T-Mobile Maintains Unprecedented Momentum in Q3 and Sets the Stage for the First Nationwide 5G Network Launch in 2019

Total Net Additions of 1.7M, Record-Low Q3 Branded Postpaid Phone Churn of 0.89%, Record Service Revenues of $8.6B, Record Q3 Net Income of $870M and Record Q3 Adj. EBITDA of $3.4B

BELLEVUE, Wash.–(BUSINESS WIRE)–T-Mobile US, Inc. (NASDAQ: TMUS):

Strong Customer Growth

• 1.7 million total net additions in Q3 2019 – record 26th consecutive quarter of more than 1 million total net additions
• 1.1 million branded postpaid net additions in Q3 2019 – best in the industry
• 754,000 branded postpaid phone net additions in Q3 2019 – best in the industry
• 62,000 branded prepaid net additions in Q3 2019, up 27,000 YoY
• Record-low Q3 branded postpaid phone churn of 0.89% in Q3 2019, down 13 bps YoY

Record Q3 Financial Performance (all percentages year-over-year)

• Record Service revenues of $8.6 billion, up 6% in Q3 2019 with Branded postpaid revenues up 10%
• Record Q3 Total revenues of $11.1 billion, up 2% in Q3 2019
• Record Q3 Net income of $870 million, up 9% in Q3 2019
• Record Q3 Diluted earnings per share (“EPS”) of $1.01, up 9% in Q3 2019
• Record Q3 Adjusted EBITDA⁽¹⁾ of $3.4 billion, up 5% in Q3 2019
• Record Q3 Net cash provided by operating activities of $1.7 billion, up 91% in Q3 2019
• Record Q3 Free Cash Flow⁽¹⁾ of $1.1 billion, up 27% in Q3 2019

Taking Major Steps Towards Nationwide 5G

• Accelerated the planned launch of the first nationwide 5G network, utilizing 600 MHz spectrum, to this year, forming the foundational 5G coverage layer for New T-Mobile
• 600 MHz now reaching nearly 8,300 cities and towns in 48 states and Puerto Rico
• 4G LTE on 600 MHz now covers 200 million people and 1.4 million square miles
• More than 26 million 600 MHz compatible devices already on our network

Continued Strong Outlook for 2019

• Branded postpaid net additions of 4.1 to 4.3 million, up from prior guidance of 3.5 to 4.0 million
• Net income is not available on a forward-looking basis⁽²⁾
• Adjusted EBITDA target of $13.1 to $13.3 billion, which includes leasing revenues of $550 to $600 million, up at the midpoint from prior guidance of $12.9 to $13.3 billion⁽¹⁾
• Cash purchases of property and equipment, excluding capitalized interest of approximately $450 million (up from prior guidance of $400 million), are expected to be $5.9 to $6.0 billion, up $200 to $300 million from the high end of the prior guidance range, reflecting the rapid rollout of 600 MHz spectrum, which sets the foundation for our accelerated plan to launch the first nationwide 5G network this year. Cash purchases of property and equipment, including capitalized interest, are expected to be $6.35 to $6.45 billion, up from the prior guidance of $5.8 to $6.1 billion
• Three-year compound annual growth rate (“CAGR”) from FY 2016 to FY 2019 for Net cash provided by operating activities, excluding payments for merger-related costs, is expected to be at 36% to 37%, an increase and narrowing from the prior target range of 33% to 35%
• Three-year CAGR from FY 2016 to FY 2019 for Free Cash Flow, excluding payments for merger-related costs, is unchanged at 46% to 48%⁽¹⁾
• In Q4 2019, pre-close merger-related costs are expected to be $125 million to $150 million before taxes

T-Mobile US, Inc. (NASDAQ: TMUS) reported another strong quarter in Q3 2019 as we continue to maintain our unprecedented momentum and set even more performance records. America’s Un-carrier reported record high service revenues and record third-quarter financial results including net income, Adjusted EBITDA, net cash provided by operating activities and free cash flow. In addition, we reported our 26th consecutive quarter with more than 1 million total customer net adds and continue to lead the industry in postpaid phone net adds.

Customers show that they want to do business with a company that treats them right and changes the rules of the industry in their favor, and that’s what differentiates the Un-carrier from the competition. T-Mobile is known for its unrivaled customer experience obsession and the best customer care in the industry, with Team of Experts, and this has resulted in record-low Q3 branded postpaid phone churn and all-time high customer satisfaction scores.

T-Mobile continues to invest in building its nationwide 4G LTE network and continues to roll out 600 MHz spectrum, which now covers 200 million Americans and is live in nearly 8,300 cities and towns across 48 states and Puerto Rico. In addition, T-Mobile accelerated plans to launch America’s first nationwide 5G network on 600 MHz spectrum, which we expect will be live later this year. Our 600 MHz spectrum will be the foundational layer for the New T-Mobile’s 5G Network that once combined with Sprint’s spectrum, will result in a broad and deep nationwide 5G experience for everyone, everywhere.

“Q3 2019 was another blockbuster quarter for T-Mobile! Once again we set new records, including our 26th quarter in a row with more than 1 million net additions. And the Un-carrier is leading the industry in postpaid phone net adds – again,” said John Legere, CEO of T-Mobile. “Our team has been hard at work deploying 600 MHz spectrum and we have accelerated our plans to launch a foundational layer of 5G nationwide later this year. On top of that, the tremendous benefits of our merger with Sprint are just as compelling today as when we announced the deal and we look forward to completing the remaining steps so the New T-Mobile can get started delivering the incredible benefits to American consumers!”

Strong Customer Growth

T-Mobile continues to deliver strong customer growth, and in Q3 2019 set a record of 26 consecutive quarters of more than 1 million total net customer additions. We once again led the industry in branded postpaid phone net customer additions.

• Total net customer additions were 1.7 million in Q3 2019, up 117,000 from Q3 2018, bringing our total customer count to 84.2 million, and marking the 26th straight quarter in which T-Mobile generated more than 1 million total net customer additions.

• Branded postpaid net customer additions were 1.1 million in Q3 2019, down 5,000 from Q3 2018. We led the industry in this category.

• Branded postpaid phone net customer additions were 754,000 in Q3 2019, down 20,000 from Q3 2018. Q3 2019 was the 23rd consecutive quarter in which T-Mobile led the industry in this category. Branded postpaid phone net customer additions decreased slightly year-over-year, primarily due to lower gross customer additions, partially offset by record-low Q3 churn.

• Branded postpaid other net customer additions were 320,000 in Q3 2019, up 15,000 from Q3 2018, primarily due to higher gross customer additions from connected devices.

• Branded postpaid phone churn was a Q3 record-low of 0.89% in Q3 2019, down 13 basis points year-over-year, primarily due to increased customer satisfaction and loyalty from ongoing improvements to network quality, industry-leading customer service and the overall value of our offerings.

• Branded prepaid net customer additions were 62,000 in Q3 2019, up 27,000 from Q3 2018, primarily due to lower churn, partially offset by the impact of continued promotional activities in the marketplace.

• Branded prepaid churn was 3.98% in Q3 2019, down 14 basis points year-over-year primarily due to increased customer satisfaction and loyalty from ongoing improvements to network quality and the continued success of our prepaid brands due to promotional activities and rate plan offers.

Record Q3 Financial Performance

T-Mobile’s strong financial performance in Q3 2019 proves that our strategy is not only good for customers, it’s also good for stockholders. We continue to successfully translate customer growth into industry-leading service revenue growth. In Q3 2019, the Un-carrier delivered record service revenues of $8.6 billion, record Q3 net income of $870 million, and record Q3 Adjusted EBITDA of $3.4 billion.

The following discussion is for the three months ended September 30, 2019, compared to the same period in 2018 unless otherwise stated.

• Total service revenues increased 6% to a record high of $8.6 billion in Q3 2019. These results represent our best quarterly performance ever and we led the industry for the 22nd consecutive quarter in year-over-year service revenue percentage growth. Branded postpaid revenues increased 10% year-over-year.

• Total revenues increased 2% to a Q3 record of $11.1 billion in Q3 2019 driven by growth in service revenues, partially offset by a decrease in equipment revenues primarily due to a decrease in the number of devices sold.

• Branded postpaid phone Average Revenue per User (ARPU) was essentially flat at $46.22 in Q3 2019. ARPU was primarily impacted by higher premium service revenue and the growing success of new customer segments and rate plans, offset by a reduction in certain non-recurring charges, a reduction in regulatory program revenues from the continued adoption of tax inclusive plans and the impact of the ongoing growth in our Netflix offering.

  We expect Branded postpaid phone ARPU in full-year 2019 to be down approximately 0.7% to 0.9% compared to full-year 2018, which implies a sequential and year-over-year decline for Q4 2019. This decrease is driven in part by a reduction in the non-cash, non-recurring benefit related to Data Stash as the majority of impacted customers have transitioned to unlimited plans.

• Branded prepaid ARPU was essentially flat at $38.16 in Q3 2019. ARPU was primarily impacted by dilution from promotional rate plans and growth in our Amazon Prime offering, offset by the removal of certain branded prepaid customers associated with products now offered and distributed by a current MVNO partner as those customers had lower ARPU.

• Net income increased 9% to a Q3 record $870 million and EPS increased 9% to $1.01 in Q3 2019, primarily due to higher Operating income, lower Interest expense to affiliates and lower Interest expense. The impact from merger-related costs on net income and EPS was $128 million and $0.15, respectively. Net income and EPS for the three months ended September 30, 2018, benefited from hurricane reimbursements, net of costs and tax, of $88 million and $0.10, respectively. There were no significant impacts from hurricanes for the three months ended September 30, 2019.

• Adjusted EBITDA increased 5% to a Q3 record $3.4 billion in Q3 2019, primarily due to higher service revenues, partially offset by higher Selling, general and administrative expenses and higher Cost of services expenses. Excluded from Adjusted EBITDA were $159 million of merger-related costs in Q3 2019 compared to $53 million in Q3 2018. The impact from hurricane-related reimbursements, net of costs, was $138 million for the three months ended September 30, 2018. There were no significant impacts from hurricanes for the three months ended September 30, 2019.

• Net cash provided by operating activities increased 91% to $1.7 billion in Q3 2019. The increase primarily resulted from lower net cash outflows from changes in working capital and higher Net income.

• Cash purchases of property and equipment increased 11% to $1.5 billion in Q3 2019 including capitalized interest of $118 million. The increase was primarily driven by growth in network build as we continued deployment of low band spectrum, including 600 MHz, and laying the groundwork for the planned launch of our 5G network in 2019.

• Free Cash Flow increased 27% to $1.1 billion in Q3 2019. Higher Net cash provided by operating activities was partially offset by lower Proceeds related to our deferred purchase price from securitization transactions and higher Cash purchases of property and equipment. Excluding the impact of payments for merger-related costs on Free Cash Flow of $124 million in Q3 2019, Free Cash Flow was $1.3 billion.

Taking Major Steps Towards Nationwide 5G

T-Mobile continues to expand the footprint and improve the quality of our network to better serve our customers. 99% of Americans are covered by our 4G LTE network, and our rapid deployment of 600 MHz spectrum provides customers with even better coverage and sets the stage for the planned launch of the first nationwide 5G network in 2019. Highlights from Q3 2019 include:

• Nationwide 5G: T-Mobile is building the foundation for its 5G network across the U.S. in 2019, utilizing both 600 MHz and mmWave spectrum. We have accelerated our plans and expect to launch America’s first nationwide 5G network in 2019, in conjunction with the introduction of the first compatible 5G smartphones, including the recently announced exclusive OnePlus 7T Pro 5G McLaren. On June 28, 2019, we introduced our 5G network using mmWave spectrum in six cities including New York and Los Angeles in conjunction with the introduction of our first 5G handset, the Samsung Galaxy S10 5G.
• Deployment of 600 MHz spectrum: At the end of Q3 2019, T-Mobile owned a nationwide average of 31 MHz of 600 MHz low band spectrum. As of September 30, 2019, we had cleared 231 million POPs, and we expect to clear spectrum covering approximately 275 million POPs by year-end 2019. T-Mobile continues its deployment of 4G LTE on 600 MHz spectrum, using 5G-ready equipment, with 1.4 million square miles already lit up, covering 200 million POPs in nearly 8,300 cities and towns in 48 states and Puerto Rico. Combining 600 MHz spectrum and 700 MHz spectrum, we have deployed low band spectrum to 311 million POPs. Currently, more than 26 million devices on T-Mobile’s network are compatible with 600 MHz spectrum.

Continued Strong Outlook for 2019

We expect postpaid net customer additions between 4.1 and 4.3 million in 2019, up from prior guidance of 3.5 to 4.0 million.

Net income is not available on a forward-looking basis.

Adjusted EBITDA is expected to be in the range of $13.1 to $13.3 billion in 2019, increasing the midpoint from the prior guidance range of $12.9 to $13.3 billion. Our Adjusted EBITDA target includes leasing revenues of $550 to $600 million, unchanged from our prior guidance.

Cash purchases of property and equipment, excluding capitalized interest of approximately $450 million (up from prior guidance of $400 million), are expected to be between $5.9 to $6.0 billion, up $200 to $300 million from the high end of the prior guidance range. Cash purchases of property and equipment, including capitalized interest, are expected to be between $6.35 and $6.45 billion in 2019, up from the prior guidance of $5.8 to $6.1 billion. The higher capital expenditures guidance reflects our rapid rollout of 600 MHz spectrum, setting the foundation for our accelerated plans to launch the first nationwide 5G network with more than 200 million POPs this year.

Net cash provided by operating activities three-year CAGR from full-year 2016 to full-year 2019, excluding payments for merger-related costs, is expected to be between 36% and 37%, an increase and narrowing from the prior target range of 33% to 35%.

Three-year CAGR guidance (2016-2019) for Free Cash Flow, excluding payments for merger-related costs, is unchanged at 46% to 48%.

In Q4 2019, pre-close merger-related costs are expected to be $125 to $150 million before taxes.

Financial Results

For more details on T-Mobile’s Q3 2019 financial results, including the Investor Factbook with detailed financial tables and reconciliations of certain historical non-GAAP measures disclosed in this release to the most comparable measures under GAAP, please visit T-Mobile US, Inc.’s Investor Relations website at http://investor.t-mobile.com.

T-Mobile Social Media

Investors and others should note that the Company announces material financial and operational information to its investors using its investor relations website, press releases, SEC filings and public conference calls and webcasts. The Company also intends to use the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the @JohnLegere Twitter (https://twitter.com/JohnLegere), Facebook and Periscope accounts, which Mr. Legere also uses as a means for personal communications and observations, as means of disclosing information about the Company and its services and for complying with its disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that the Company intends to use as a means of disclosing the information described above may be updated from time to time as listed on the Company’s investor relations website.

About T-Mobile US, Inc.

As America’s Un-carrier, T-Mobile US, Inc. (NASDAQ: TMUS) is redefining the way consumers and businesses buy wireless services through leading product and service innovation. Our advanced nationwide 4G LTE network delivers outstanding wireless experiences to 84.2 million customers who are unwilling to compromise on quality and value. Based in Bellevue, Washington, T-Mobile US provides services through its subsidiaries and operates its flagship brands, T-Mobile and Metro by T-Mobile. For more information, please visit http://www.t-mobile.com or join the conversation on Twitter using $TMUS.

Q3 2019 Earnings Call, Livestream and Webcast Access Information

Access via Phone (audio only):

Please plan on accessing the earnings call ten minutes prior to the scheduled start time.

Access via Social Media:

The @TMobileIR Twitter account will live-tweet the earnings call.

Submit Questions via Twitter:

Access via Webcast:

The earnings call will be broadcast live via our Investor Relations website at http://investor.t-mobile.com. A replay of the earnings call will be available for two weeks starting shortly after the call concludes and can be accessed by dialing 888-203-1112 (toll free) or +1 719-457-0820 (international). The passcode required to listen to the replay is 7294539.

To automatically receive T-Mobile financial news by e-mail, please visit the T-Mobile Investor Relations website, http://investor.t-mobile.com, and subscribe to E-mail Alerts.

Forward-Looking Statements

This communication includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including information concerning T-Mobile US, Inc.’s future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” or similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: the failure to obtain, or delays in obtaining, required regulatory approvals for the merger (the “Merger”) with Sprint Corporation (“Sprint”), pursuant to the Business Combination Agreement with Sprint and other parties therein (as amended, the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”), risks associated with the actions and conditions we have agreed to in connection with such approvals, and the risk that such approvals may result in the imposition of additional conditions that, if accepted by the parties, could adversely affect the combined company or the expected benefits of the Transactions, or the failure to satisfy any of the other conditions to the Transactions on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of the parties to terminate the Business Combination Agreement; adverse effects on the market price of our common stock or on our operating results because of a failure to complete the Merger in the anticipated timeframe, on the anticipated terms or at all; inability to obtain the financing contemplated to be obtained in connection with the Transactions on the expected terms or timing or at all; the ability of us, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein; adverse changes in the ratings of our or Sprint’s debt securities or adverse conditions in the credit markets; negative effects of the announcement, pendency or consummation of the Transactions on the market price of our common stock and on our or Sprint’s operating results, including as a result of changes in key customer, supplier, employee or other business relationships; significant costs related to the Transactions, including financing costs, and unknown liabilities of Sprint or that may arise; failure to realize the expected benefits and synergies of the Transactions in the expected timeframes, in part or at all; costs or difficulties related to the integration of Sprint’s network and operations into our network and operations, including intellectual property and communications systems, administrative and information technology infrastructure and accounting, financial reporting and internal control systems, and the alignment of the two companies’ guidelines and practices; costs or difficulties related to the completion of the divestiture of Sprint’s prepaid wireless businesses to DISH Network Corporation and the satisfaction of any related government commitments to such divestiture; the risk of litigation or regulatory actions related to the Transactions, including the antitrust litigation related to the Transactions brought by the attorneys general of certain states and the District of Columbia; the inability of us, Sprint or the combined company to retain and hire key personnel; the risk that certain contractual restrictions contained in the Business Combination Agreement during the pendency of the Transactions could adversely affect our or Sprint’s ability to pursue business opportunities or strategic transactions; adverse economic, political or market conditions in the U.

Contacts

Press Contact:

Media Relations

T-Mobile US, Inc.

[email protected]
http://newsroom.t-mobile.com

Investor Relations Contact:
Nils Paellmann

T-Mobile US, Inc.

[email protected]
http://investor.t-mobile.com

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