United States

Customer development

Customers

At September 30, 2023, the United States operating segment (T‑Mobile US) had 117.9 million customers, compared to 113.6 million customers at December 31, 2022. Net customer additions were 4.3 million in the nine months ended September 30, 2023, compared to 4.9 million in the nine months ended September 30, 2022 due to the factors described below.

Postpaid net customer additions were 4.1 million in the nine months ended September 30, 2023, compared to 4.6 million in the nine months ended September 30, 2022. Postpaid net customer additions decreased primarily from lower postpaid other net customer additions, primarily due to deactivations from mobile internet devices in the educational sector that were originally activated during the coronavirus pandemic and no longer needed and lower net additions from other connected devices. This decrease was partially offset by higher High Speed Internet net customer additions, primarily due to continued growth in gross additions driven by increasing customer demand, partially offset by increased deactivations from a growing customer base. In addition, the decrease in postpaid net customer additions resulted from slightly lower postpaid phone net customer additions, primarily due to increased deactivations from a growing customer base despite slightly lower churn, mostly offset by higher gross additions. High Speed Internet net customer additions included in postpaid other net customer additions were 1.4 million and 1.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Prepaid net customer additions were 229 thousand in the nine months ended September 30, 2023, compared to 313 thousand in the nine months ended September 30, 2022. This decrease was primarily due to continued moderation of industry growth and continued industry migration of prepaid to postpaid, partially offset by growth in High Speed Internet. High Speed Internet net customer additions included in prepaid net customer additions were 192 thousand and 162 thousand for the nine months ended September 30, 2023 and 2022, respectively.

Development of operations

Revenue, service revenue

Total revenue for the United States operating segment of EUR 53.5 billion in the nine months ended September 30, 2023 decreased by 3.9 %, compared to EUR 55.6 billion in the nine months ended September 30, 2022. In U.S. dollars, T‑Mobile US’ total revenues decreased by 2.1 % during the same period. Total revenues decreased primarily due to lower equipment revenues partially offset by higher service revenues. The components of these changes are described below.

Service revenues increased in the nine months ended September 30, 2023 by 1.1 % to EUR 43.5 billion. This increase resulted from higher postpaid revenues, primarily due to higher average postpaid accounts and higher postpaid Average Revenue per Account (ARPA). This increase was partially offset by lower wholesale and other service revenues, primarily from lower MVNO revenues and lower Wireline revenues due to the sale of the Wireline Business on May 1, 2023.

Equipment revenues decreased in the nine months ended September 30, 2023 primarily from a decrease in the number of devices and accessories sold, primarily driven by higher postpaid upgrades in the prior year period related to facilitating the migration of Sprint customers to the T‑Mobile US network, as well as longer device lifecycles, and lower prepaid sales. In addition, equipment revenues decreased due to 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 in device financing from leasing to equipment installment plans (EIP). The decrease in equipment revenues was partially offset by slightly higher average revenue per device sold, primarily driven by higher promotions in the prior year period, which included promotions for Sprint customers to facilitate their migration to the T‑Mobile US network, partially offset by a decrease in the high-end phone mix.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 3.6 % to EUR 19.9 billion in the nine months ended September 30, 2023, compared to EUR 19.2 billion in the nine months ended September 30, 2022. The adjusted EBITDA AL margin increased to 37.2 % in the nine months ended September 30, 2023, compared to 34.5 % in the nine months ended September 30, 2022. In U.S. dollars, adjusted EBITDA AL increased by 5.5 % during the same period. Adjusted EBITDA AL increased primarily due to lower costs as a result of lower number of devices and accessories sold, primarily driven by longer device lifecycles and lower prepaid sales, slightly lower average cost per device sold driven by a decrease in the high-end phone mix, higher service revenues as discussed above, higher realized Sprint Merger-related synergies and lower costs due to the sale of the Wireline Business on May 1, 2023. This increase was partially offset by lower equipment revenues as described above and higher site costs related to the continued build-out of our nationwide 5G network. In U.S. dollars, lease revenues decreased as a result of the continued strategic shift in device financing from leasing to EIP by 77.8 % in the nine months ended September 30, 2023.

In euros, adjusted core EBITDA AL increased by 8.5 % to EUR 19.6 billion in the nine months ended September 30, 2023, compared to EUR 18.1 billion in the nine months ended September 30, 2022. In U.S. dollars, adjusted core EBITDA AL increased by 10.6 % 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, 2023 included special factors of EUR -1.3 billion compared to EUR -5.3 billion in the nine months ended September 30, 2022. The change in special factors was primarily due to lower Sprint Merger-related costs, lower expenses related to the sale of the Wireline Business, lower legal-related expenses, net of recoveries, including the settlement of certain litigation associated with the cyberattack on T‑Mobile US in August 2021, and lower impairment expense due to the non-cash impairment of certain Wireline Business-related right-of-use assets recognized during the nine months ended September 30, 2022. These lower expenses were partially offset by higher severance and related costs associated with the August 2023 workforce reduction. Special factors include Sprint 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 billing systems and the impact of legal matters assumed as part of the Sprint Merger. In addition, Sprint 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 increased by 33.7 % to EUR 18.6 billion in the nine months ended September 30, 2023, compared to EUR 13.9 billion in the nine months ended September 30, 2022, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT increased to EUR 10.9 billion in the nine months ended September 30, 2023, compared to EUR 4.5 billion in the nine months ended September 30, 2022. In U.S. dollars, EBIT increased by USD 7.0 billion during the same period primarily due to higher EBITDA AL and lower depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses decreased by 21.3 % primarily due to lower depreciation expense on leased devices, resulting from a lower number of total customer devices under lease, certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks in 2022, and the non-cash impairment of certain Wireline network assets recognized during the nine months ended September 30, 2022. These decreases were partially offset by higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network and higher amortization of capitalized software driven by increased in-service internally developed and purchased software.

Cash capex (before spectrum investment), cash capex

Cash capex (before spectrum investment) decreased by 24.5 % to EUR 7.6 billion in the nine months ended September 30, 2023, compared to EUR 10.0 billion in the nine months ended September 30, 2022. In U.S. dollars, cash capex (before spectrum investment) decreased by 22.9 % due to decrease in purchases of property and equipment primarily due to increased capital efficiencies from accelerated investments in the T‑Mobile US nationwide 5G network in 2022.

Cash capex decreased by 39.8 % to EUR 7.8 billion in the nine months ended September 30, 2023, compared to EUR 13.0 billion in the nine months ended September 30, 2022. In U.S. dollars, cash capex decreased by 39.2 % primarily due 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 compared to no spectrum licenses won during the nine months ended September 30, 2023 and lower purchases of property and equipment as discussed above.