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On Thursday, T-Mobile shares fell 2.2% after trading after the program.
GoranJakus / Dreamstime
T-Mobile USA
closed an eventful 2020, adding more subscribers than its rivals and easily surpassing the wider wireless industry. The self-described “un-carrier” reported better-than-expected earnings and revenue for the fourth quarter on Thursday night and announced strong subscriber results in early January.
Shares of T-Mobile (ticker: TMUS) fell 2.2% on trading after Thursday to about $ 128. Investors have come to expect a lot from T-Mobile, and the top and bottom rates were probably already at prices. In addition, the company’s profit in 2021 and its subscriber growth guidelines were both just below Wall Street forecasts.
T-Mobile reported earnings per share in the fourth quarter of 60 cents, which exceeds analysts’ average forecast of 49 cents. But some expected T-Mobile to work even better – estimates reached 61 cents a share. The result compares with the 87 cents per share earned in the pre-Sprint T-Mobile merger in the fourth quarter of 2019.
Revenue was $ 20.3 billion, compared to the consensus forecast of $ 19.9 billion and $ 11.9 billion for autonomous T-Mobile in the same quarter a year earlier. T-Mobile’s adjusted earnings before interest, taxes, depreciation and amortization – or Ebitda – were $ 6.7 billion, ahead of Wall Street’s estimate of $ 6.5 billion. The adjustments include $ 686 million in merger costs.
The number of T-Mobile subscribers previously announced in the fourth quarter included net additions of 1.6 million postpaid subscribers – wireless customers receiving a monthly bill – while analysts expected about 1.5 million, on average. T-Mobile also said it signed a net 84,000 prepaid subscribers in the last quarter, roughly equivalent to Wall Street’s consensus estimate.
For the full year 2020, T-Mobile earned net revenue of $ 3.1 billion – or $ 2.65 per share – and adjusted Ebitda by $ 24.6 billion on sales of $ 50.4 billion. Capital expenditures were $ 11.0 billion and free cash flow was $ 3.0 billion. T-Mobile added 5.5 million postpaid subscribers – including 2.2 million postpaid phones – and about 145,000 prepaid subscribers in 2020.
T-Mobile’s churn rate – the percentage of customers who cancel each month – was 0.9% in 2020 and 1.03% in the fourth quarter.
It was an important quarter for the global growth of wireless industry subscribers:
AT&T
(T) added a net of 1.2 million postpaid subscribers and
Verizon Communications
(VZ) entered a net amount of 703,000. All three carriers have stepped up their promotions before and during the holidays, with many offering big discounts.
Apple‘s
(AAPL) New 5G iPhones.
On Thursday’s earnings call, T-Mobile CEO Mike Sievert threw himself at his competitors.
“In a quarter in which Verizon sacrificed growth for profitability and AT&T sacrificed profit growth for customer growth, only T-Mobile offered growth and increased customer profitability, surpassing consensus for both,” Sievert said. “We’re about to take all of their customers.”
T-Mobile sees good times continuing into 2021 as cost savings and economies of scale since the acquisition of Sprint have begun. The company has already made $ 1.3 billion in annual cost savings since the combination ended in April. Chief Financial Officer Peter Osvaldik said Thursday that T-Mobile expects to see $ 2.7 billion to $ 3 billion in annual synergies in 2021. This includes savings from combining networks, brands and marketing budgets and reducing administrative and backlog costs. office.
T-Mobile’s 2021 guide presented Thursday also calls for the addition of net postpaid customers from $ 4 million to $ 4.7 million, capital spending from $ 11.7 billion to $ 12.0 billion, and free cash flow to $ 4.9 billion to $ 5.4 billion. Management also expects to see $ 26.5 billion to $ 27.0 billion in adjusted Ebitda, which excludes an estimated cost of $ 2.5 billion to $ 3.0 billion from merger-related costs. Wall Street consensus estimates before the call included 5.0 million postpaid subscribers and $ 27.1 billion in adjusted Ebitda.
T-Mobile will host an investor day in March after the results of the C-Band auction were made public. Wall Street expects management to increase its estimate of the cost savings from Sprint’s acquisition and reveal new long-term directions.
This should be the next major catalyst for T-Mobile stock, which has risen 60% in the last year, when Barron’s recommended the purchase of shares. It compares to a yield of 18%, including dividends for
S&P 500,
and 1% and 18% losses after dividends for Verizon and AT&T, respectively.
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