T-Mobile US has significantly increased its outlook for second-half EBITDA and cash flow after record customer growth in the third quarter. The mobile operator added 2.035 million new customers, taking its past 100 million in total for the first time.
The growth was nearly all postpaid customers, at a record 1.979 million net additions. That included 689,000 postpaid phone customers. After meeting its postpaid target for H2 already in Q3, the company set a new target of 1.3-1.4 million postpaid phone net additions in H2. This means it should match the Q3 performance in Q4 again.
Quarterly revenues rose 74.2 percent year-on-year to USD 19.27 billion thanks to the takeover of Sprint. Service revenue increased 62.3 percent to USD 14.14 billion. The company generated adjusted EBITDA of USD 7.13 billion, more than double the USD 3.40 billion a year ago, and net profit improved 44.0 percent to USD 1.25 billion.
T-Mobile raised its forecast for second-half adjusted EBITDA to USD 13.6-13.7 billion from earlier guidance of USD 12.4-12.7 billion. Capex is now expected at the high end of its previous forecast, at USD 6.7-6.9 billion.
The outlook is supported by synergies from the Sprint merger, which are estimated at over USD 1.2 billion in 2020. The company said synergies are coming faster than planned. Around 15 percent of Sprint postpaid customer traffic has already been moved to the T-Mobile network, and customer network migrations have begun, as the company enabled cross-provisioning last month. This separates the network migration from the billing system migration and enables gross additions and upgrades from Sprint customers to be activated on the T-Mobile network.
Merger-related costs are expected to be USD 800 million to USD 1 billion before taxes in H2, unchanged from prior guidance. Including these costs, operating cash flow is estimated at USD 5.9-6.1 billion, up from prior guidance of USD 5.3-5.7 billion. The free cash flow forecast for H2 was increased to USD 700-900 million from USD 300-500 million, after reporting USD 352 million already in Q3.
