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T-Mobile (TMUS) Q4 Earnings, Revenues Top on Merger Synergies
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T-Mobile US, Inc. (TMUS - Free Report) reported solid fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
The wireless carrier recorded industry-leading total net additions, postpaid net additions and postpaid phone net additions.
Net Income
Net income in the December quarter was $750 million or 60 cents per share compared with $751 million or 87 cents per share in the year-ago quarter. The performance reflects an increase in expenses owing to the Sprint merger, including merger-related costs, which were partly offset by higher revenues. Earnings per share (EPS) decreased due to lower net income and a higher number of outstanding shares as a result of the merger.
In 2020, net income was $2,744 million or $2.37 per share compared with $3,468 million or $4.02 per share in 2019.
Quarterly adjusted EPS came in at $1.03, beating the Zacks Consensus Estimate by 52 cents, with the earnings surprise being 102%.
TMobile US, Inc. Price, Consensus and EPS Surprise
Quarterly total revenues soared 71.2% year over year to $20,341 million, driven by the Sprint merger and customer growth. The top line surpassed the consensus estimate of $19,966 million.
In 2020, revenues increased 52% year over year to $68,397 million.
Quarterly Segment Results
Total Service revenues grew 60.2% year over year to $14,180 million.
Under this, postpaid revenues were $10,251 million, up 76.1% year over year. The company recorded 1.6 million postpaid net customer additions and 824,000 postpaid phone net customer additions in the quarter. Postpaid phone average revenue per user (ARPU) increased 4.5% year over year to $47.86. Prepaid revenues were $2,354 million, down 1.6% year over year. Prepaid net customer additions were 84,000 in the quarter. Prepaid ARPU slipped 1.2% to $38.08. Wholesale revenues were $927 million, up 171.8% year over year. Roaming and other service revenues were $648 million, up 119.7%.
Equipment revenues totaled $5,973 million, up 107.8% year over year. Other revenues were $188 million, up 22.9%.
Other Details
Total operating expenses increased to $18,629 million from $10,644 million in the year-ago quarter. Operating income improved to $1,712 million from $1,234 million in the prior-year quarter. T-Mobile recorded adjusted EBITDA of $6,746 million compared with $3,242 million in the prior-year quarter. Merger-related costs (before taxes) were $686 million in the fourth quarter.
Cash Flow & Liquidity
In 2020, T-Mobile generated $8,640 million of net cash from operating activities compared with $6,824 million in 2019. Free cash flow was $658 million compared with $4,319 million.
As of Dec 31, 2020, the company had $10,385 million in cash and cash equivalents with $61,830 million of long-term debt. This compares with the respective tallies of $1,528 million and $10,958 million a year ago.
2021 Outlook
For 2021, T-Mobile expects adjusted EBITDA between $26.5 billion and $27 billion. Cash purchases of property and equipment are projected between $11.7 billion and $12 billion. Net cash from operating activities is expected in the range of $13 billion to $13.5 billion. Free cash flow, including payments for merger-related costs, is estimated between $4.9 billion and $5.4 billion.
Looking Ahead
T-Mobile is confident in its ability to deliver the Sprint merger synergies and achieve annualized savings. The company’s Extended Range 5G covers 280 million people across 1.6 million square miles. It offers almost 4 times more coverage than Verizon (VZ - Free Report) and 2.5 times more than AT&T (T - Free Report) .
T-Mobile’s Ultra Capacity 5G covers 106 million people, which is 50 times more than Verizon’s 5G Ultra Wideband. It expects to reach 200 million people nationwide by the end of 2021.
Zacks Rank & Stocks to Consider
T-Mobile currently carries a Zacks Rank #3 (Hold).
U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 231.1%, on average.
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T-Mobile (TMUS) Q4 Earnings, Revenues Top on Merger Synergies
T-Mobile US, Inc. (TMUS - Free Report) reported solid fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
The wireless carrier recorded industry-leading total net additions, postpaid net additions and postpaid phone net additions.
Net Income
Net income in the December quarter was $750 million or 60 cents per share compared with $751 million or 87 cents per share in the year-ago quarter. The performance reflects an increase in expenses owing to the Sprint merger, including merger-related costs, which were partly offset by higher revenues. Earnings per share (EPS) decreased due to lower net income and a higher number of outstanding shares as a result of the merger.
In 2020, net income was $2,744 million or $2.37 per share compared with $3,468 million or $4.02 per share in 2019.
Quarterly adjusted EPS came in at $1.03, beating the Zacks Consensus Estimate by 52 cents, with the earnings surprise being 102%.
TMobile US, Inc. Price, Consensus and EPS Surprise
TMobile US, Inc. price-consensus-eps-surprise-chart | TMobile US, Inc. Quote
Revenues
Quarterly total revenues soared 71.2% year over year to $20,341 million, driven by the Sprint merger and customer growth. The top line surpassed the consensus estimate of $19,966 million.
In 2020, revenues increased 52% year over year to $68,397 million.
Quarterly Segment Results
Total Service revenues grew 60.2% year over year to $14,180 million.
Under this, postpaid revenues were $10,251 million, up 76.1% year over year. The company recorded 1.6 million postpaid net customer additions and 824,000 postpaid phone net customer additions in the quarter. Postpaid phone average revenue per user (ARPU) increased 4.5% year over year to $47.86. Prepaid revenues were $2,354 million, down 1.6% year over year. Prepaid net customer additions were 84,000 in the quarter. Prepaid ARPU slipped 1.2% to $38.08. Wholesale revenues were $927 million, up 171.8% year over year. Roaming and other service revenues were $648 million, up 119.7%.
Equipment revenues totaled $5,973 million, up 107.8% year over year. Other revenues were $188 million, up 22.9%.
Other Details
Total operating expenses increased to $18,629 million from $10,644 million in the year-ago quarter. Operating income improved to $1,712 million from $1,234 million in the prior-year quarter. T-Mobile recorded adjusted EBITDA of $6,746 million compared with $3,242 million in the prior-year quarter. Merger-related costs (before taxes) were $686 million in the fourth quarter.
Cash Flow & Liquidity
In 2020, T-Mobile generated $8,640 million of net cash from operating activities compared with $6,824 million in 2019. Free cash flow was $658 million compared with $4,319 million.
As of Dec 31, 2020, the company had $10,385 million in cash and cash equivalents with $61,830 million of long-term debt. This compares with the respective tallies of $1,528 million and $10,958 million a year ago.
2021 Outlook
For 2021, T-Mobile expects adjusted EBITDA between $26.5 billion and $27 billion. Cash purchases of property and equipment are projected between $11.7 billion and $12 billion. Net cash from operating activities is expected in the range of $13 billion to $13.5 billion. Free cash flow, including payments for merger-related costs, is estimated between $4.9 billion and $5.4 billion.
Looking Ahead
T-Mobile is confident in its ability to deliver the Sprint merger synergies and achieve annualized savings. The company’s Extended Range 5G covers 280 million people across 1.6 million square miles. It offers almost 4 times more coverage than Verizon (VZ - Free Report) and 2.5 times more than AT&T (T - Free Report) .
T-Mobile’s Ultra Capacity 5G covers 106 million people, which is 50 times more than Verizon’s 5G Ultra Wideband. It expects to reach 200 million people nationwide by the end of 2021.
Zacks Rank & Stocks to Consider
T-Mobile currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the industry is United States Cellular Corporation (USM - Free Report) , carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 231.1%, on average.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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