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T-Mobile US (TMUS) Tops Q2 Earnings & Revenues, View Up
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T-Mobile US Inc.(TMUS - Free Report) reported strong financial results in the second quarter of 2016. Both the top and the bottom line surpassed the respective Zacks Consensus Estimate.
T-Mobile US continues to gain postpaid wireless customers, which has encouraged management to raise the subscriber gain outlook for 2016. Notably, this Zacks Rank #3 (Hold) company competes with the likes of Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and Sprint Corp. (S - Free Report) in the highly price-sensitive U.S. wireless market.
GAAP net income in the reported quarter was $225 million or 25 cents per share as against a net income of $361 million or earnings of 42 cents per share in the year-ago quarter. Quarterly earnings per share of 25 cents came in above the Zacks Consensus Estimate of 22 cents.
Total revenue increased 12.7% year over year to $9,222 million in the second quarter, surpassing the Zacks Consensus Estimate of $9,041 million. Segment wise, Service revenues were up 12.1% year-over-year to $6,888 million. Sales from Equipment totaled $2,188 million, up 14.2 year over year while Other revenues were $146 million, up 21.7% year over year.
Quarterly operating income was $768 million compared with $597 million in the year-ago quarter. Operating margin, in the reported quarter, was 8.3% against a mere 7.3% in the prior-year quarter. Adjusted EBITDA was $2,464 million, up by 35.6% year over year. Adjusted EBITDA margin was 36% compared with 30% in the year-ago quarter.
Cash Flow
In the second quarter of 2016, T-Mobile US generated $1768 million of cash from operations compared with $1,161 million in the prior-year quarter. Adjusted free cash flow in the reported quarter was $419 million, compared with the negative $30 million in the year-ago quarter.
Liquidity
At the end of the second quarter of 2016, T-Mobile had $5,538 million of cash and cash equivalents and short-term securities and $29,808 million of debt outstanding compared with $7,574 million and $28,719 million respectively, at the end of 2015. The debt-to-equity ratio at second quarter end was 1.71, with the end of 2015 ratio of 1.73.
Subscriber Statistics and Other Metrics
As of June 30, 2016, the total customer base of T-Mobile was 67.384 million, up 14.4% year over year. Branded postpaid phone customers totaled 30.878 million, up 11.9%. Branded postpaid mobile broadband customer count was 2.748 million, up a massive 59.5%. Branded prepaid customer count was 18.914 million, up 14.2%. Wholesale customers tallied 14.844 million, up 14%.
In the reported quarter, T-Mobile added net 0.646 branded postpaid phone customers, 0.244 branded postpaid mobile broadband customers, 0.476 branded prepaid customers and 0.515 wholesale customers. Total net customer addition was 1.881 million, signifying the 13th successive quarter of over one million net customer additions. Out of this, net prepaid customer addition was 0.646 million, signifying the 10th straight quarter of industry leading net prepaid customer addition.
Quarterly branded postpaid churn was 1.27% against 1.32% in the year-ago quarter. Branded prepaid churn was 3.91% against 4.93% in the prior-year quarter.
Quarterly, branded postpaid phone average revenue per user (ARPU) was $47.11 compared with $48.19 in the prior-year quarter. Branded prepaid ARPU was $37.86 compared with $37.83 in the prior-year quarter. Branded postpaid average billing per user (ABPU) was $62.59 compared with $63.29 in the year-ago quarter.
Guidance
For 2016, the company narrowed its adjusted EBITDA guidance to the range of $9.8 billion to $10.1 billion from the previous range of $9.7 billion to $10.2 billion. Branded postpaid net customer addition in 2016 has been revised up to 3.4 million to 3.8 million from the previously guided range of 3.2 million and 3.6 million. However, capital expenditures for 2016 are projected to remain in the $4.5 billion to $4.8 billion band.
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T-Mobile US (TMUS) Tops Q2 Earnings & Revenues, View Up
T-Mobile US Inc.(TMUS - Free Report) reported strong financial results in the second quarter of 2016. Both the top and the bottom line surpassed the respective Zacks Consensus Estimate.
T-Mobile US continues to gain postpaid wireless customers, which has encouraged management to raise the subscriber gain outlook for 2016. Notably, this Zacks Rank #3 (Hold) company competes with the likes of Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and Sprint Corp. (S - Free Report) in the highly price-sensitive U.S. wireless market.
GAAP net income in the reported quarter was $225 million or 25 cents per share as against a net income of $361 million or earnings of 42 cents per share in the year-ago quarter. Quarterly earnings per share of 25 cents came in above the Zacks Consensus Estimate of 22 cents.
Total revenue increased 12.7% year over year to $9,222 million in the second quarter, surpassing the Zacks Consensus Estimate of $9,041 million. Segment wise, Service revenues were up 12.1% year-over-year to $6,888 million. Sales from Equipment totaled $2,188 million, up 14.2 year over year while Other revenues were $146 million, up 21.7% year over year.
Quarterly operating income was $768 million compared with $597 million in the year-ago quarter. Operating margin, in the reported quarter, was 8.3% against a mere 7.3% in the prior-year quarter. Adjusted EBITDA was $2,464 million, up by 35.6% year over year. Adjusted EBITDA margin was 36% compared with 30% in the year-ago quarter.
Cash Flow
In the second quarter of 2016, T-Mobile US generated $1768 million of cash from operations compared with $1,161 million in the prior-year quarter. Adjusted free cash flow in the reported quarter was $419 million, compared with the negative $30 million in the year-ago quarter.
Liquidity
At the end of the second quarter of 2016, T-Mobile had $5,538 million of cash and cash equivalents and short-term securities and $29,808 million of debt outstanding compared with $7,574 million and $28,719 million respectively, at the end of 2015. The debt-to-equity ratio at second quarter end was 1.71, with the end of 2015 ratio of 1.73.
Subscriber Statistics and Other Metrics
As of June 30, 2016, the total customer base of T-Mobile was 67.384 million, up 14.4% year over year. Branded postpaid phone customers totaled 30.878 million, up 11.9%. Branded postpaid mobile broadband customer count was 2.748 million, up a massive 59.5%. Branded prepaid customer count was 18.914 million, up 14.2%. Wholesale customers tallied 14.844 million, up 14%.
In the reported quarter, T-Mobile added net 0.646 branded postpaid phone customers, 0.244 branded postpaid mobile broadband customers, 0.476 branded prepaid customers and 0.515 wholesale customers. Total net customer addition was 1.881 million, signifying the 13th successive quarter of over one million net customer additions. Out of this, net prepaid customer addition was 0.646 million, signifying the 10th straight quarter of industry leading net prepaid customer addition.
Quarterly branded postpaid churn was 1.27% against 1.32% in the year-ago quarter. Branded prepaid churn was 3.91% against 4.93% in the prior-year quarter.
Quarterly, branded postpaid phone average revenue per user (ARPU) was $47.11 compared with $48.19 in the prior-year quarter. Branded prepaid ARPU was $37.86 compared with $37.83 in the prior-year quarter. Branded postpaid average billing per user (ABPU) was $62.59 compared with $63.29 in the year-ago quarter.
Guidance
For 2016, the company narrowed its adjusted EBITDA guidance to the range of $9.8 billion to $10.1 billion from the previous range of $9.7 billion to $10.2 billion. Branded postpaid net customer addition in 2016 has been revised up to 3.4 million to 3.8 million from the previously guided range of 3.2 million and 3.6 million. However, capital expenditures for 2016 are projected to remain in the $4.5 billion to $4.8 billion band.
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