Telecom giant T-Mobile US (TMUS 0.18%)reported third-quarter earnings on Wednesday, Oct. 23, that showed substantial growth across several key performance areas. Most notably, T-Mobile added 1.6 million postpaid customers, marking the highest growth in the sector. T-Mobile generated $16.7 billion in service revenue, reflecting a robust 5% increase from the same quarter last year. T-Mobile delivered a net income surge of 43% to $3.1 billion, resulting in diluted earnings per share of $2.61.
Overall, the results reaffirm T-Mobile's strategic market position, despite competitive pressures and a dip in prepaid customer additions.
| Metric | Q3 2024 | Q3 2023 | Change (YOY) |
|---|---|---|---|
| Postpaid net customer additions | 1.58 million | 1.23 million | 28.4% |
| Service revenue | $16.7 billion | $15.9 billion | 5% |
| Net income | $3.06 billion | $2.14 billion | 43% |
| Diluted EPS | $2.61 | $1.82 | 43% |
| Adj. free cash flow | $5.16 billion | $4 billion | 29% |
Source: T-Mobile US. YOY = Year over year.
Company Overview
T-Mobile US, a leader in the American wireless telecommunications space, is known for its extensive 5G network and innovative customer strategies. The company emphasizes network superiority, robust customer experiences, and diversified revenue streams. Its strategic focus includes enhancing its 5G network, driving value, and expanding into fixed wireless services. T-Mobile’s success depends heavily on its advanced 5G capabilities and customer satisfaction efforts, critical for maintaining competitive leverage.
Recently, T-Mobile has adopted strategies aimed at broadening its market presence. This involves capturing customer base through its top-tier 5G network and customer-centric initiatives. The firm has also expanded its offerings with fixed wireless services, leveraging excess network capacity for additional revenue channels.
T-Mobile's Q3 Highlights
T-Mobile reported a significant 1.6 million increase in postpaid net custom additions in the quarter, marking a 28.4% growth year on year. The firm also achieved its best revenue mark with $16.7 billion in service revenue, up 5% from the $15.9 billion a year prior. These achievements underscore successful customer acquisition and retention strategies.
From a profitability perspective, T-Mobile recorded a remarkable 43% increase in net income, amounting to $3.1 billion compared to $2.1 billion in Q3 2023. This substantial growth led to a diluted EPS of $2.61, reflecting robust profitability bolstered by operational efficiencies and cost management.
Q3 competition intensified in prepaid segments, resulting in a net addition of just 24,000 prepaid customers -- a significant drop from 79,000 in Q3 2023. This decline points to heightened market saturation and fiercely competitive pricing.
T-Mobile’s Core adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved significantly, reaching $8.2 billion, which is a 9% increase from last year’s $7.6 billion. The adjusted free cash flow saw an impressive rise to $5.2 billion, up 29% year over year, delivering strong financial leverage for future ventures and shareholder returns.
T-Mobile's Future Outlook
Looking forward, T-Mobile management raised its expectations for full year 2024. It forecasts postpaid customer additions of 5.6 million to 5.8 million (up from 5.4 million to 5.7 million). Management anticipates adjusted EBITDA between $31.6 billion and $31.8 billion, increasing the midpoint from prior guidance. These forward-looking estimates underscore confidence in its ongoing business strategies amidst competitive challenges.
Investors should closely monitor T-Mobile’s continued focus on network investment and the impact of spectrum acquisitions. A key area to watch will be the execution of its sustainability agenda, which aligns with broader industry trends toward environmental and social governance. These strategic endeavors will likely shape the firm's growth trajectory and market standing.
