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Will Top-Line Decline Impede T-Mobile's (TMUS) Q4 Earnings?
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T-Mobile US, Inc. (TMUS - Free Report) is set to report fourth-quarter 2023 results on Jan 25, after the closing bell. In the last reported quarter, the company reported adjusted earnings of $1.82 per share and delivered an earnings surprise of 4%. The wireless service provider is expected to report lower revenues year over year in the fourth quarter, owing to macroeconomic challenges and fierce competition in the U.S. wireless market.
Factors at Play
In the fourth quarter, Seattle University opted to deploy T-Mobile’s 5G services to provide robust Internet connectivity across the campus premises at a significantly lower cost. This will enhance the digital learning experience, boost research collaboration and drive technology innovation at the institute. Moreover, 5G-powered smart cameras were deployed to augment campus safety.
T-Mobile successfully achieved its 2023 goal of connecting 300 million people with Ultra Capacity 5G network. The target was reached two months before the scheduled deadline. The company’s overall 5G coverage reached more than 330 million people across the country. These are likely to get reflected in the upcoming results.
During the quarter, T-Mobile collaborated with Deutsche Telekom Global to validate roaming service on a 5G Standalone (SA) network. The company’s ultra-high bandwidth and low latency 5G network was also utilized to enhance the broadcasting of the Formula 1 Las Vegas Grand Prix. These developments are likely to have supported the top line in the fourth quarter.
In the to-be-reported quarter, TMUS successfully tested 5G standalone millimeter wave (mmWave) on its production network for faster download and upload speed. The first-of-its-kind test on the 5G network accentuates the Un-carrier’s multi-band spectrum strategy as it aims to reach a broader user base across the country. Collaborating with Ericsson and Qualcomm Technologies, it aggregated eight channels of mmWave spectrum to reach download speeds of 4.3 Gbps and four channels on the uplink for an upload speed of above 420 Mbps. This is likely to have a favorable impact on fourth-quarter earnings.
T-Mobile operates in a highly competitive and saturated U.S. Wireless industry. This impacts profitability. Moderation of industry growth is also impacting net sales from prepaid services. Declining equipment revenues are also likely to impact the top line. Management’s strategy of introducing several promotional activities, such as free music streaming, video offers and price cuts on service plans and adoption of phone leasing plans where equipment revenues are not booked upfront, creates a margin squeeze for the company.
Our estimate for total service revenues is pegged at $16,187.5 million. Our estimate for equipment revenues is pegged at $3,073.9 million, indicating a 30.9% decrease year over year. Branded postpaid and prepaid ARPU are likely to witness a decline year over year.
For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $19,692 million, which indicates a decline from the year-ago quarter’s reported figure of $20,273 million. The consensus estimate for adjusted earnings per share stands at $1.90, up from $1.18 reported a year ago.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for T-Mobile this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.22%. The Most Accurate Estimate is pegged at $1.84, while the Zacks Consensus Estimate stands at $1.90. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: T-Mobile currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for NVIDIA Corporation (NVDA - Free Report) is +3.68% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 28.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.46% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
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Will Top-Line Decline Impede T-Mobile's (TMUS) Q4 Earnings?
T-Mobile US, Inc. (TMUS - Free Report) is set to report fourth-quarter 2023 results on Jan 25, after the closing bell. In the last reported quarter, the company reported adjusted earnings of $1.82 per share and delivered an earnings surprise of 4%. The wireless service provider is expected to report lower revenues year over year in the fourth quarter, owing to macroeconomic challenges and fierce competition in the U.S. wireless market.
Factors at Play
In the fourth quarter, Seattle University opted to deploy T-Mobile’s 5G services to provide robust Internet connectivity across the campus premises at a significantly lower cost. This will enhance the digital learning experience, boost research collaboration and drive technology innovation at the institute. Moreover, 5G-powered smart cameras were deployed to augment campus safety.
T-Mobile successfully achieved its 2023 goal of connecting 300 million people with Ultra Capacity 5G network. The target was reached two months before the scheduled deadline. The company’s overall 5G coverage reached more than 330 million people across the country. These are likely to get reflected in the upcoming results.
During the quarter, T-Mobile collaborated with Deutsche Telekom Global to validate roaming service on a 5G Standalone (SA) network. The company’s ultra-high bandwidth and low latency 5G network was also utilized to enhance the broadcasting of the Formula 1 Las Vegas Grand Prix. These developments are likely to have supported the top line in the fourth quarter.
In the to-be-reported quarter, TMUS successfully tested 5G standalone millimeter wave (mmWave) on its production network for faster download and upload speed. The first-of-its-kind test on the 5G network accentuates the Un-carrier’s multi-band spectrum strategy as it aims to reach a broader user base across the country. Collaborating with Ericsson and Qualcomm Technologies, it aggregated eight channels of mmWave spectrum to reach download speeds of 4.3 Gbps and four channels on the uplink for an upload speed of above 420 Mbps. This is likely to have a favorable impact on fourth-quarter earnings.
T-Mobile operates in a highly competitive and saturated U.S. Wireless industry. This impacts profitability. Moderation of industry growth is also impacting net sales from prepaid services. Declining equipment revenues are also likely to impact the top line. Management’s strategy of introducing several promotional activities, such as free music streaming, video offers and price cuts on service plans and adoption of phone leasing plans where equipment revenues are not booked upfront, creates a margin squeeze for the company.
Our estimate for total service revenues is pegged at $16,187.5 million. Our estimate for equipment revenues is pegged at $3,073.9 million, indicating a 30.9% decrease year over year. Branded postpaid and prepaid ARPU are likely to witness a decline year over year.
For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $19,692 million, which indicates a decline from the year-ago quarter’s reported figure of $20,273 million. The consensus estimate for adjusted earnings per share stands at $1.90, up from $1.18 reported a year ago.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for T-Mobile this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.22%. The Most Accurate Estimate is pegged at $1.84, while the Zacks Consensus Estimate stands at $1.90. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. price-eps-surprise | T-Mobile US, Inc. Quote
Zacks Rank: T-Mobile currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
InterDigital, Inc. (IDCC - Free Report) is set to release quarterly numbers on Feb 15. It has an Earnings ESP of +1.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NVIDIA Corporation (NVDA - Free Report) is +3.68% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 28.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.46% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar..