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United States

Customer development

thousands

 

 

 

 

 

 

 

 

Sept. 30,
2024

June 30,
2024

Change
Sept. 30, 2024/
June 30, 2024
%

Dec. 31,
2023

Change
Sept. 30, 2024/
Dec. 31, 2023
%

Sept. 30,
2023

Change
Sept. 30, 2024/
Sept. 30, 2023
%

Customers

127,492

125,893

1.3

119,700

6.5

117,907

8.1

Postpaid customers

102,185

100,610

1.6

98,052

4.2

96,312

6.1

Postpaid phone customers a

78,110

77,245

1.1

75,936

2.9

74,982

4.2

Other postpaid customers a

24,075

23,365

3.0

22,116

8.9

21,330

12.9

Prepaid customers b

25,307

25,283

0.1

21,648

16.9

21,595

17.2

a

In the fourth quarter of 2023, we recognized an additional base adjustment to increase postpaid phone customers by 20 thousand and increase postpaid other customers by 150 thousand due to fewer customers than expected whose service was deactivated as a result of the network shutdowns.

b

In the second quarter of 2024, we acquired 3.5 million prepaid customers through the Ka’ena Acquisition, which includes the impact of certain base adjustments to align the policies of Ka’ena and T-Mobile US.

Customers

At September 30, 2024, the United States operating segment (T‑Mobile US) had 127.5 million customers, compared to 119.7 million customers at December 31, 2023. Net customer additions were 4.3 million in the nine months ended September 30, 2024, compared to 4.3 million in the nine months ended September 30, 2023, due to the factors described below.

Postpaid net customer additions were 4.1 million in the nine months ended September 30, 2024, compared to 4.1 million in the nine months ended September 30, 2023. Postpaid net customer additions were relatively flat and included slightly higher postpaid other net customer additions, primarily due to higher net additions from mobile internet devices and higher net additions from other connected devices. The increase in net additions from mobile internet devices was primarily due to higher prior year deactivations of lower Average Revenue Per User (ARPU) mobile internet devices in the educational sector that were activated during the coronavirus pandemic and no longer needed. The increase in postpaid other net customer additions was mostly offset by lower net additions from wearables and lower net additions from High Speed Internet, primarily driven by increased deactivations from a growing customer base and lower gross additions driven by sunsetting of promotional pricing, partially offset by a lower churn rate. In addition, postpaid net customer additions included slightly higher postpaid phone net customer additions, primarily due to higher gross additions and higher prepaid to postpaid migrations, mostly offset by increased deactivations from a growing customer base. High Speed Internet net customer additions included in postpaid other net customer additions were 1.1 million and 1.4 million in the nine months ended September 30, 2024 and 2023, respectively.

Prepaid net customer additions were 155 thousand in the nine months ended September 30, 2024, compared to 229 thousand in the nine months ended September 30, 2023. The decrease was primarily driven by continued moderation of prepaid industry growth, lower net additions from High Speed Internet and higher prepaid to postpaid migrations, partially offset by higher net additions following the Ka’ena Acquisition. High Speed Internet net customer additions included in prepaid net customer additions were 137 thousand and 192 thousand in the nine months ended September 30, 2024 and 2023, respectively.

Development of operations

millions of €

 

 

 

 

 

 

 

 

 

 

 

 

Q1-Q3
2024

Q1-Q3
2023

Change
%

Q1 2024

Q2 2024

Q3 2024

Q3 2023

Change
%

FY 2023

Revenue

 

54,584

53,455

2.1

18,009

18,282

18,293

17,638

3.7

72,436

Service revenue

 

45,280

43,508

4.1

14,827

15,238

15,215

14,606

4.2

58,522

EBITDA

 

24,840

22,469

10.6

8,031

8,462

8,346

7,436

12.2

30,038

Special factors affecting EBITDA

 

(218)

(1,090)

80.0

(111)

4

(111)

(574)

80.6

(1,286)

EBITDA (adjusted for special factors)

 

25,058

23,559

6.4

8,142

8,458

8,458

8,010

5.6

31,324

EBITDA AL

 

21,120

18,552

13.8

6,802

7,212

7,107

6,184

14.9

24,840

Special factors affecting EBITDA AL

 

(294)

(1,329)

77.9

(130)

(25)

(138)

(608)

77.2

(1,569)

EBITDA AL (adjusted for special factors)

 

21,414

19,882

7.7

6,932

7,237

7,245

6,791

6.7

26,409

Core EBITDA AL
(adjusted for special factors) a

 

21,339

19,640

8.6

6,900

7,213

7,226

6,745

7.1

26,130

EBITDA AL margin
(adjusted for special factors)

%

39.2

37.2

 

38.5

39.6

39.6

38.5

 

36.5

Depreciation, amortization and
impairment losses

 

(11,655)

(11,578)

(0.7)

(4,003)

(3,907)

(3,745)

(3,808)

1.7

(15,551)

Profit (loss) from operations (EBIT)

 

13,185

10,891

21.1

4,028

4,555

4,601

3,628

26.8

14,487

EBIT margin

%

24.2

20.4

 

22.4

24.9

25.2

20.6

 

20.0

Cash capex

 

(8,529)

(7,830)

(8.9)

(2,476)

(2,042)

(4,011)

(2,378)

(68.7)

(10,053)

Cash capex (before spectrum investment)

 

(6,146)

(7,577)

18.9

(2,420)

(1,907)

(1,820)

(2,218)

17.9

(9,060)

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.

Revenue, service revenue

Total revenue for the United States operating segment of EUR 54.6 billion in the nine months ended September 30, 2024, increased by 2.1 %, compared to EUR 53.5 billion in the nine months ended September 30, 2023. In U.S. dollars, T‑Mobile US’ total revenue increased by 2.5 % during the same period. Total revenue increased primarily due to higher service revenues, partially offset by lower equipment revenues and lower other revenues. The components of these changes are described below.

Service revenues increased in the nine months ended September 30, 2024, by 4.1 % to EUR 45.3 billion. In U.S. dollars, T‑Mobile US’ service revenues increased by 4.4 % during the same period. This increase resulted from higher postpaid revenues, primarily due to higher average postpaid accounts and higher postpaid Average Revenue per Account (ARPA). In addition, service revenues increased from higher prepaid revenues, primarily due to higher average prepaid customers, primarily from the prepaid customers acquired through the Ka’ena Acquisition, partially offset by lower prepaid ARPU. This increase was partially offset by lower wholesale and other service revenues, primarily from lower MVNO revenues, lower Affordable Connectivity Program and Lifeline revenues, and lower Wireline revenues due to the sale of the Wireline Business on May 1, 2023. The decrease in MVNO revenues includes the impact from the Ka’ena Acquisition, and lower DISH and TracFone MVNO revenue.

Equipment revenues decreased in the nine months ended September 30, 2024, primarily from a net decrease in the total number of devices sold, driven by lower prepaid and government assistance program devices, partially offset by higher postpaid devices. This decrease was partially offset by higher average revenue per device sold, net of promotions, primarily driven by an increase in the high-end phone mix. In addition, equipment revenues decreased due to a decrease in lease revenues, 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 an increase in liquidation revenue, primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing.

Other revenues decreased in the nine months ended September 30, 2024, primarily from the transition of certain device recovery programs from external sources to in-house processing, resulting in a change in presentation to equipment revenues.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 7.7 % to EUR 21.4 billion in the nine months ended September 30, 2024, compared to EUR 19.9 billion in the nine months ended September 30, 2023. The adjusted EBITDA AL margin increased to 39.2 % in the nine months ended September 30, 2024, compared to 37.2 % in the nine months ended September 30, 2023. In U.S. dollars, adjusted EBITDA AL increased 8.1 % during the same period. Adjusted EBITDA AL increased primarily due to higher service revenues, as discussed above, lower costs due to the sale of the Wireline Business on May 1, 2023, lower employee costs, primarily due to reduced headcount, and higher Sprint Merger-related synergies. The increase in adjusted EBITDA AL was partially offset by lower equipment revenues, as discussed above, and higher site costs related to the continued build-out of the T‑Mobile US 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 68.7 % in the nine months ended September 30, 2024.

In euros, adjusted core EBITDA AL increased by 8.6 % to EUR 21.3 billion in the nine months ended September 30, 2024, compared to EUR 19.6 billion in the nine months ended September 30, 2023. In U.S. dollars, adjusted core EBITDA AL increased by 9.0 % during the same period. The increase was primarily due to the fluctuation in adjusted EBITDA AL as discussed above, excluding the change in lease revenues.

EBITDA AL in the nine months ended September 30, 2024, included special factors of EUR -0.3 billion compared to EUR -1.3 billion in the nine months ended September 30, 2023. The change in special factors was primarily due to lower Sprint Merger-related costs and severance and related costs associated with the August 2023 workforce reduction recognized in the prior year. The change in special factors was also impacted by other special items including certain severance, restructuring, and other expenses, gains and losses, not directly attributable to the Sprint Merger which are not reflective of T‑Mobile US’ core business activities recognized in the nine months ended September 30, 2023. Overall, EBITDA AL increased by 13.8 % to EUR 21.1 billion in the nine months ended September 30, 2024, compared to EUR 18.6 billion in the nine months ended September 30, 2023, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT increased by 21.1 % to EUR 13.2 billion in the nine months ended September 30, 2024, compared to EUR 10.9 billion in the nine months ended September 30, 2023. In U.S. dollars, EBIT increased by 21.5 % during the same period primarily due to higher EBITDA AL, slightly offset by higher depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses increased by 1.0 % primarily due to higher depreciation expense from the acceleration of certain technology assets in the first half of 2024 as T‑Mobile US continues to modernize its network, technology systems, and platforms and from the continued build-out of its nationwide 5G network.

Cash capex (before spectrum investment), cash capex

Cash capex (before spectrum investment) decreased by 18.9 % to EUR 6.1 billion in the nine months ended September 30, 2024, compared to EUR 7.6 billion in the nine months ended September 30, 2023. In U.S. dollars, cash capex (before spectrum investment) decreased by 18.5 % due to a 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 previous years.

Cash capex increased by 8.9 % to EUR 8.5 billion in the nine months ended September 30, 2024, compared to EUR 7.8 billion in the nine months ended September 30, 2023. In U.S. dollars, cash capex increased by 9.8 % primarily due to an increase in purchases of spectrum licenses, primarily for the first tranche of 600 MHz licenses purchased from Channel 51. The increase was partially offset by lower purchases of property and equipment as discussed above.

5G
Refers to the mobile communications standard launched in 2020, which offers data rates in the gigabit range, mainly over the 3.6 GHz and 2.1 GHz bands, 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
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
Wholesale
Refers to the business of selling services to telecommunications companies which sell them to their own retail customers either directly or after further processing.
Glossary