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T-Mobile US, Inc. (TMUS)·Q1 2025 Earnings Summary

Executive Summary

  • Strong start to 2025: record Q1 diluted EPS ($2.58), 5% YoY service revenue growth to $16.9B, and Core Adjusted EBITDA up 8% to $8.26B, supported by best-ever Q1 postpaid net adds (1.34M) and continued fixed wireless broadband leadership (424K HSI net adds) .
  • Guidance raised at the midpoint for FY25 Core Adjusted EBITDA (+$0.1B), net cash from operations (+$0.1B), and Adjusted FCF (+$0.1B); postpaid net add outlook maintained at 5.5–6.0M; capex unchanged at ~$9.5B .
  • Mix and monetization remain healthy: postpaid ARPA stable sequentially at $146.22 and up YoY; management lifted 2025 ARPA growth expectation to ≥3.5% and postpaid phone ARPU growth to 1.5% on deeper premium plan adoption and household share gains .
  • Strategic catalysts: nationwide 5G Advanced rollout, beta traction and pricing set for T‑Satellite ($10/month; included in select plans; commercial launch in July), and fiber expansion via Lumos JV (T‑Fiber launch this quarter) .

What Went Well and What Went Wrong

What Went Well

  • Industry-leading customer momentum: best-ever Q1 postpaid net adds (1.34M), strong postpaid phone net adds (495K), and continued HSI leadership (424K net adds; lowest broadband churn to date) .
  • Cash generation: record Q1 Adjusted FCF ($4.40B) with 26.0% FCF-to-service revenue conversion and $6.85B cash from ops (+35% YoY), aided by working capital/receivables sale flow changes from Nov 1, 2024 .
  • Technology leadership and product innovation: nationwide 5G Advanced (standalone core), 6.3 Gbps field test, slicing progress, and T‑Satellite momentum and pricing; “first and only” carrier to roll out 5G Advanced nationwide .
    Quote: “We’re excited today to announce that T‑Mobile is now the first and only carrier in the country to roll out 5G Advanced nationwide… [and] after gauging the incredible response… we’ve set our final launch pricing for T‑Satellite at just $10 a month.”

What Went Wrong

  • Slight pressure on postpaid phone: net adds decreased YoY (495K, −37K YoY) and churn ticked up 5 bps YoY to 0.91%, tied to “temporary” impact from rate plan optimizations (price ups) .
  • Wholesale/other service revenue drift: YoY decline driven by lower MVNO revenues (including DISH/TracFone) and ACP moderation, marking a headwind within service revenue mix .
  • Equipment economics: YoY growth in equipment cost tied to higher high‑end device mix and upgrades; though sequentially costs fell with seasonal unit volume .

Financial Results

Income Statement and Cash Flow (USD)

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($B)$20.162 $21.872 $20.886
Service Revenues ($B)$16.725 $16.928 $16.925
Postpaid Service Revenues ($B)$13.308 $13.502 $13.594
Net Income ($B)$3.059 $2.981 $2.953
Diluted EPS ($)$2.61 $2.57 $2.58
Adjusted EBITDA ($B)$8.243 $7.916 $8.259
Core Adjusted EBITDA ($B)$8.222 $7.905 $8.258
Cash from Operations ($B)$6.139 $5.549 $6.847
Capital Expenditures ($B)$1.961 $2.212 $2.451
Adjusted Free Cash Flow ($B)$5.162 $4.084 $4.396

Service Revenue Mix (USD)

MetricQ3 2024Q4 2024Q1 2025
Postpaid Revenues ($B)$13.308 $13.502 $13.594
Prepaid Revenues ($B)$2.716 $2.688 $2.643
Wholesale & Other Svc ($B)$0.701 $0.738 $0.688
Total Service Revenues ($B)$16.725 $16.928 $16.925

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Postpaid Net Adds (000s)1,575 1,933 1,337
Postpaid Phone Net Adds (000s)865 903 495
Postpaid Phone Churn (%)0.86% 0.92% 0.91%
Prepaid Net Adds (000s)24 103 45
HSI Net Adds (000s)415 428 424
Total HSI Customers (000s)6,002 6,430 6,854
Postpaid ARPA ($)145.60 146.28 146.22
Postpaid Phone ARPU ($)49.79 49.73 49.38

Notes:

  • Net debt (ex-tower) ended Q1 at $76.0B; LTM net-debt-to-Core Adj. EBITDA 2.3x .
  • Q1 shareholder returns of $3.47B (repurchases $2.47B; dividends $1.00B; DPS $0.88 paid Mar 13) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Postpaid Net Adds (M)FY 20255.5 – 6.0 5.5 – 6.0 Maintained
Core Adjusted EBITDA ($B)FY 202533.1 – 33.6 33.2 – 33.7 Raised ($+0.1B midpoint)
Net Cash from Ops ($B)FY 202526.8 – 27.5 27.0 – 27.5 Raised ($+0.1B midpoint)
Capital Expenditures ($B)FY 2025~9.5 ~9.5 Maintained
Adjusted FCF ($B)FY 202517.3 – 18.0 17.5 – 18.0 Raised ($+0.1B midpoint)
Effective Tax Rate (%)FY 202524 – 26 24 – 26 Maintained
Postpaid ARPA Growth (YoY)FY 2025~3% (prior internal outlook) ≥3.5% Raised
Postpaid Phone ARPU Growth (YoY)FY 20251.1% (FY24 actual context) 1.5% Raised

Guidance excludes pending UScellular and Metronet and includes Lumos, Vistar Media and Blis as noted .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Network & 5G AdvancedLeadership affirmed; Opensignal/Ookla awards; VoNR scale and premium experiences Nationwide 5G Advanced rolled out; 6.3 Gbps field test; slicing scale-up Strengthening tech lead
Digital/AI & CXDigital transformation ongoing; strong self-service adoption (prior narratives) T‑Life driving >50% of upgrades digitally by Q1-end; OpenAI-powered intent CX reducing care contacts Improving efficiency and NPS
Fixed Wireless Broadband6.0M subs Q3; leadership reiterated Q4 424K net adds; lowest churn; pricing/ARPU gains; T‑Fiber launch following Lumos close Continuing leadership; layering fiber
Fiber StrategyCapital Markets Day targets; FY25 outlook excluded M&A Lumos JV closed (Apr 1); T‑Fiber launch this quarter; fiber JVs neutral to 2025 EBITDA/FCF, accretive longer term Disciplined expansion
Pricing/ChurnRecord low FY24 postpaid phone churn (0.86%) Temporary churn impact from rate plan optimizations; managed via test-learn rollout Managing through price-ups
Tariffs/MacroN/A in prior tablesPotential handset tariff impacts likely borne by customers; no material change to outlook embedded Watching; not in guide
Wholesale/Other Svc2024 headwinds from DISH/TracFone/ACP Q1 seen as low point; underlying growth (ex DISH/TracFone) plus T‑Ads and M&A Stabilizing ex-MVNO runoff

Management Commentary

  • “A record number of customers chose the Un‑carrier in Q1… our High Speed Internet business led the industry… and all of this customer growth drove fantastic financial growth with… our highest-ever Q1 Adjusted Free Cash Flow.” — Mike Sievert, CEO .
  • “We’re now the first and only carrier… to roll out 5G Advanced nationwide… and… final launch pricing for T‑Satellite at just $10 a month… Commercial service starts in July.” — Mike Sievert, CEO .
  • “We’re increasing our postpaid ARPA growth expectations to at least 3.5%… and… postpaid phone ARPU to 1.5% this year… We now expect 2025 core adjusted EBITDA of $33.2–$33.7B… Adjusted FCF of $17.5–$18.0B.” — Peter Osvaldik, CFO .
  • “With the completion of… Lumos, we’re now set to officially launch T‑Fiber later this quarter… another step on our journey of profitably serving even more broadband customers.” — Mike Sievert, CEO .

Q&A Highlights

  • Fiber JVs and contribution: Lumos retail is slightly accretive to service revenue and neutral to 2025 EBITDA/FCF; equity-method JV earnings immaterial in 2025; broader T‑Fiber update to follow after Metronet close .
  • Pricing/churn dynamics: Price-ups targeted to legacy plans; churn impacts temporary and expected across Q1 notice/Q2 bill cycles; overall industry still generating record cash flows despite device-promo competition .
  • Wholesale & T‑Ads: Underlying wholesale growth excluding DISH/TracFone runoff; Q1 likely low point; full-year ~“$2.9B-ish” for wholesale/other including T‑Ads and acquired assets .
  • Tariffs: Potential handset tariffs would likely shift to customers, slowing upgrades; no material impact currently embedded in guidance; continue to monitor .
  • Broadband and demand environment: 5G broadband showing lowest churn, rising ARPU, strong NPS leadership; confident in path to 12M broadband subs by 2028; elevated gross adds into Q2 not disclosed intra‑quarter .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable at query time; therefore, we cannot quantify beats/misses vs. estimates. Values would normally be retrieved from S&P Global; consensus not available at time of request (S&P Global).

Key Takeaways for Investors

  • Momentum intact across customer growth and monetization: postpaid ARPA/ARPU inflecting upward while maintaining industry-leading net adds and share gains in top 100 markets and enterprise .
  • Free cash flow engine compounding: record Q1 Adjusted FCF ($4.40B) with 26% conversion; FY25 FCF midpoint raised to $17.75B, supporting ongoing repurchases/dividends .
  • Tech/product catalysts: 5G Advanced, T‑Satellite July launch at $10/month, and T‑Fiber expansion underpin multi‑year differentiation and cross‑sell opportunities .
  • Pricing risk manageable: temporary churn from plan optimizations appears contained; mix and premium plan uptake support raised ARPA/ARPU outlooks .
  • Wholesale headwinds stabilizing: DISH/TracFone runoff offset by underlying wholesale growth and T‑Ads scale; Q1 likely the trough .
  • Balance sheet/leverage in range: net debt/EBITDA ~2.3x; targeting ~2.5x by YE25 given M&A/spectrum funding while maintaining robust shareholder returns .
  • Near-term setup: Guide raise, durable HSI adds, and T‑Satellite pricing/launch are potential positive catalysts into Q2; monitor tariff policy outcomes and any broader churn upticks tied to industry price actions .