T-Mobile US (NASDAQ:TMUS) is closing the gap between itself and its larger rivals, as evidenced by its strong fourth-quarter results released last week.

T-Mobile results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$10.759 billion

$10.234 billion


Operating cash flow

$2.058 billion

$1.602 million


Free cash flow

$1.137 billion

$743 million


Data source: T-Mobile Q4 2017 earnings release.

What happened with T-Mobile this quarter? 

T-Mobile added 1.9 million customers in the fourth quarter and a total of 5.7 million in 2017. These figures include 1.1 million new postpaid subscribers in Q4, who pay monthly bills and are the most sought-after customers for wireless carriers. Moreover, T-Mobile continues to take share from rival carriers Verizon Communications (NYSE: VZ), AT&T (NYSE: T), and Sprint (NYSE: S), as it once again led the industry by a wide margin in terms of new postpaid phone subscribers.

"With 891,000 postpaid phone net adds in Q4, we captured more than twice the postpaid phone net adds of our next closest competitor, Verizon; more than 3x AT&T; and almost 5x Sprint," CEO John Legere said during a conference call with analysts.

T-Mobile CEO John Legere

CEO John Legere refuses to ease up T-Mobile's assault on its competitors' customer bases. Image source: T-Mobile US.

Better still, T-Mobile is getting better at retaining its existing customers. The company's fourth-quarter postpaid churn rate improved by 10 basis points year over year, to 1.18%.

Helping to drive these gains are T-Mobile's heavy investments in its network, which are boosting coverage and download speeds, as noted by Legere: "OpenSignal, the global standard for measuring consumers' real-world mobile network experience, named T-Mobile as the winner in 5, count them, 5 categories in their recent report," he said during the conference call. "Nearly 6 billion tests from actual customers of every major wireless network shows that T-Mobile's network is the fastest in the industry, and that T-Mobile customers get an LTE signal more often than AT&T, Sprint and even Verizon."

All told, T-Mobile's customer additions fueled a 5% rise in total revenue, to $10.8 billion. In turn, EBITDA -- adjusted to exclude stock-based compensation, spectrum gains, and certain other items -- rose 4% to $2.7 billion.

Looking forward

T-Mobile expects to add between 2 million and 3 million new branded postpaid customers in 2018. The company is also forecasting its full-year adjusted EBITDA to be in the range of $11.3 billion to $11.7 billion.

Looking even further ahead, T-Mobile raised its projected three-year (from 2016 to 2019) compound annual growth rates for operating and free cash flow to 16%-18% and 46%-48%, respectively, up from prior estimates of 15%-18% and 45%-48%.

"We made incredible progress in 2017 building out our network and retail footprint to set ourselves up for future growth," Legere said in the company's press release. "Our business is clearly firing on all cylinders and our strong guidance for 2018 shows that we have no plans of letting up!"

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