Q4 2024 Earnings Summary
- T-Mobile increased its 2025 service revenue growth guidance to approximately 5%, up from the previous 4%, reflecting strong financial momentum and confidence in continued customer growth. ,
- The company is pursuing strategic acquisitions and partnerships, including U.S. Cellular, MetroNet, and Lumos, which are expected to be accretive and enhance future growth opportunities.
- T-Mobile provided its highest-ever guidance for total postpaid customer net additions of between 5.5 million and 6 million in 2025, indicating strong demand across all business segments and confidence in capturing market share. , ,
- Declining wholesale revenue due to major partners offloading traffic: T-Mobile anticipates that 2025 will be the low point for wholesale revenue, as partners like TracFone and DISH are building their own networks and moving off T-Mobile's, ultimately reducing their contributions to zero. This reduction in wholesale revenue could pressure overall revenue growth and offset gains elsewhere.
- Significant capital investments and integration risks from acquisitions: The company is embarking on several acquisitions and joint ventures, including U.S. Cellular, MetroNet, and Lumos, which, while potentially value-accretive in the long run, could impact free cash flow due to required capital investments. Additionally, there are risks associated with integrating these businesses, and the company provided limited details on the expected EBITDA contributions or potential operational challenges.
- Potential capacity constraints limiting fixed wireless growth: T-Mobile manages fixed wireless customer additions carefully to avoid network congestion, especially in highly utilized cells. This suggests that there may be limits to growth in fixed wireless broadband due to capacity constraints, which could hinder the company's ability to sustain its current rate of customer additions in this segment.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Postpaid Customer Net Additions | FY 2024 | 5.6M to 5.8M | no current guidance | no current guidance |
Postpaid Phone Net Additions | FY 2024 | approximately 3M | no current guidance | no current guidance |
Postpaid ARPA | FY 2024 | 3% year-over-year | no current guidance | no current guidance |
Core Adjusted EBITDA | FY 2024 | $31.6B to $31.8B | no current guidance | no current guidance |
Cash CapEx | FY 2024 | $8.8B to $9.0B | no current guidance | no current guidance |
Adjusted Free Cash Flow | FY 2024 | $16.7B to $17.0B | no current guidance | no current guidance |
Total Postpaid Customer Net Additions | FY 2025 | no prior guidance | 5.5M to 6.0M | no prior guidance |
Postpaid Phone Net Additions | FY 2025 | no prior guidance | approximately half of total adds | no prior guidance |
Service Revenue Growth | FY 2025 | no prior guidance | 5% | no prior guidance |
Postpaid ARPA | FY 2025 | no prior guidance | 3% | no prior guidance |
Core Adjusted EBITDA | FY 2025 | no prior guidance | $33.1B to $33.6B | no prior guidance |
Cash CapEx | FY 2025 | no prior guidance | $9.5B | no prior guidance |
Adjusted Free Cash Flow | FY 2025 | no prior guidance | $17.3B to $18.0B | no prior guidance |
Cash Income Tax Payments | FY 2025 | no prior guidance | $700M | no prior guidance |
Cash Interest Payments | FY 2025 | no prior guidance | $3.9B | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consistent postpaid phone net additions growth across quarters | Q3 2024: Best Q3 adds in a decade. Q2 2024: Highest Q2 ever with 777,000 phone net adds. Q1 2024: Postpaid phone churn matched best-ever Q1. | Highlighted 903,000 net additions; third consecutive year of 3+ million postpaid phone net adds. | Recurring with ongoing positive sentiment |
Recurring capacity constraints for fixed wireless broadband impacting growth | Q3 2024: No mention. Q2 2024: Fallow capacity model explained in detail. Q1 2024: 7–8 million total opportunity acknowledged with capacity constraints. | Confirmed algorithm-based approvals to avoid congestion; no sustained capacity issues. | Recurring but absent in Q3 2024 |
Recurring wholesale revenue declines from partners offloading traffic (TracFone, DISH, ACP) | Q3 2024: 2025 as trough year for wholesale. Q2 2024: Declines tied to ACP wind-down and partner traffic shift. Q1 2024: No mention. | 2025 expected to be the low point; TracFone/DISH offloading planned. | Ongoing |
Competitive pressure from mid-band spectrum expansions | Q1 2024: Acknowledged competitors’ C-band narrowed the gap slightly, but T-Mobile still leads. No mention in Q2 or Q3 2024. | No mention in Q4 2024. | No longer mentioned after Q1 2024 |
Integration and capital risks from acquisitions (U.S. Cellular, MetroNet, Lumos) | Q3 2024: Regulatory progress updates on U.S. Cellular, MetroNet, Lumos. No mention in Q2 or Q1 2024. | Discussed Sprint integration learnings, JV structures, and synergy focus; value accretive over time. | New in recent quarters |
Raised 2025 service revenue growth guidance (from 4% to 5%) | No mention in Q3, Q2, or Q1 2024. | Increased confidence driven by ARPA growth, wholesale stabilization, and strong subscriber outlook. | New |
Shifting sentiment on postpaid net additions, with record-high guidance of 5.5–6 million for 2025 | No mention in Q3, Q2, or Q1 2024 regarding 2025 guidance. | Record guidance due to success across consumer, rural, and business segments; half expected to be phone net additions. | New |
Growing reliance on strategic fiber partnerships | Q3 2024: Fiber approach not heavily emphasized. Q2 2024: Partnerships with KKR for Metronet and Lumos. Q1 2024: Fiber as complement to 5G; Lumos JV details. | Emphasized JV structures (e.g., MetroNet, Lumos) to expand broadband in a capital-light manner. | Recurring |
Significant future impact of large-scale acquisitions on free cash flow and EBITDA | Q3 2024: No detailed EBITDA/FCF impact mentioned. Q2 2024: No explicit large-scale acquisition impact noted. Q1 2024: No mention. | Not fully quantified; expected to be value accretive but contingent on deal closures and final structures. | New |
Potential indefinite constraints on fixed wireless capacity as data usage grows | Q3 2024: Not mentioned. Q2 2024: Sophisticated sector-level capacity model. Q1 2024: 7–8 million opportunity; exploring expansion. | Algorithm-based checks ensure capacity for years to come; no sign of indefinite constraints. | Recurring except Q3 2024 |
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Capital Allocation and Buybacks
Q: How are you thinking about the pace of buybacks in 2025 given acquisitions?
A: We have contemplated all announced acquisitions and JV partnerships, including U.S. Cellular and MetroNet Lemos, in our authorization for up to $14 billion in 2025. We expect buyback pacing in 2025 to be more ratable during the year as we approach shareholder returns. -
Revenue and Subscriber Guidance
Q: What's driving the 5% service revenue growth guidance and confidence in subscriber growth?
A: Growth is driven by slowing wholesale decline and accelerating ARPA growth. We're outperforming expectations across all areas, gaining share in top 100 markets and rapidly in smaller and rural areas that represent over 40% of the country. Exceptional performance in T-Mobile for Business gives us confidence to tune up our guidance as we enter 2025. -
ARPU Growth Drivers
Q: Is ARPU growth driven by selling more into the base and bundled customer growth?
A: Yes, ARPU is driven by growth across all vectors, including customers self-selecting higher rate plans and momentum in high-speed broadband. We've achieved the highest-ever year-over-year fixed broadband ARPU growth. Addressing outdated legacy rate plans offers additional tailwinds for ARPA growth in 2025. -
Broadband Pricing Strategy
Q: How are you approaching broadband pricing and market segmentation?
A: We're focusing on competitively priced constructs that address value shoppers while providing more value when customers trade up. Changes made in Q4 allowed us to compete for price-discerning customers while realizing significant gains in broadband ARPA. We see opportunities to deepen ARPU within core broadband services and associated offerings. -
Vistar Acquisition and Advertising Ambitions
Q: What does the Vistar acquisition indicate about your advertising ambitions?
A: The Vistar acquisition presents an opportunity to transform the out-of-home advertising industry. By combining Vistar's technology with our customer intelligence, we aim to bring measurability and impact to outdoor advertising. Our goal is to make digital outdoor media addressable for the first time, offering marketers insights into media performance and consumer engagement. -
Wholesale Philosophy and MVNO Strategy
Q: What's your wholesale philosophy and pricing strategy for MVNO opportunities?
A: We seek partners who can target audiences better than we can with our existing brands. Our pricing aims for a great return on our network, ensuring margins are attractive at the wholesale level. We carefully manage capacity to avoid network congestion due to fixed wireless, approving applicants only if sectors have excess capacity.
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