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T-Mobile (TMUS) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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T-Mobile US, Inc. (TMUS - Free Report) reported mixed fourth-quarter 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

The Bellevue, WA-based wireless carrier witnessed record postpaid account and postpaid customer net additions in 2021.

Net Income

Net income in the quarter was $422 million or 34 cents per share compared with $750 million or 60 cents per share in the prior-year quarter. The decline was primarily due to a planned increase in merger-related costs. Adjusted earnings came in at $1.10 per share. The bottom line beat the Zacks Consensus Estimate by 94 cents, delivering a surprise of 587.5%.

In 2021, net income was $3,024 million or $2.41 per share compared with $3,064 million or $2.37 per share in 2020.

Revenues

Quarterly total revenues inched up 2.2% year over year to $20,785 million, driven by T-Mobile’s customer growth momentum and synergy-backed model. However, the top line lagged the consensus estimate of $21,120 million. In 2021, total revenues increased 17.1% year over year to $80,118 million.

Quarterly Segment Results

Total Service revenues grew 5.5% year over year to $14,963 million. Within it, postpaid revenues were $10,963 million, up 6.9%.

T-Mobile recorded 1.8 million postpaid net customer additions and 844 thousand postpaid phone net customer additions in the quarter. Postpaid phone average revenue per user (ARPU) improved 0.4% year over year to $48.03.

Prepaid revenues were $2,474 million, up 5.1% year over year. Prepaid net customer additions were 49 thousand in the quarter. Prepaid ARPU grew 3.3% to $39.32. Wholesale revenues were $975 million, up 5.2% year over year. Other service revenues were $551 million, down 15%.

Equipment revenues totaled $5,506 million, down 7.8% year over year. Other revenues were $316 million, up 68.1%.

Other Quarterly Details

Total operating expenses increased to $19,722 million from $18,629 million in the year-ago quarter. This was due to the higher cost of equipment sales and selling, general and administrative expenses. Operating income decreased to $1,063 million from $1,712 million. T-Mobile recorded an adjusted EBITDA of $6,302 million compared with $6,746 million a year ago. Merger-related costs were $1,243 million in the quarter.

Cash Flow & Liquidity

In 2021, T-Mobile generated $13,917 million of net cash from operating activities compared with $8,640 million in 2020. Free cash flow was $5,646 million compared with $658 million.

As of Dec 31, 2021, the company had $6,631 million in cash and cash equivalents with $67,076 million of long-term debt.

2022 Guidance

For full-year 2022, T-Mobile expects postpaid net customer additions between 5 million and 5.5 million. Core adjusted EBITDA (adjusted EBITDA less lease revenues) is estimated to be between $25.6 billion and $26.1 billion.

The company anticipates cash from operating activities between $15.5 billion and $16.1 billion. Capital expenditures are projected between $13 billion and $13.5 billion. Free cash flow is estimated in the $7.1 billion to $7.6 billion range.

T-Mobile continues to make significant progress on integration activities. It ended 2021 with nearly 64% of Sprint customers transitioning to the T-Mobile network. The company expects to complete the network migration by mid-2022. Ultra Capacity 5G covered 210 million people and Extended Range 5G covered 94% of people at the end of 2021.

Zacks Rank & Stocks to Consider

T-Mobile currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. (VCRA - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised 6.2% upward over the past 60 days.

Vocera Communications delivered a trailing four-quarter earnings surprise of 109.6%, on average. The stock has returned 76.5% in the past year.

SeaChange International, Inc. (SEAC - Free Report) carries a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised 10% upward over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has inched up 4.2% in the past year.

Qualcomm, Inc. (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick for investors. The consensus estimate for current-year earnings has been revised 0.7% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 11.2%, on average. It has appreciated 27.2% in the past year.