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United States

Customer development

thousands

 

 

 

 

 

 

Dec. 31, 2022

Dec. 31, 2021

Change

Change
%

Dec. 31, 2020

Customers

113,598

108,719

4,879

4.5

102,064

Postpaid customers

92,232

87,663

4,569

5.2

81,350

Postpaid phone customersa, b

72,834

70,262

2,572

3.7

66,618

Other postpaid customersa, b

19,398

17,401

1,997

11.5

14,732

Prepaid customers

21,366

21,056

310

1.5

20,714

a

Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile US UMTS networks have been excluded from our customer base resulting in the removal of 212 thousand postpaid phone customers and 349 thousand postpaid other customers in the first quarter of 2022 and 284 thousand postpaid phone customers, 946 thousand postpaid other customers and 28 thousand prepaid customers in the second quarter of 2022. In connection with our acquisition of companies, we included a base adjustment in the first quarter of 2022 to increase postpaid phone customers by 17 thousand and reduce postpaid other customers by 14 thousand. Certain customers now serviced through reseller contracts were removed from our reported postpaid customer base resulting in the removal of 42 thousand postpaid phone customers and 20 thousand postpaid other customers in the second quarter of 2022.

b

In the first quarter of 2021, we acquired 11 thousand postpaid phone customers and 1 thousand postpaid other customers through our acquisition of an affiliate. In the third quarter of 2021, we acquired 716 thousand postpaid phone customers and 90 thousand postpaid other customers through our acquisition of the Wireless Assets from Shentel.

Customers

At December 31, 2022, the United States operating segment (T‑Mobile US) had 113.6 million customers, compared to 108.7 million customers at December 31, 2021. Net customer additions were 6.8 million in 2022, compared to 5.8 million in 2021 due to the factors described below.

Postpaid net customer additions reached a record 6.4 million in 2022, compared to 5.5 million in 2021 and again exceeded the high end of the company’s most recently increased annual guidance range. This increase resulted from higher postpaid other net customer additions, primarily due to an increase in High Speed Internet net customer additions and other connected devices, partially offset by lower net additions from mobile internet devices. In addition, the increase resulted from higher postpaid phone net customer additions, primarily due to lower churn, partially offset by lower gross additions driven by industry switching activity normalizing closer to pre Pandemic levels. High Speed Internet net customer additions included in postpaid other net customer additions were 1.8 million and 546 thousand in 2022 and 2021, respectively.

Prepaid net customer additions were 338 thousand in 2022, compared to 342 thousand in 2021. This decrease was primarily due to the continued industry shift to postpaid plans, partially offset by the introduction of our High Speed Internet offering and lower churn. High Speed Internet net customer additions included in prepaid net customer additions were 236 thousand in 2022. Our prepaid High Speed Internet launch was in the first quarter of 2022. Therefore, there were no prepaid High Speed Internet net customer additions in 2021.

Development of operations

millions of €

 

 

 

 

 

 

 

 

2022

2021

Change

Change
%

2020

Net revenue

 

75,436

67,791

7,645

11.3

60,702

Service revenue

 

58,219

48,361

9,858

20.4

43,766

EBITDA

 

26,707

25,555

1,152

4.5

24,852

Special factors affecting EBITDA

 

(4,155)

(1,836)

(2,319)

n.a.

(270)

EBITDA (adjusted for special factors)

 

30,862

27,392

3,470

12.7

25,122

EBITDA AL

 

19,665

20,060

(395)

(2.0)

20,628

Special factors affecting EBITDA AL

 

(5,949)

(2,637)

(3,312)

n.a.

(370)

EBITDA AL (adjusted for special factors)

 

25,614

22,697

2,917

12.9

20,997

Core EBITDA AL (adjusted for special factors)a

 

24,280

19,912

4,368

21.9

17,366

EBITDA AL margin (adjusted for special factors)

%

34.0

33.5

 

 

34.6

Depreciation, amortization and impairment losses

 

(19,237)

(18,338)

(899)

(4.9)

(15,665)

Profit (loss) from operations (EBIT)

 

7,470

7,217

253

3.5

9,187

EBIT margin

%

9.9

10.6

 

 

15.1

Cash capex

 

(16,340)

(18,594)

2,254

12.1

(10,394)

Cash capex (before spectrum investment)

 

(13,361)

(10,328)

(3,033)

(29.4)

(9,286)

a

Adjusted core EBITDA AL is distinguished by excluding revenue from terminal equipment leases from adjusted EBITDA AL, thereby presenting operational development undistorted by the withdrawal from the terminal equipment lease business.

Revenue, service revenue

Total revenue for the United States operating segment of EUR 75.4 billion in 2022 increased by 11.3 percent, compared to EUR 67.8 billion in 2021. In U.S. dollars, T‑Mobile US’ total revenues decreased slightly during the same period. Total revenues decreased primarily due to lower equipment revenues, mostly offset by higher service revenues. The components of these changes are described below.

Service revenues increased in 2022 by 20.4 percent to EUR 58.2 billion. In organic terms, service revenues increased by 4.9 percent year-on-year. This increase resulted from higher postpaid revenues primarily from higher average postpaid accounts and higher postpaid ARPA (Average Revenue per Account). In addition, service revenues increased due to higher prepaid revenues primarily from higher average prepaid customers. This increase was partially offset by lower wholesale and other service revenues primarily from lower advertising, MVNO and Wireline revenues, partially offset by higher Lifeline revenues.

Equipment revenues decreased in 2022 primarily from a decrease in lease revenues and customer purchases of leased devices primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to equipment installment plans (EIP). In addition, equipment revenues decreased due to a decrease in the number of devices sold primarily driven by lower prepaid sales, partially offset by higher upgrade volume for Sprint customers to facilitate their migration to the T‑Mobile US’ network. In addition, equipment revenues decreased due to slightly lower average revenue per device sold, primarily driven by higher promotions, which included promotions for Sprint customers to facilitate their migration to the T‑Mobile US’ network, and an increase in contra-revenue primarily driven by higher imputed interest rates on EIP.

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 12.9 percent to EUR 25.6 billion in 2022, compared to EUR 22.7 billion in 2021. The adjusted EBITDA AL margin increased to 34.0 percent in 2022, compared to 33.5 percent in 2021. In U.S. dollars, adjusted EBITDA AL remained relatively flat during the same period. Adjusted EBITDA AL increased primarily due to higher service revenue as discussed above, lower cost of equipment sales and cost of services excluding Sprint Merger-related costs and higher realized synergies. This increase was offset by lower equipment revenues, higher bad debt expense and losses from sales of receviables driven by higher receivable balances, as well as normalization relative to muted pandemic levels in 2021 and estimated potential future macroeconomic impacts and higher costs related to outsourced functions. In U.S. dollars, lease revenues decreased as a result of the continued strategic shift in device financing from leasing to EIP by 57.2 percent in 2022.

Adjusted core EBITDA AL increased by 21.9 percent to EUR 24.3 billion in 2022, compared to EUR 19.9 billion in 2021. In U.S. dollars, adjusted core EBITDA AL increased by 8.4 percent during the same period. The change was primarily due to the fluctuation in adjusted EBITDA AL, discussed above, excluding the change in lease revenues.

EBITDA AL in 2022, included special factors of EUR -5.9 billion compared to EUR -2.6 billion in 2021. The change in special factors was primarily due to higher Merger-related costs, expenses related to the agreed sale of the Wireline Business, higher legal-related expenses (net of recoveries) including the settlement of certain litigation associated with the August 2021 cyberattack, and higher impairment expense due to the non-cash impairment of certain Wireline Business related right-of use assets during 2022. The change in special factors is also impacted by other special items including certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Sprint Merger. Special factors include Merger-related costs predominantly associated with the integration of Sprint and are comprised of integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T‑Mobile US’ network and mitigate the impact of legal matters assumed as part of the Sprint Merger. In addition, Merger-related special factors include restructuring costs, including severance, store rationalization and network decommissioning as well as transaction costs, including legal and professional services related to the completion of transactions. Overall, EBITDA AL decreased by 2.0 percent to EUR 19.7 billion in 2022, compared to EUR 20.1 billion in 2021, primarily due to the factors described above, including special factors.

Profit/loss from operations (EBIT)

EBIT increased by 3.5 percent to EUR 7.5 billion in 2022, compared to EUR 7.2 billion in 2021. In U.S. dollars, EBIT decreased by 8.3 percent during the same period primarily due to lower EBITDA AL, partially offset by lower depreciation, amortization and impairment losses. In U.S. dollars, depreciation, amortization and impairment losses decreased 6.6 percent primarily due to lower depreciation expense on leased devices, resulting from a lower number of total customer devices under lease and certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks and lower amortization expense on certain intangible assets acquired in the Sprint Merger. These decreases were partially offset by the non-cash impairments of certain wireline network assets in 2022 and higher depreciation expense (excluding leased devices) from the continued build-out of our nationwide 5G network.

Cash capex (before spectrum investment), cash capex

Cash capex (before spectrum investment) increased by 29.4 percent to EUR 13.4 billion in 2022, compared to EUR 10.3 billion in 2021. In U.S. dollars, cash capex (before spectrum investment) increased by 15.0 percent due to increase in purchases of property and equipment from the accelerated build-out of our nationwide 5G network, including from network integration related to the Sprint Merger.

Cash capex decreased by 12.1 percent to EUR 16.3 billion in 2022, compared to EUR 18.6 billion in 2021. In U.S. dollars, cash capex decreased by 21.3 percent primarily from a decrease in spectrum purchases, primarily due to USD 8.9 billion paid for spectrum licenses won at the conclusion of the C-band auction in March 2021, compared to USD 2.8 billion paid for spectrum licenses won at the conclusion of Auction 110 in February 2022 and USD 0.3 billion paid in total for spectrum licenses won at the conclusion of Auction 108 in September 2022. These decreases were partially offset by the fluctuation in cash capex (before spectrum investments) discussed above.

4G
Refers to the fourth-generation mobile communications standard (see LTE).
Glossary
5G
Refers to the mobile communications standard launched in 2020, which offers data rates in the gigabit range, mainly over the 3.6 GHz and 2.1 GHz bands, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
IP – Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Glossary
LTE – Long-Term Evolution
4G mobile communications technology that uses, for example, wireless spectrum on the 800 MHz band freed up by the digitalization of television. Powerful TV frequencies enable large areas to be covered with far fewer radio masts. LTE supports speeds of over 100 Mbit/s downstream and 50 Mbit/s upstream.
Glossary
MVNO – Mobile Virtual Network Operator
Company that offers mobile minutes at relatively low prices without subsidized handsets. A mobile virtual network operator does not have its own wireless network, but uses the infrastructure of another mobile operator to provide its services.
Glossary
Postpaid
Customers who pay for communication services after receiving them (usually on a monthly basis).
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Glossary
Wholesale
Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing.
Glossary