T-Mobile (NASDAQ: TMUS) reported fourth-quarter financial results on Feb. 7. The company delivered solid increases in revenue and cash production, fueled by impressive subscriber gains that once again paced the wireless industry.
T-Mobile results: The raw numbers
|Metric||Q4 2018||Q4 2017||Year-Over-Year Change|
|Revenue||$11.445 billion||$10.759 billion||6.4%|
|Adjusted EBITDA||$2.97 billion||$2.711 billion||9.6%|
|Free cash flow||$1.22 billion||$1.137 billion||7.3%|
Data source: T-Mobile Q4 2018 earnings release . EBITDA = earnings before interest, taxes, depreciation, and amortization.
What happened with T-Mobile this quarter?
T-Mobile added 2.4 million net new customers, including 1.4 million postpaid subscribers, who pay monthly bills and are generally the most-sought-after customers for wireless carriers.
Impressively, T-Mobile led the industry in terms of both postpaid phone net additions (1 million) and prepaid net additions (135,000) in the fourth quarter. Notably, the postpaid phone figure significantly exceeded that of industry leader Verizon (NYSE: VZ) , which added 653,000 postpaid phone net subscribers in its most recent quarter.
T-Mobile is also getting better at retaining its existing customers. The carrier's branded postpaid phone churn rate improved 19 basis points year over year to 0.99% in the fourth quarter, continuing a positive trend that's seen T-Mobile narrow the gap with Verizon over the past year in terms of this important metric.
This powerful combination of subscriber gains and improved retention is helping to drive solid increases in T-Mobile's revenue and earnings. In all, revenue rose 6% to $11.4 billion, while EBITDA -- adjusted to exclude stock-based compensation and certain other items -- jumped 10% to $3 billion.
Moreover, T-Mobile's cash generation remains robust. Operating cash flow climbed 10% to $954 million, and free cash flow increased 7% to $1.2 billion.
T-Mobile issued its operating and financial outlook for 2019. The company expects to add between 2.6 million and 3.6 million branded postpaid customers and deliver adjusted EBITDA of $12.7 billion to $13.2 billion.
CEO John Legere also provided an update on the progress of T-Mobile's pending merger with Sprint (NYSE: S) during a conference call with analysts. Legere highlighted some of the proposed benefits of the deal, saying:
The combined company will create an aggressive competitor in wireless broadband and beyond, which will result in lower prices for consumers and will create jobs starting on day one. American consumers will benefit from a nationwide 5G network that is both broad and deep.
Legere noted that T-Mobile and Sprint are entering the final stages of their regulatory review process. The companies are hopeful that the deal will be approved later this year. "And we can't wait to get started," Legere said.
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