The News: T-Mobile reported third quarter (Q3) 2023 results, raising 2023 guidance again. Service revenue of $15.9 billion grew 4% year-over-year (YoY), including Postpaid service revenue of $12.3 billion, which grew 6% YoY. Read the earnings press release on the T-Mobile website.
T-Mobile Q3 2023: Industry Pacesetter for Revenue and Customer Growth
Analyst Take: T-Mobile’s Q3 2023 results were highlighted by its breakthrough postpaid account and customer net additions as well as record low postpaid phone churn, which provided the basis for the company to claim industry-leading service revenue and postpaid service revenue.
T-Mobile Spotlights Differentiated Profitable Growth Strategy, Driving Industry-Leading Financial Performance
- Service revenue of $15.9 billion grew 4% YoY and Postpaid service revenue of $12.3 billion grew 6% YoY, with T-Mobile positioning both as best in industry growth.
- Net income of $2.1 billion grew 322% YoY and diluted earnings per share (EPS) of $1.82 grew 355% YoY, both best in industry growth claimed.
- Net cash provided by operating activities of $5.3 billion grew 21% YoY, raising guidance.
- Adjusted free cash flow (FCF) of $4.0 billion grew 94% YoY, also best in industry growth and raising guidance.
- Repurchased $2.7 billion of common stock in Q3 2023 and $14.7 billion cumulatively as of October 20, 2023.
- Core adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $7.5 billion grew 12% YoY, best in industry growth claimed and raising guidance.
T-Mobile Declares Industry-Leading Growth in Postpaid and Broadband Customer Categories
- Postpaid net account additions of 386,000, enabling T-Mobile to claim best in industry.
- Postpaid net customer additions of 1.2 million, enabling T-Mobile to claim the best in the industry and raising guidance.
- Postpaid phone net customer additions of 850,000, enabling T-Mobile to claim best in industry.
- Postpaid phone churn of 0.87%, enabling T-Mobile to report a record low for Q3.
- High-speed internet net customer additions of 557,000, enabling T-Mobile to claim best in industry.
T-Mobile Highlights as Nationwide Overall Network Leader and Multiple 5G Network Awards
- T-Mobile had a complete sweep across every category for overall network performance for the fourth quarter in a row from Ookla, and best 5G availability in the world from Opensignal.
- 300 million Americans are now covered by Ultra Capacity 5G, achieving T-Mobile’s year-end goal more than 2 months ahead of schedule, with the total 5G network covering more than 300 million people (98% of Americans).
We are reassured by T-Mobile’s Q3 2023 results and sustained market momentum across the mobile ecosystem. T-Mobile continues to be the pacesetter for the mobile network industry as it conveyed breakthrough results throughout the major mobile network provider categories such as postpaid net account additions, postpaid net customer additions, and broadband net customer additions as well as its lowest Q3 postpaid phone churn. T-Mobile produced remarkable advances across key metrics including YoY service revenue, YoY postpaid service revenue, YoY net income, YoY net cash, and adjusted FCF including delivering the highest cash flow in company history ($4.0 billion).
Moreover, in September 2023 at MWC Las Vegas 2023, T-Mobile debuted T-Mobile SASE, a SIM-based SASE solution that also offers customers a network slice dedicated to SASE traffic. T-Mobile’s offering consists of components designed to ease how organizations protect vital corporate data and network resources from nearly anywhere. T-Mobile’s hardware-based component approach enables devices that are connected to T-Mobile’s network to be automatically authorized through the SIM card. From our view, the offering can streamline workload demands and strengthen security policy control for IT and security teams by decreasing administrative burdens.
Moreover, T-Mobile SASE puts competitive pressure on key rivals Verizon and AT&T to refresh their respective SASE offerings. Both operators launched their SASE packages in 2021 with fanfare. However, Verizon and AT&T have not subsequently moved the needle with their respective SASE solutions. Notably, T-Mobile offers T-Mobile Security Slice as part of its SASE solution, enabling each slice to be set up separately, making it possible to isolate and customize them to meet the needs and requirements of specific application and service traffic, such as SASE.
We see T-Mobile establishing swift differentiation for its network slice capability through time-to-market advantages over its top-tier carrier rivals. T-Mobile’s offering can utilize its nationwide 5G standalone (SA) network to use 5G SA-enabled devices that provide improved latency and enhanced mobile broadband speeds that compare favorably to Wi-Fi, LTE, and 5G non-SA with built-in security and control safeguards.
Plus, we see that the availability of Google Pixel 8, Pixel 8 Pro, and Pixel Watch 2 on the T-Mobile network enables it to promote the performance gains that Google’s new devices can attain through T-Mobile’s 5G SA four-carrier aggregation capabilities as validated by the Ookla and Opensignal reports.
Key Takeaways: T-Mobile Raising 2023 Guidance Again After Strong Q3 2023 Performance
T-Mobile is raising its 2023 outlook powered by continued customer growth and merger synergies. Top 2023 guidance highlights include:
- Postpaid net customer additions are expected to be between 5.7 million and 5.9 million, an increase from prior guidance of 5.6 million to 5.9 million.
- Core adjusted EBITDA, which is adjusted EBITDA less lease revenue, is expected to be between $29.0 billion and $29.2 billion, an increase from prior guidance of $28.9 billion to $29.2 billion.
- Merger synergies are expected to be approximately $7.5 billion.
We continue to see that T-Mobile for Business is an increasingly important asset for advancing T-Mobile’s strategic vision and growth objectives as demonstrated by the T-Mobile SASE launch. As a result, we advocate that T-Mobile should consider highlighting T-Mobile for Business activities in its quarterly financial releases, ultimately culminating in the breakout of separate T-Mobile for Business revenue when the unit fulfills revenue targets that can warrant such an approach.
Overall, we expect T-Mobile to attain its latest raise in 2023 guidance as the company is consistently outperforming its key rivals across the topmost mobile network service categories, consisting of financial, technical, and customer attraction and retention milestones. Consistently, T-Mobile is showing the entire mobile industry why it is the service provider pacesetter by executing relentlessly on its portfolio development objectives and market vision.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
MWC23 LV: T-Mobile Dazzles With SASE and Slicing Breakthroughs
T-Mobile Q2 2023: Breakthrough Growth in Customers and Profitability
5G Factor: T-Mobile, Vodafone, Orange, and Telefonica Shine at 5G Sustainability
Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
