due to higher Merger-related costs, expenses related to the agreed sale of the wireline business, higher legal-related expenses, net of recoveries, including the settlement of certain litigation associated with the cyberattack, and higher impairment expense due to the non-cash impairment of certain wireline business-related right-of use assets during the nine months ended 2022. The change in special factors is also impacted by other special items including certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Sprint Merger. 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. In addition, Merger-related special factors include restructuring costs, including severance, store rationalization and network decommissioning as well as transaction costs, including legal and professional services related to the completion of transactions. Overall, EBITDA AL decreased by 11.4 % to EUR 13.9 billion in the nine months ended September 30, 2022, compared to EUR 15.7 billion in the nine months ended September 30, 2021, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT decreased by 25.0 % to EUR 4.5 billion in the nine months ended September 30, 2022, compared to EUR 6.0 billion in the nine months ended September 30, 2021. In U.S. dollars, EBIT decreased by 32.5 % during the same period primarily due to lower EBITDA AL, partially offset by lower depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses decreased 3.4 % primarily due to 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. These decreases were partially offset by the non-cash impairments of certain wireline network assets during the nine months ended September 30, 2022 and higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network.

Cash capex

Cash capex decreased by 18.9 % to EUR 13.0 billion in the nine months ended September 30, 2022, compared to EUR 16.0 billion in the nine months ended September 30, 2021. In U.S. dollars, cash capex decreased by 27.1 % 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 and USD 0.3 billion paid in total for spectrum licenses won at the conclusion of Auction 108 in September 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
IP – Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
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
MVNO – Mobile Virtual Network Operator
Company that offers mobile minutes at relatively low prices without subsidized handsets. A mobile virtual network operator does not have its own wireless network, but uses the infrastructure of another mobile operator to provide its services.
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