TMUS Q2 2025 ARPA rises 5% as premium plans boost revenue
- Network Leadership & Expansion: T‑Mobile is aggressively expanding its network with 4,000 planned greenfield builds, integration of U.S. Cellular sites (expanding from 9,000 to 12,000 sites) primarily in rural areas, and enhanced capacity through initiatives like t satellite. This positions the company to capture more market share in underserved segments .
- Robust Fiber Broadband Growth: The company is executing its T Fiber strategy effectively—with 100,000 fiber net additions expected in the second half of the year via joint ventures (Lumos and MetroNet) and wholesale markets—illustrating strong momentum in broadband, which can drive incremental revenue and diversify its revenue streams .
- Premium Rate Plan & ARPA Growth: Leading execution on rate plan optimizations has driven over 5% ARPA growth—the highest in eight years—as customers migrate to premium plans. This not only enhances service revenues but also strengthens customer lifetime value, supporting prolonged margin expansion .
- Elevated churn risk: Q2 saw higher churn due to rate plan optimizations, and while management expects sequential improvement in Q3, sustained elevated churn could pressure subscriber retention and ARPU growth in a fiercely competitive market.
- Execution risk in fiber and broadband expansion: The ambitious target of 100,000 fiber net adds—relying on newly integrated or soon-to-close JV deals (e.g., Lumos and MetroNet) and wholesale market strategies—poses significant execution and integration challenges that could hinder expected revenue growth.
- Capital allocation and integration uncertainties: The ongoing large-scale acquisitions (such as the pending U.S. Cellular integration) and reliance on uncertain elements like tax benefits and synergy realization create risks that may delay or dilute anticipated productivity and profitability improvements.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 7% increase (from $19,772M in Q2 2024 to $21,132M in Q2 2025) | Total Revenue grew primarily due to higher service and postpaid revenues, along with improved equipment revenue performance. This builds on previous period trends where increased postpaid ARPA and a higher high-end device mix in Q1 2025 drove revenue gains. |
Service Revenue | 6% increase to $17,438M in Q2 2025 | Service Revenue rose as a result of higher postpaid and prepaid service revenues. Increased postpaid ARPA and growth in postpaid account numbers—factors noted in Q1 2025—supported this gain despite some offset from declining wholesale components. |
Postpaid Revenue | 9% increase (from $12,899M to $14,078M) | Postpaid Revenue strengthened owing to higher postpaid ARPA, an increased number of postpaid accounts, and a rising share of premium rate plans. Similar drivers contributed to an 8% increase in Q1 2025, underscoring a consistent trend in high-end service offerings. |
Prepaid Revenue | 2% increase (from $2,592M to $2,643M) | Prepaid Revenue saw modest growth driven by an increased average number of prepaid customers, partly due to acquisitions like the Ka’ena Acquisition. This gain is tempered by lower prepaid ARPU, echoing the modest trends observed in Q1 2025. |
Wholesale & Other Service Revenue | 24% decline (from $938M to $717M) | A significant decline in this segment is attributed to lower MVNO revenues, reduced DISH and TracFone performance, and decreased Affordable Connectivity Program revenues. These factors, which also impacted Q1 2025, compounded to drive down the overall revenue in this category. |
Equipment Revenue | 10.8% increase (from $3,106M to $3,439M) | Equipment Revenue improved due to an increase in the high-end phone mix, which boosted average revenue per device sold and increased liquidation revenue. This trend mirrors Q1 2025 performance where stronger device sales contributed to a marked rise in equipment revenue. |
Other Revenue | 7.6% increase (from $237M to $255M) | Other Revenue experienced a modest uplift, potentially linked to reclassified device recovery revenue moving from equipment to other revenue. Although detailed drivers are not fully explained, this minor change aligns with similar subtle variations observed in previous periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Postpaid Net Additions | FY 2025 | 5.5 million to 6 million | 6.1 million to 6.4 million | raised |
Postpaid ARPA Growth | FY 2025 | At least 3.5% | At least 3.5% | no change |
Organic Service Revenue Growth | FY 2025 | Closer to 6% | At least 6% | no change |
Core Adjusted EBITDA | FY 2025 | 33.2 to 33.7 | 33.3 to 33.7 | raised |
Adjusted Free Cash Flow | FY 2025 | 17.5 to 18 | 17.6 billion to 18.0 billion | raised |
Cash CapEx | FY 2025 | 9.5 | Approximately 9.5 billion | no change |
Postpaid Phone Net Additions | FY 2025 | no prior guidance | 2.95 million to 3.1 million | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Organic Service Revenue Growth | Q2 2025 | Closer to 6% | 6.1% (from Q2 2024: 16,429To Q2 2025: 17,438) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Network Leadership & Expansion | Emphasized consistently in Q1 ( ), Q4 ( ) and Q3 ( ) through 5G advancements, customer perception campaigns, and targeted acquisitions. | Focus on expanding the network with nearly 4,000 new sites, a commercial T-Satellite service, and enhanced customer perception efforts ( ). | Increasing emphasis on tangible network expansion and performance improvement, building on prior commitments. |
Broadband and Fiber Growth | Discussed across Q1 ( ), Q4 ( ) and Q3 ( ) with strong broadband customer momentum and multiple fiber transactions. | Highlights include the T Fiber launch and an ambitious goal of 100,000 fiber net additions using a unified T Fiber platform ( ). | Consistent robust growth combined with enhanced asset integration and clearer go-to-market strategies. |
Premium ARPA/Rate Plan Optimization | Addressed in Q1 ( ) and Q4 ( ), with Q3 noting modest ARPA improvements ( ) driven by premium plan adoption. | Reports over 5% ARPA growth with strong customer self-selection into the highest premium tiers and finalized rate plan optimizations ( ). | Accelerated premium adoption and stronger ARPA momentum, reflecting deeper customer upgrade trends relative to earlier periods. |
Customer Churn Risk | Discussed in Q1 ( ) with temporary churn due to price hikes, in Q4 (record low churn) and Q3 ( ) with strong retention metrics. | Churn is expected to be temporarily higher due to the finalization of rate plan changes, with a turnaround anticipated in Q3 ( ). | Short-term volatility from pricing initiatives with expectations of stabilization and improved retention in subsequent quarters. |
Acquisition, Integration & Capital Allocation Risks | Covered in Q1 ( ) regarding Lumos/Metronet and US Cellular, in Q4 ( ) with broader M&A discussions, and in Q3 ( ) noting regulatory and spectrum transaction updates. | Detailed updates on closing the US Cellular acquisition, progress on the MetroNet joint venture, and strategic divestitures (e.g. Grain licenses) ( ). | Enhanced clarity and proactive integration with a more defined capital allocation strategy that builds on earlier M&A initiatives. |
Technological Leadership & 5G/Digital Innovation | Consistently emphasized in Q1 with 5G Advanced and T-Satellite ( ), in Q4 with AI integration and Starlink connectivity ( ), and in Q3 through digital transformation efforts ( ). | Emphasis remains on technological leadership with advanced 5G, the commercial rollout of T-Satellite, and digital transformation via AI-enabled services ( ). | A steady commitment to innovation that builds on previous advancements, with the current period reinforcing and expanding digital and network capabilities. |
Wholesale Revenue Decline & Partner Offloading Risks | Addressed in Q1 ( ), Q4 ( ) and Q3 ( ) highlighting expected declines from DISH/TracFone and related offloading risks. | Not mentioned. | The topic has been de-emphasized, suggesting potential stabilization or a strategic shift away from this focus in recent communications. |
Tariff Uncertainty | Touched on in Q1 ( ) with concerns over potential handset tariff impacts; not highlighted in Q4 or Q3. | Not mentioned. | Continued de-emphasis as any potential impacts appear to be already factored into guidance. |
Direct-to-Device Service Challenges with Starlink | Discussed in Q3 ( ) (challenges with FCC authorization) and in Q4 ( ) (beta service progress), with no mention in Q1. | Not mentioned. | No current reference indicates that either challenges have been resolved or the priority has shifted away from this topic. |
6G Spectrum Investment & Cost Uncertainty | Mentioned in Q3 ( ) regarding potential efficiency improvements and strategic partnerships; only minimal or indirect references in Q1/Q4. | Not mentioned. | De-emphasized in the current period, suggesting that 6G investment issues are not a near-term focus relative to immediate 5G and digital initiatives. |
Fixed Wireless Capacity Constraints | Addressed in Q1 ( ) by describing the fallow capacity model and in Q4 ( ) with a detailed analysis; Q3 focused on overall fixed wireless performance without emphasizing constraints ( ). | Discussed through the fallow capacity model and enhancements in the 5G SA network allowing optimal utilization of existing capacity ( ). | Consistent management of capacity through innovative allocation methods, building on past performance with continued operational optimization. |
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ARPA & Cable
Q: What drives ARPA growth and cable partnership?
A: Management explained that ARPA grew nearly 5% thanks to effective rate plan optimizations and customers moving up into premium tiers, while a new multiyear cable partnership is poised to capture incremental SMB revenue. -
Rural Market Share
Q: How is rural market share progressing?
A: Leaders noted they have surpassed the 20% share target in smaller markets, with further improvements expected as U.S. Cellular integration and tailored investments further enhance network coverage. -
Fiber Business
Q: What is the fiber net-add outlook?
A: Executives indicated that the fiber business is on track to deliver 100,000 net adds by combining JV and wholesale efforts, reinforcing the strength of their fiber expansion strategy. -
Churn Trend
Q: How will churn trend in coming quarters?
A: Although Q2 saw a slight uptick due to rate plan adjustments, management expects churn to decline in Q3 and stabilize, reflecting their resilient competitive position. -
Broadband & FWA
Q: What is driving 5G broadband performance?
A: Improved word-of-mouth, higher usage (about 560 GB per user), and national speeds in the 200–250 Mbps range are powering strong momentum in their 5G broadband and FWA offerings. -
Market Position
Q: How is T-Mobile balancing disruption and stability?
A: The team emphasized that while they continue to act as a disruptive force with best network and value, they are simultaneously ensuring lasting profitability and prudent reinvestment. -
Slicing & Satellite
Q: What enterprise interest exists in slicing and t‑satellite?
A: There is robust interest among enterprises and first responders for guaranteed service levels, with t‑satellite proving critical—especially highlighted during recent emergency situations. -
Broadband Scale
Q: How does T‑Mobile’s broadband scale compare to cable peers?
A: Management stressed that they are focused on a superior product mix with FWA and fiber, targeting a scale equivalent to 40–45 million homes passed, rather than chasing scale for its own sake.
Research analysts covering T-Mobile US.