T-Mobile US finding increased balance between growth, profits
T-Mobile US provided greater insight into its robust fourth-quarter performance, showing improved financial results that in most cases exceeded expectations.
The carrier, which announced preliminary results last month, reported $8.154 billion in total revenue for the quarter, well ahead of the nearly $6.9 billion posted last year. For the full year, revenues jumped more than $5 billion to $29.5 billion.
Helping to boost revenue was a significantly larger customer base to draw money from, with total customers on its network jumping from 46.7 million at the end of 2013 to 55 million at the end of last year. T-Mobile US had previously reported 2.1 million net connection additions for the fourth quarter, which came despite year-over-year increases in churn for both direct postpaid (1.63% to 1.73%) and prepaid (5.1% to 5.39%) operations.
That larger customer base also helped offset a dip in quarterly postpaid average revenue per user, which dropped $2.87 year-over-year to $48.26, although when factoring in revenue generated from monthly device payments, postpaid ARPU increased $3.02 year-over-year. T-Mobile US also reported a $1.67 increase in prepaid ARPU to $37.51 duringQ4.
The surge in revenue also helped T-Mobile US post $101 million in net income for the quarter, which was ahead of the $20 million loss posted in 2013, as well as a sequential improvement compared with the $94 million loss posted for the third quarter of 2014. For the full year, net income increased from $35 million in 2013 to $247 million in 2014.
Of more importance to the financial community, adjusted earnings before interest, taxes, depreciation and amortization increased from $1.2 billion during Q4 2013 to $1.75 billion in Q4 2014, with EBITDA margins surging from 24% to 30%. T-Mobile US’ stock price (TMUS) was up more than 4% in early Thursday trading.
Highlighting an increased focus on network operations, T-Mobile US reported that quarterly capital expenses increased by $882 million in 2013 to nearly $1.3 billion in 2014, with full-year capex increasing from $4 billion in 2013 to more than $4.3 billion in 2014. T-Mobile US noted that its LTE network hit 265 million potential customers covered at the end of 2014, ahead of its previous target of 250 million pops covered. The carrier said it still planned on hitting 300 million pops covered by the end of 2015 as it taps into its 700 MHz spectrum holdings. T-Mobile US said that spectrum was now live in a handful of markets, including Cleveland; Colorado Springs, Colo.; Minneapolis; Washington, D.C.; Houston and Dallas.
T-Mobile US also recently committed $1.8 billion toward new spectrum licenses as part of the Federal Communications Commission’s Auction 97 proceedings. The carrier said it expects to receive approval on purchasing those licenses during the second quarter, although actual access to those licenses is expected to take several years as current users of that spectrum are cleared.
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