T-Mobile US, Inc. ( TMUS Quick Quote TMUS - Free Report) reported solid second-quarter 2022 results with healthy customer growth driven by diligent execution of operational plans. While the bottom line beat the Zacks Consensus Estimate, 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 with focus on customers. Net Income
Net loss in the quarter was $108 million or 9 cents per share against net income of $978 million or 78 cents per share in the prior-year quarter. The decline was due to merger-related costs and other special expenses, net of tax of $1.9 billion or $1.52 per share. Excluding the one-time items, adjusted income for the quarter was $1.43 per share, which beat the Zacks Consensus Estimate of 42 cents.
Quarterly total revenues declined 1.2% year over year to $19,701 million despite a healthy improvement in service revenues due to lower equipment revenues. The top line lagged the consensus estimate of $20,160 million.
Service revenues grew 5.7% year over year to $15,316 million, which include Postpaid service revenue growth of 9.1% ($11,445 million) driven by higher customer account and average revenue per account (ARPA). T-Mobile recorded 1.7 million postpaid net customer additions and 723,000 postpaid phone net customer additions in the quarter. Postpaid phone average revenue per user (ARPU) improved 2.8% year over year to $48.96, led by premium services, including Magenta MAX. Prepaid revenues were $2,469 million, up 1.7% year over year. Prepaid net customer additions were 146,000 in the quarter. Prepaid ARPU grew 0.5% to $38.71. Wholesale and other service revenues were $1,402 million, down 10.9% year over year. Equipment revenues totaled $4,130 million, down 20.8% year over year. Other revenues were $255 million, up 4.9%. Other Details
Total operating expenses increased to $18,992 million from $17,844 million in the year-ago quarter. Operating income decreased to $709 million from $2,106 million. T-Mobile recorded an adjusted EBITDA of $7,004 million compared with $6,906 million a year ago.
Cash Flow & Liquidity
During the first six months of 2022, T-Mobile generated $8,054 million of cash from operating activities compared with $7,440 million in the year-ago period. Free cash flow was $3,407 million for the first half of 2022 compared with $2,975 million in the prior-year period.
As of Jun 30, 2022, the company had $3,151 million in cash and cash equivalents with $66,552 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 6 million and 6.3 million, an increase from prior guidance of 5.3 million and 5.8 million. Core adjusted EBITDA (adjusted EBITDA less lease revenues) is estimated to be between $26 billion and $26.3 billion, an increase from prior guidance of $25.8 billion and $26.2 billion. It anticipates cash from operating activities between $16 billion and $16.3 billion, changed from prior guidance of $15.7 billion and $16.1 billion.
Cash purchases of property and equipment, including capitalized interest, are projected between $13.5 billion and $13.7 billion, up from prior guidance of $13.2 billion and $13.5 billion. Free cash flow, including payments for merger-related costs, is estimated in the $7.3 billion to $7.6 billion range, changed from prior guidance of $7.2 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 320 million people. The Ultra Capacity 5G covers 235 million people and it expects to increase this tally to 260 million by the end of 2022. Zacks Rank & Stocks to Consider
T-Mobile currently carries a Zacks Rank #3 (Hold). You can see
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