T Mobile US Inc (TMUS)

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T-Mobile US Reports Fourth-Quarter and Full-Year 2014 Results

Last update: 19/02/2015 6:00:00 am

T-Mobile US Reports Fourth Quarter and Full-Year 2014 Results

Delivers Year of Record Growth and Outperforms the Competition Across all Key Metrics
BELLEVUE, Wash.--(BUSINESS WIRE)--February 19, 2015--

T-Mobile US, Inc. (NYSE:TMUS):

Fourth Quarter and Full-Year 2014 Highlights:

-- Fastest growing wireless company delivers record year of customer growth:

-- 2.1 million total net adds in 4Q14 -- 8.3 million in 2014

-- 1.3 million branded postpaid net adds in 4Q14 -- 4.9 million in
2014

-- 1.0 million branded postpaid phone net adds in 4Q14 -- 4.0 million
in 2014

-- T-Mobile captured nearly 80% of industry postpaid phone growth in
4Q14 -- nearly 100% in 2014

-- Strong financial performance balancing growth and profitability:

-- Service revenues up 13.6% YoY in 4Q14 and up 9.0% YoY in 2014

-- Total revenues up 19.4% YoY in 4Q14 and up 13.1% YoY in 2014

-- Diluted earnings per share of $0.12 in 4Q14 compared to a loss of
$0.12 in 3Q14

-- 2014 Adjusted EBITDA of $5.6 billion, up 6.0% YoY, achieving
guidance despite higher customer growth

-- 4Q14 Adjusted EBITDA of $1.8 billion, up 41.3% YoY

-- 4Q14 Adjusted EBITDA margin of 30%, up from 24% in 3Q14 and
4Q13

-- Only major US wireless carrier with expanding sequential
Adjusted EBITDA margins in 4Q14

-- Rapid expansion of the nation's fastest 4G LTE network:

-- 265 million 4G LTE POPs at end of 2014 -- targeting 300 million
Americans in 2015

-- 121 Wideband LTE market areas -- over 150 market areas targeted by
year-end 2015

-- 700 MHz A-Block spectrum deployment well under way in multiple
markets

-- Clear execution on synergies with MetroPCS:

-- Projected to reach full run-rate synergies of at least $1.5
billion by 2016

-- NPV of synergies now expected to be $9-10 billion, up from
original projection of $6-7 billion

-- Strong outlook for 2015:

-- Target of 2.2 to 3.2 million branded postpaid net customer
additions

-- Target of $6.8 to $7.2 billion of Adjusted EBITDA

-- Target of $4.4 to $4.7 billion of cash capex

T-Mobile US, Inc. (NYSE: TMUS) today reported fourth quarter and full-year 2014 results reflecting a record year of growth. The Company delivered the best customer growth year in T-Mobile's history and outperformed the competition.

"2014 was the best year of growth in company history," said John Legere, President and CEO of T-Mobile. "Our Un-carrier moves helped us blow away the competition. The best is yet to come as the future looks bright in 2015."

Un-Carrier Delivering Results

Since launching Un-carrier(TM) in 2013, T-Mobile has transformed the wireless industry with innovations such as No Annual Service Contracts, equipment installment plans, the JUMP! (R) device upgrade program, free international data roaming, lifetime free data allowances for tablets, Contract Freedom(TM), T-Mobile Test Drive(TM), Music Freedom(TM), and Wi-Fi Un-leashed. In the fourth quarter of 2014, the Company again expanded the Un-carrier portfolio with:
-- Un-carrier 8.0: Data Stash(TM): With Data Stash, T-Mobile became the
first national wireless provider to allow customers to save and retain
their unused data capacity. The high-speed data that a customer does not
use each month is automatically rolled into a personal Data Stash and
available for use for one year. In addition, every Data Stash comes with
an initial allotment of up to 10 GB of free 4G LTE data for qualifying
customers. The service, which was announced on December 16, 2014 and
launched on January 1, 2015, is offered at no extra charge to every new
and existing T-Mobile customer on an eligible postpaid Simple Choice plan
who buys extra high-speed data for their tablet or smartphone.

Operational and Financial Highlights for the Fourth Quarter and Full-Year 2014

All comparisons for annual results in this release are based on pro forma combined results in 2013.

T-Mobile continues to deliver strong customer growth and ended the year with more than 55 million total customers. In the fourth quarter of 2014, T-Mobile added 2.1 million net customers, marking the seventh quarter in a row that the Company has generated more than one million net customer additions. For the full-year 2014, T-Mobile added 8.3 million net customers, an 89% increase from the prior year.

In the fourth quarter of 2014, branded postpaid net customer additions were 1.3 million, including more than 1.0 million phone net customer additions, the highest in the U.S. wireless industry once again, and 239,000 mobile broadband net customer additions. For the full-year 2014, total branded postpaid net customer additions were 4.9 million, consisting of more than 4.0 million phone net customer additions and 839,000 mobile broadband net customer additions.

T-Mobile's branded prepaid business led the industry with more than 1.2 million prepaid net customer additions in 2014, including 266,000 in the fourth quarter of 2014.

Branded postpaid phone churn amounted to 1.7% in the fourth quarter of 2014, up 10 basis points year-over-year and 9 basis points sequentially primarily due to increased competition and promotions in the marketplace.

As part of the ongoing movement toward simplifying the business, the Company continued to drive the penetration of Simple Choice plans within its customer base. The portion of branded postpaid customers on Simple Choice plans was 89% at the end of the fourth quarter of 2014, up from 84% at the end of the third quarter of 2014.

Consistent with industry trends, T-Mobile's customers continued to migrate to smartphones. Total smartphone sales, including sales to branded postpaid and prepaid customers, were a record 8.0 million units in the fourth quarter of 2014, or 93% of all phone units sold.

Branded postpaid Average Billings Per User (ABPU) was $61.80 in the fourth quarter of 2014, up 5.1% compared to the fourth quarter of 2013, and the highest in the Company's history. Branded postpaid phone Average Revenue Per User (ARPU) decreased sequentially by 3.2% to $48.26, driven by dilution resulting from promotional activities, including the "4 for $100" offer and a reduction in certain regulatory surcharges. Branded prepaid ARPU increased by 4.7% year-over-year to $37.51.

T-Mobile is disclosing three new metrics to assist investors in evaluating its performance in the branded postpaid business: Average Revenue Per Account (ARPA), Average Billings Per Account (ABPA), and Customers Per Account. The Company considers branded postpaid ARPA and ABPA indicative of its revenue growth potential given the increase in the average number of branded postpaid phone customers and increased penetration of mobile broadband devices.

Branded postpaid ARPA was $109.87 in the fourth quarter of 2014, essentially flat year-over-year and sequentially, while branded postpaid ABPA amounted to $143.79 in the fourth quarter of 2014, an increase of 12.9% year-over-year and 3.6% sequentially. The increase in ABPA was primarily due to growth in EIP billings as well as an increase in the number of customers per account.

In addition to strong customer growth, T-Mobile delivered outstanding financial results. In the fourth quarter of 2014, the Company again reported the fastest revenue growth in the industry for both service and total revenues. Service revenues for the fourth quarter of 2014 grew by 13.6% year-over-year, which was an acceleration compared to the third quarter of 2014 when service revenues increased by 10.6% year-over-year. On a sequential basis, service revenues grew by 3.3%. The sequential and year-over-year increase in service revenues was primarily due to rapid growth in the Company's customer base, partially offset by lower branded postpaid phone ARPU. T-Mobile's total revenues for the fourth quarter of 2014 grew by 19.4% year-over-year due to very strong growth in equipment sales revenues, driven by record smartphone sales, and growth in service revenues. On a sequential basis, total revenues increased by 10.9%. Full-year 2014 service revenues increased by 9.0% year-over-year, and total revenues increased by 13.1% year-over-year.

Adjusted EBITDA for the fourth quarter of 2014 was $1.751 billion, up 41.3% year-over-year and 30.1% sequentially. Sequentially and year-over-year, the increase was primarily due to higher branded postpaid and prepaid revenues from growth in the customer base as well as disciplined cost control. The Adjusted EBITDA margin was 30% for the fourth quarter of 2014, up from 24% in both the fourth quarter of 2013 and third quarter of 2014. For the full-year 2014, Adjusted EBITDA amounted to $5.636 billion, up 6.0% year-over-year.

Network Expansion and Capital Expenditures

The Company's network expansion is continuing at an accelerated pace. T-Mobile's 4G LTE network -- America's Fastest -- covered 265 million people at the end of 2014, exceeding the original year-end target of 250 million. The Company is targeting coverage of 300 million people by year-end 2015. T-Mobile is rapidly deploying Wideband LTE, while at the same time rolling out 4G LTE on its 700 MHz A-Block and 1900 MHz PCS spectrum. At the end of 2014, Wideband LTE was available in 121 market areas and the goal is to expand the service to over 150 market areas by the end of 2015. Building on the A-Block spectrum acquisition from Verizon, the Company continues to expand its 700 MHz A-Block holdings, now reaching approximately 190 million POPs. The Company deployed 700 MHz A-Block spectrum in Cleveland, Colorado Springs, Minneapolis, and Washington DC in 2014, and has already added Houston and Dallas in 2015.

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February 19, 2015 06:00 ET (11:00 GMT)