T-Mobile Earnings Soar
T-Mobile Tops Q2 Earnings and Subscriber Estimates, Lifts Full-Year Cash Flow Outlook
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Key Points
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T-Mobile raised its full-year adjusted free cash flow forecast to $18.4 billion to $18.8 billion, up from the prior range, signaling stronger cash generation alongside its upmarket 'Experience' strategy and efficiency gains.
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Postpaid net adds totaled 277,000, beating analyst expectations of about 259,000; average revenue per postpaid account rose 2% year over year to $152.91, and quarterly earnings per share were $2.99, topping consensus of $2.59.
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Operating income rose to $5.49 billion in the quarter (up from $5.213 billion a year earlier), underscoring stronger profitability beyond the headline EBITDA figure.
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Merger-related costs tied to the USCellular acquisition totaled about $146 million (net of tax) during the quarter.
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Postpaid service revenue grew 13% year over year to about $15.853 billion, driven by higher postpaid revenue and ongoing investments in the network and offerings.
T-Mobile posted a strong second quarter, adding 277,000 net postpaid accounts and beating analyst expectations of roughly 259,000, according to MarketScreener. Revenue climbed 7.9% to $22.79 billion, while earnings per share came in at $2.99, well above the $2.59 consensus estimate.
Despite the solid beat, shares slipped in premarket trading, reflecting cautious investor sentiment, Seeking Alpha noted. The results show T-Mobile's postpaid business remains resilient, even as account growth slows from last year's pace.
Postpaid Growth Beats but Slows from Last Year
T-Mobile added 277,000 net postpaid accounts in Q2, topping the 259,000 analysts had forecast, according to MarketScreener. That figure is modest compared to a year earlier, signaling the carrier's growth rate is cooling even as it stays ahead of Wall Street targets.
Average revenue per postpaid account rose 2% year over year to $152.91. Postpaid service revenue grew 13% to $15.853 billion. T-Mobile is pushing customers toward pricier 'Experience' plans, a strategy that lifts revenue even when raw account growth slows, MarketScreener reported.
Profits Rise as Operating Income Hits $5.49 Billion
Operating income climbed to $5.49 billion, up from $5.213 billion a year earlier, according to MarketScreener. Core adjusted EBITDA — a key profit measure before interest, taxes, and other costs — rose 11% to about $9.5 billion for the quarter.
The company also raised its full-year free cash flow forecast to between $18.4 billion and $18.8 billion, up from its prior range. That signals stronger cash generation as T-Mobile's efficiency gains and upmarket strategy take hold, Seeking Alpha reported.
USCellular Merger Costs Weigh on the Quarter
T-Mobile's acquisition of USCellular came with a price tag this quarter. Merger-related costs totaled about $146 million, net of tax, according to MarketScreener. That deal is part of T-Mobile's broader push to expand its network reach and diversify beyond wireless into fiber.
The carrier is also investing in fiber through acquisitions and joint ventures. These moves add short-term costs but are meant to build a stronger base for long-term growth as competition with AT&T and Verizon intensifies.
Full-Year Guidance Held Steady Despite Share Dip
Management kept its full-year guidance unchanged. T-Mobile still expects core adjusted EBITDA of $37.1 billion to $37.5 billion for 2024. It also held its postpaid net account addition outlook at 950,000 to 1.05 million for the full year, according to Seeking Alpha.
Shares fell in premarket trading after the results, even though T-Mobile beat on most key metrics. Investors appear focused on the slower pace of account additions rather than the earnings beat. Still, the raised cash flow forecast suggests the company's core business is generating more money than expected, MarketScreener noted.
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