T-Mobile US Sales Soar 18%

By Markets Fool.com

Image source: T-Mobile.

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T-Mobile US (NASDAQ: TMUS) reported third-quarter results on Oct. 24. The wireless carrier continues to pace the industry in terms of customer and revenue growth.

T-Mobile results: The raw numbers

Q3 2016

Q3 2015

Growth (YOY)

Revenue

$9.246 billion

$7.849 billion

18%

Net income

$366 million

$138 million

165%

Earnings per share

$0.42

$0.15

180%

Data source: T-Mobile Q3 2016 financial results.

What happened with T-Mobile this quarter?

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T-Mobile continues to strengthen its reputation as the fastest-growing wireless company in America, with 2 million net customer additions in the third quarter. That helped T-Mobile's total customer count surpass 69 million by the end of the period.

"That's 14 quarters in a row that T-Mobile has won share from the competition," said CEO John Legere in a press release. "The Un-carrier is delivering."

T-Mobile added 969,000 branded postpaid subscribers, including 851,000 branded postpaid phone net adds and 118,000 mobile broadband customers. Branded prepaid net adds were likewise impressive at 684,000, driven by strong growth in T-Mobile's MetroPCS business. Together, those helped to make T-Mobile the only provider to grow both postpaid and prepaid for the past 13 consecutive quarters.

T-Mobile also continues to show signs of strong customer loyalty, with branded postpaid phone churn improving 14 basis points, to 1.32%, compared to the prior-year quarter.

This robust customer growth continues to fuel T-Mobile's financial performance, with third-quarter revenue jumping 17.8% year over year to $9.2 billion, marking the 13th time in the past 14 quarters that T-Mobile has led the industry in total revenue growth. Also helping to drive total revenue higher was a 2.2% sequential increase in branded postpaid phone ARPU (average revenue per user) to $48.15.

EBITDA (earnings before interest, taxes, depreciation, and amortization) -- adjusted to exclude stock-based compensation, as well as gains related to the sale of spectrum licenses and other non-recurring items -- increased 27% to $2.4 billion, as adjusted EBITDA margin rose to 34% from 30% in Q3 2015.

All told, adjusted net income surged 77% to $224 million, and adjusted earnings per share soared 80% to $0.27.

More importantly, T-Mobile's cash generation remained strong, with operating cash flow increasing 14% to $1.7 billion and free cash flow rising 41% to $581 million.

Looking forward

These strong results prompted T-Mobile to raise its customer outlook for the year ahead. The company now expects its full-year branded postpaid net customer additions to be between 3.7 million and 3.9 million, up from its previous estimates of 3.4 million and 3.8 million in July and its estimates of 3.2 million to 3.6 million back in April.

T-Mobile also boosted its adjusted EBITDA guidance to a range of $10.2 billion to $10.4 billion, up from prior estimates of $9.8 billion to $10.1 billion.

"We took share and grew our customer base while producing both financial growth and shareholder value," added Legere. "Most importantly, we are delivering results for both customers and shareholders alike."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends T-Mobile US. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.