T-Mobile US, Inc. (TMUS) 2024 Q2 Earnings Call Summary
July 31, 2024 
T-Mobile US, Inc. (TMUS)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
Record Customer Growth and Cash Flow Guidance Increase
T-Mobile announced its highest ever Q2 postpaid phone net additions in company history, surpassing 100 million customer connections, and increased its full-year customer growth and cash flow guidance.
Network Leadership and Awards
T-Mobile swept every category for overall network performance in Opensignal and Ookla tests, showcasing download speeds up to three times as fast as peers and nearly six times the 5G availability.
Broadband Expansion Success
The company captured a record share of industry broadband net additions this quarter, reaching 5.6 million fixed wireless broadband customers.
Strategic Partnerships and Acquisitions
T-Mobile's partnership with KKR to acquire Metronet and the acquisition of Mint Mobile and Ultra are highlighted as strategic moves to enhance its service offerings and market reach.
Financial Performance
T-Mobile reported industry-leading service revenue growth, core adjusted EBITDA growth, and a record adjusted free cash flow quarter, growing 54% year-over-year.
Pessimistic Highlights
ACP Impact on EBITDA
The anticipated year-over-year impact of the Affordable Connectivity Program (ACP) is expected to be in the range of $350 million to $450 million, primarily affecting wholesale providers.
Company Outlook
Raised Customer Net Additions Forecast
T-Mobile has raised its total postpaid customer net additions forecast to between 5.4 million and 5.7 million for 2024, with postpaid phone net customer additions expected to be approximately half of the total postpaid additions.
Core Adjusted EBITDA and Cash CapEx Expectations
The company maintains its core adjusted EBITDA forecast between $31.5 billion and $31.8 billion for the full year and expects cash CapEx to be between $8.7 billion and $9.1 billion.
Adjusted Free Cash Flow Projection
T-Mobile now projects adjusted free cash flow to be in the range of $16.6 billion to $17 billion, up $150 million at the midpoint and up 24% year-over-year.
Q & A Highlights
Q: Can we talk a little bit about the fiber strategy? (John Hodulik, from UBS)
A: T-Mobile is excited about its fiber strategy, including partnerships with KKR for Metronet and the acquisition of Lumos. The strategy focuses on pure play fiber and leveraging T-Mobile's assets for growth, with limited further appetite for additional transactions.
Q: Could you give us more color on ACP's impact and expectations for the iPhone cycle? (Simon Flannery, from Morgan Stanley)
A: The majority of the ACP impact is expected in the second half of the year, primarily affecting wholesale and other service revenues. T-Mobile is excited about the potential iPhone cycle, especially with AI features, but maintains a flexible business plan responsive to upgrade rates and industry switching activity.
Q: Can you unpack more of where you saw the strength of the postpaid phone net adds in the quarter? (Michael Rollins, from Citi)
A: T-Mobile saw strong growth across both smaller markets and rural areas as well as top 100 markets, driven by geographic balance and the appeal of its 5G network. The company also highlighted its success in the enterprise and small business segments.
Q: Now that you've begun to gain appreciable broadband scale with fixed wireless, can you comment on your penetration of mobile wireless subscribers inside your broadband base? (Jim Schneider, from Goldman Sachs)
A: The majority of T-Mobile's 5.6 million broadband customers are existing mobile subscribers, with the product resonating well across various customer segments due to its performance and value.
Q: Could you clarify your fiber strategy and its impact on your converged offers and coverage? (Craig Moffett, from MoffettNathanson)
A: T-Mobile's fiber strategy is not defensive for its mobile business but sees convergence as real for customers who buy bundled offers. The company is focused on executing its current fiber partnerships effectively before considering further expansion.