T-Mobile US Q3 2024 $TMUS (+1.87%)

Financial performance: T-Mobile delivered a strong financial performance in Q3 2024, with total service revenues of USD 16.7 billion, an increase of 5% year-on-year. Postpaid service revenue grew 8% to USD 13.3 billion. Net income increased by 43% year-on-year to USD 3.1 billion, while diluted earnings per share (EPS) also increased by 43% to USD 2.61.

Balance sheet analysis: At the end of the third quarter of 2024, T-Mobile's net debt, excluding tower obligations, amounted to USD 72.6 billion. The company maintained a last twelve months (LTM) net debt to core adjusted EBITDA ratio of 2.3x, indicating a stable debt position.

Income statement: The income statement shows a significant increase in net income to $3.1 billion, driven by higher services and equipment revenue. Core adjusted EBITDA increased by 9% year-on-year to USD 8.2 billion, indicating improved operational efficiency.

Cash flow analysis: Net cash flow from operating activities increased by 16% year-on-year to USD 6.1 billion. Adjusted free cash flow also recorded a significant increase of 29% year-on-year, reaching USD 5.2 billion.

Key figures and profitability: Net profit margin improved significantly, underscoring the company's ability to efficiently convert revenues into profits. The core adjusted EBITDA margin amounted to 49.2%, indicating strong profitability.

Segment analysis: T-Mobile's postpaid sector continued to perform well, with 1.6 million new customers added. In contrast, the prepaid sector showed a weaker performance with only 24,000 new customers.

Competitive analysis: T-Mobile maintained its leadership position in network performance, which was recognized by third-party awards. The company's strategic focus on customer-centric network improvements and 5G expansion positions it well against the competition.

Forecasts and management comments: The company has raised its 2024 guidance on several metrics, including postpaid net additions and core adjusted EBITDA. Management remains optimistic about future growth driven by network improvements and customer acquisition strategies.

Risks and opportunities: The main risks include potential regulatory changes and competitive pressure in the mobile market. Opportunities exist in the expansion of the 5G network and in increasing market share in the high-speed internet sector.

Summary and strategic implications: T-Mobile's strong financial performance and strategic initiatives in network build-out and customer acquisition are expected to drive future growth. The company's focus on enhancing its 5G capabilities and customer experience is likely to strengthen its competitive position. However, it will need to overcome regulatory challenges and maintain customer growth to secure its market leadership. With my investment through $DTE (+1.33%) I am invested in T-Mobile and what can I say. The growth carrier of Telekom delivers.

Positive statements:

• Net postpaid customer growth: T-Mobile reported impressive net postpaid customer additions of 1.6 million, an increase of 349,000 year-over-year.
• Postpaid churn: The postpaid churn rate improved slightly by 1 basis point year-on-year and now stands at 0.86%, indicating improved customer retention.
• High-speed Internet customers: The company ended the quarter with 6.0 million high-speed Internet customers, reflecting strong growth in this segment.
• Total number of customer connections: Total customer connections increased to a record 127.5 million, reflecting T-Mobile's growing customer base.
• Forecast for Core Adjusted EBITDA: Core Adjusted EBITDA guidance was revised upward to between $31.6 billion and $31.8 billion, indicating a positive outlook for the company's financial performance.

Negative statements:

• Net customer growth in prepaid: The prepaid segment had challenges as net customer additions declined by 55,000 year-over-year and only 24,000 additions were recorded in the quarter.
• Net customer growth in high-speed Internet: There was a year-on-year decline of 142,000 net customer connections in the high-speed internet segment, equating to a total of 415,000, indicating slower growth in this segment.
• Interest expense: Interest expense for the quarter was significant and had a negative impact on net profit.
• Prepaid churn: Prepaid churn remained relatively high at 2.78% but showed a slight improvement of 3 basis points year-on-year.
• Use of the shareholder repayment program: There is a risk that the approved amount for the 2023-2024 shareholder repayment program may not be fully utilized, which could adversely affect shareholder value.