Back to top

Image: Shutterstock

T-Mobile (TMUS) Beats on Q1 Earnings, Raises 2022 Guidance

Read MoreHide Full Article

T-Mobile US, Inc. (TMUS - Free Report) reported mixed first-quarter 2022 results, wherein the bottom line beat the Zacks Consensus Estimate, but the top line missed the same.

The Bellevue, WA-based company delivered industry-leading growth in postpaid and broadband customers driven by its 5G network and best value combination.

Net Income

Net income in the quarter was $713 million or 57 cents per share compared with $933 million or 74 cents per share in the prior-year quarter. The decline was due to merger-related costs, net of tax of $1.1 billion or 84 cents per share. The bottom line beat the Zacks Consensus Estimate by 16 cents, delivering a surprise of 39%.

TMobile US, Inc. Price, Consensus and EPS Surprise TMobile US, Inc. Price, Consensus and EPS Surprise

TMobile US, Inc. price-consensus-eps-surprise-chart | TMobile US, Inc. Quote

Revenues

Quarterly total revenues inched up 1.8% year over year to $20,120 million, primarily driven by growth in service revenues. The top line, however, lagged the consensus estimate of $20,129 million.

Segment Results

Total Service revenues grew 6.6% year over year to $15,128 million, which include Postpaid service revenue growth of 9% driven by customer account and average revenue per account (ARPA) growth. Within it, postpaid revenues were $11,201 million, up 8.7%. T-Mobile recorded 1.3 million postpaid net customer additions and 589 thousand postpaid phone net customer additions in the quarter. Postpaid phone average revenue per user (ARPU) improved 2.3% year over year to $48.41, led by premium services, including Magenta MAX, partly offset by increased promotional activity.

Prepaid revenues were $2,455 million, up 4.4% year over year. Prepaid net customer additions were 62 thousand in the quarter. Prepaid ARPU grew 3.6% to $39.19. Wholesale and other service revenues were $1,472 million, down 4.3% year over year.

Equipment revenues totaled $4,694 million, down 12.2% year over year. Other revenues were $298 million, up 34.8%.

Other Details

Total operating expenses increased to $18,314 million from $17,620 million in the year-ago quarter. Operating income decreased to $1,806 million from $2,139 million. T-Mobile recorded an adjusted EBITDA of $6,950 million compared with $6,905 million a year ago. Merger-related costs were $1,413 million in the quarter.

Cash Flow & Liquidity

During the first quarter, T-Mobile generated $3,845 million of cash from operating activities compared with $3,661 million in the year-ago quarter. Free cash flow was $1,649 million compared with $1,304 million.

As of Mar 31, 2022, the company had $3,245 million in cash and cash equivalents with $66,861 million of long-term debt.

2022 Guidance Raised

T-Mobile has raised the guidance for 2022 across the board. The company now expects postpaid net customer additions between 5.3 million and 5.8 million, an increase from prior guidance of 5 million and 5.5 million. Core adjusted EBITDA (adjusted EBITDA less lease revenues) is estimated to be between $25.8 billion and $26.2 billion, an increase from prior guidance of $25.6 billion and $26.1 billion. It anticipates cash from operating activities between $15.7 billion and $16.1 billion, changed from prior guidance of $15.5 billion and $16.1 billion.

Cash purchases of property and equipment, including capitalized interest, are projected between $13.2 billion and $13.5 billion, changed from prior guidance of $13 billion and $13.5 billion. Free cash flow, including payments for merger-related costs, is estimated in the $7.2 billion to $7.6 billion range, changed from prior guidance of $7.1 billion to $7.6 billion.

T-Mobile is on track to complete the Sprint customer network migration mid-year and decommissioning by the year-end. Its Extended Range 5G covers 315 million people or 95% of Americans. The Ultra Capacity 5G covers 225 million people and nearly 85% of T-Mobile’s customers. About 45% of postpaid customers are currently using a 5G phone, and 5G devices account for more than half of the total network traffic.

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.

Gogo Inc. (GOGO - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 25% over the past 60 days.

Gogo delivered a trailing four-quarter earnings surprise of 65%, on average. It has rallied 79.8% in the past year.

Nokia (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 5% over the past 60 days.

Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average. It has returned 7.9% in the past year.

Sierra Wireless, Inc. carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.

Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has inched up 3.3% in the past year.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Nokia Corporation (NOK) - free report >>

T-Mobile US, Inc. (TMUS) - free report >>

Gogo Inc. (GOGO) - free report >>

Published in