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T-Mobile US, Inc. (TMUS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered industry-leading customer growth and strong financials: total revenues rose to $21.87B (+6.8% YoY; +8.5% QoQ), service revenues to $16.93B (+5.5% YoY; +1.2% QoQ), and diluted EPS to $2.57 (+53.9% YoY; -1.5% QoQ) .
  • Postpaid growth remained best-in-class: 903K postpaid phone net adds, 1.93M total postpaid net adds, and phone churn of 0.92% (tied for lowest Q4), while High Speed Internet added 428K (12th straight quarter leading broadband net adds) .
  • FY 2025 guidance: postpaid net adds 5.5–6.0M (highest-ever start-of-year range), Core Adjusted EBITDA $33.1–$33.6B (~5% YoY at midpoint), Adjusted FCF $17.3–$18.0B; effective tax rate 24–26% .
  • Catalysts highlighted: beta rollout of Starlink direct-to-cell service (texting initially), plus a significant City of New York public safety network contract validating T-Mobile’s 5G leadership .

What Went Well and What Went Wrong

What Went Well

  • Record growth with resilient churn: 903K postpaid phone net adds and 0.92% Q4 phone churn; total customer connections hit 129.5M, HSI customers reached 6.43M .
  • Service revenue and profitability strength: postpaid service revenues grew 8.3% YoY to $13.50B; Core Adjusted EBITDA rose 10.1% YoY to $7.91B in Q4; FY diluted EPS reached a company record $9.66 .
  • Management confidence and network leadership: “another monster Q4,” with the strongest start-of-year postpaid net adds guide; third-party network wins (Opensignal, Ookla); City of New York public safety contract secured .
    • “In 2024, more new postpaid customers chose the Un-carrier than ever before… Now… 2025 is poised to be even more exciting…” — CEO Mike Sievert .

What Went Wrong

  • Sequential softness in profitability and cash: Q4 net income and diluted EPS declined vs. Q3 (NI -2.5%, EPS -1.5%); Adjusted EBITDA fell 4.0% QoQ; operating cash flow (-9.6% QoQ) and Adjusted FCF (-20.9% QoQ) pulled back on higher capex and working capital .
  • Higher equipment mix costs and promotional intensity: cost of equipment sales +41% QoQ on seasonal high-end phone mix and unit volumes; SG&A +3% QoQ on seasonal selling, labor and advertising .
  • Wholesale and ACP headwinds: management reiterated wholesale revenue trough in 2025 as TracFone and DISH volumes taper; ACP decline pressures wholesale/other service revenues .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($MM)$20,478 $20,162 $21,872
Total Service Revenues ($MM)$16,043 $16,725 $16,928
Postpaid Service Revenues ($MM)$12,472 $13,308 $13,502
Net Income ($MM)$2,014 $3,059 $2,981
Diluted EPS ($)$1.67 $2.61 $2.57
Adjusted EBITDA ($MM)$7,224 $8,243 $7,916
Core Adjusted EBITDA ($MM)$7,181 $8,222 $7,905
Net Cash Provided by Operating Activities ($MM)$4,859 $6,139 $5,549
Cash Purchases of P&E incl. capitalized interest ($MM)$1,587 $1,961 $2,212
Adjusted Free Cash Flow ($MM)$4,305 $5,162 $4,084
Q/Q Change (%)—see rowsee row
Q4 2024 vs Q3 2024 (%)——Total rev +8.5%; Service rev +1.2%; NI -2.5%; EPS -1.5%; Adj. EBITDA -4.0%; Core Adj. EBITDA -3.9%; CFO -9.6%; Capex +12.8%; Adj. FCF -20.9%
Y/Y Change (%)——Total rev +6.8%; Service rev +5.5%; NI +48.0%; EPS +53.9%; Adj. EBITDA +9.6%; Core Adj. EBITDA +10.1%

Segment revenue breakdown

Revenue Component ($MM)Q4 2023Q3 2024Q4 2024
Postpaid Revenues$12,472 $13,308 $13,502
Prepaid Revenues$2,433 $2,716 $2,688
Wholesale & Other Service Revenues$1,138 $701 $738
Total Service Revenues$16,043 $16,725 $16,928
Equipment Revenues$4,174 $3,207 $4,699
Other Revenues$261 $230 $245
Total Revenues$20,478 $20,162 $21,872

KPIs

KPIQ4 2023Q3 2024Q4 2024
Postpaid Net Account Adds (000s)299 315 263
Total Net Customer Adds (000s)1,623 1,599 2,036
Postpaid Net Customer Adds (000s)1,570 1,575 1,933
Postpaid Phone Net Adds (000s)934 865 903
Postpaid Other Net Adds (000s)636 710 1,030
Prepaid Net Adds (000s)53 24 103
Postpaid Phone Churn (%)0.96% 0.86% 0.92%
Prepaid Churn (%)2.86% 2.78% 2.85%
HSI Net Adds (000s)541 415 428
Total Customers (end-period, 000s)119,700 127,492 129,528
Total HSI Customers (end-period, 000s)4,776 6,002 6,430

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Postpaid Net Customer Adds (000s)FY 2025N/A (initial start-of-year)5,500–6,000 New/Initial
Core Adjusted EBITDA ($MM)FY 2025$33,100–$33,600 (CMD Sept 2024) $33,100–$33,600 Maintained vs CMD
Net Cash Provided by Operating Activities ($MM)FY 2025N/A26,800–27,500 New/Initial
Capital Expenditures ($MM)FY 2025N/A~9,500 New/Initial
Adjusted Free Cash Flow ($MM)FY 2025N/A17,300–18,000 New/Initial
Effective Tax Rate (%)FY 2025N/A24%–26% New/Initial
Service Revenue Growth (%)FY 2025~4% (CMD) ~5% (now) Raised

Notes: CFO confirmed FY25 Core Adjusted EBITDA range consistent with September guidance; service revenue growth raised to ~5% vs ~4% discussed at CMD .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Wholesale revenue trajectory2025 expected trough; ACP headwinds; TracFone/DISH offload Trough still expected in 2025; exit rate similar across 2025 Stable outlook, headwinds moderating post-2025
Postpaid ARPA growthGuide ~3% for 2024 (Q2); ARPA strength from bundling, HSI, premium rates ~3% ARPA growth expected again in 2025 Sustained growth
Fixed Wireless (HSI) cadenceConsistent ~400K/quarter in 2024 vs ~500K in 2023; strong satisfaction 428K adds; highest YoY broadband ARPU growth; elastic pricing tests Consistent adds, improving ARPU
Starlink direct-to-cellRegistration opened Dec; texting initial, voice/data later Beta widening soon; emergency activation use cases; monetization via plan upsell and a la carte Accelerating rollout
Fiber strategyMetronet & Lumos JVs; limited appetite for more; pure-play focus Close timing: Lumos early 2025, Metronet 2025; complementary with HSI capacity Execution phase; measured expansion
SMRA (rural) expansionRecord switching; strong NPS; underpenetrated tailwinds Continued share gains in smaller markets and rural areas Improving penetration
Pricing/ConvergenceValue-led strategy; bundles exist; convergence not required to compete in mobile Maintain value leadership; selective pricing tests; bundling reduces churn Strategy consistent
Spectrum/C-band/800 MHzSmart C-band deployment; optionality on 800 MHz 3.45 GHz swaps; 800 MHz optionality preserved Portfolio optimization
Network/AI initiativesAI-RAN vision; SA 5G & VoNR scale; carrier aggregation benefits AI-driven self-optimizing network; allocate capex via customer-driven coverage Advancing capabilities

Management Commentary

  • “We delivered our highest-ever postpaid phone gross additions… third straight year of more than 3 million postpaid phone net additions… 2025 is poised to be even more exciting” — Mike Sievert, CEO .
  • “We expect approximately half [of total] to be postpaid phone net additions… ~5% service revenue growth for 2025… Core Adjusted EBITDA $33.1–$33.6B” — Peter Osvaldik, CFO .
  • On network leadership and public safety: Opensignal/Ookla wins and City of New York public safety award underscore reliability and differentiated capabilities (e.g., T Priority) .
  • On Starlink: beta widening soon; monetization via premium plans, share-taking, and a la carte offerings; emergency activations demonstrated utility during disasters .
  • On fiber: limited appetite beyond Lumos/Metronet, focus on pure-play partners; complementary with fixed wireless excess-capacity model .

Q&A Highlights

  • Wholesale and ACP: Management reiterated wholesale trough in 2025; ACP impact concentrated in H2 2024 and especially Q4; underlying wholesale partnerships growing ex-ACP/TracFone .
  • ARPU vs account growth: ARPA growth driven by premium plan mix, more customers per account, HSI attach; ARPU mix influenced by business segment scale .
  • Fiber strategy: Execution focus on Lumos and Metronet; balanced capital allocation; dividends from JV expected; minimal need for incremental equity to reach 6.5M passings .
  • Starlink monetization and rollout: staged beta widening then commercial service; plan upsell and differentiated share-taking envisioned .
  • Upgrade cycle & AI phones: Prepared to win switching in a stronger upgrade cycle; carrier aggregation and SA 5G features differentiate device performance on T-Mobile .

Estimates Context

  • S&P Global consensus estimates could not be retrieved due to a daily request limit; as a result, beat/miss vs consensus cannot be quantitatively assessed at this time. Values retrieved from S&P Global are unavailable due to system limits.
  • Directionally, management emphasized outsized service revenue and Core Adjusted EBITDA growth vs peers and raised FY25 service revenue growth expectations to ~5% (from ~4%), but we cannot validate consensus comparisons without SPGI data .

Key Takeaways for Investors

  • Durable growth algorithm: Momentum across postpaid, HSI, and business supports FY25 guidance with highest-ever start-of-year postpaid adds and ~5% service revenue growth; near-term stock drivers include accelerating Starlink beta and public safety wins .
  • Profitability mix: YoY EPS and EBITDA growth remain strong, but expect seasonal Q4-to-Q1 mix (capex timing, promotions) and wholesale/ACP headwinds to shape near-term quarterly cadence .
  • Capital returns intact: With Adjusted FCF guidance of $17.3–$18.0B for 2025 and leverage discipline (~2.5x target per CFO), repurchases/dividends remain supported alongside fiber/USCellular execution .
  • HSI strategy is defensible: Excess-capacity gating and improving broadband ARPU mitigate network saturation risk; consistent ~400K quarterly adds demonstrate runway vs cable .
  • Network advantage compounds: SA 5G, VoNR, multi-carrier aggregation, and AI-driven optimization continue to differentiate user experience, aiding premium mix and retention .
  • Watch 2025 wholesale inflection: As TracFone/DISH offload completes, underlying wholesale growth should re-emerge post trough; monitor ACP replacement dynamics and MVNO trends .
  • Execution on fiber/USCellular: Closing and integrating announced transactions (Lumos, Metronet, U.S. Cellular) are medium-term levers for growth and FCF; near-term updates post-close will clarify EBITDA/FCF trajectory .

Additional Notes

  • Non-GAAP measures: Core Adjusted EBITDA excludes lease revenues; Adjusted Free Cash Flow includes operating cash flow less capex plus proceeds from tower sales and securitization; reconciliations provided in the release .
  • Shareholder returns: Program-to-date returns through 12/31/24 total $31.4B; Q4 repurchases $4.6B (20.3M shares) and $0.88 dividend (~$1.0B) .
  • Network awards: T-Mobile won all five overall network experience categories in Opensignal’s latest report and multiple Ookla awards; reliability and 5G availability underpin competitive edge .