Carrier gains another 400,000+ FWA additions
T-Mobile US reported postpaid phone net customer adds of 777,000 and gained another 406,000 home internet customers, and raised its guidance on full-year performance across several metrics.
Overall, T-Mobile US saw 1.3 million postpaid net customer additions, crossing the 100 million postpaid-customer mark.
“It was another industry-leading quarter for T-Mobile as our continued focus on delivering customers more value and a superior network experience enabled us to outperform our peers in the marketplace and translated into outsized financial growth,” said CEO Mike Sievert. “Our formula is continuing to work and we’ve got a lot of room to run including pursuing new growth opportunities that bring the Un-carrier experience to more customers and new markets. This incredible momentum makes us even more excited for what’s next for T-Mobile, and our confidence is reflected in our raised guidance for the full year ahead.”
Service revenues were up 4% year-on-year, with postpaid service revenues up even higher at 7% to reach $12.9 billion. T-Mo’s profits came in at $2.9 billion for the quarter, up 32% compared to a year ago.
The company also posted a record-high free cash flow and noted that it had made $2.3 billion in stock repurchases and a quarterly dividend payment of $759 million.
However, there were some headwinds. The carrier said that it saw some higher customer deactivations year-over-year, citing a couple of reasons including a larger customer base but also more deactivations from lower-cost mobile internet devices in the educational sector that originated during the Covid-19 pandemic. T-Mo also saw churn tick up from 0.77% in the year-ago period to 0.8% in the Q2 2024, which it said was due to “rate plan optimizations.” And it estimates that it will see an overall impact of $350-$450 million in losses from the shutdown of the federal Affordable Connectivity Program, which will primarily impact its wholesale revenues and come in the third and fourth quarter of this year.
T-Mo’s prepaid base saw a boost during the quarter due to its acquisition of the Mint Mobile family of brands; its prepaid numbers had been declining each quarter but the second quarter saw an addition of 179,000 net new customers. Sievert said that with the ACP changes, “this is a year when value consumers … will be re-entering the market,” and that T-Mobile is well-positioned to serve them.
It should also be noted that in 2023’s Q2, T-Mobile US added 509,000 new FWA customers; its Q2 2024 figure of 406,000 is close to flat from the first quarter of 2024, when it added 405,000 net new FWA customers.
On the quarterly call with investors, Sievert also addressed T-Mo’s recent news of a second fiber-focused joint venture, with its proposed acquisition with KKR of fiber-based service provider Metronet.
“This is a unique company and asset. They already reach over 2 million homes today, and with this partnership are expected to grow to 6.5 million homes passed by 2030,” Sievert said, adding: “As with our Lumos JV, T-Mobile will leverage our scale, brand, distribution, and existing customer relationships to grow faster and to do it smarter. I can’t highlight enough how both the Metronet and Lumos JVs represent best in class partnerships in the fiber space. Because of the partners that we’ve chosen and T-Mobile’s unique assets and capabilities, I believe this is going to be a very successful initiative for our shareholders.”
He went on to say: “Now we have the beginnings of a critical mass in the space,” detailing that the Lumos transaction involves a company which will have 3.5 million homes passed by 2028 and for Metronet, 6.5 million homes passed by 2030, plus “probably a couple more million in the wholesale partnerships we have so far,” according to Sievert. “That’s a pretty significant footprint that we put together,” he said. But he went on to say that there are no other current transactions in the works and that “our appetite is somewhat limited for more” such deals.
T-Mobile US’ strategy, he explained is to leverage “pure play fiber, the simplicity and elegance of that model” and combining that with partners so that it is effectively leveraging its investment dollars.
