T-Mobile Reiterates Q4 Growth But Flags Drop In Device Upgrade Rates

On Monday, T-Mobile US, Inc TMUS chief Mike Sievert cautioned investors against fourth quarter back-half risks. Bloomberg cites Sievert from the UBS investor conference. The telecom company expects some year-end factors to drag on results after a record third quarter. The stock plunged close to 10% on Monday’s close.

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Sievert flagged a “pretty low” device upgrade rate behind his warning. However, T-Mobile continues to expect to deliver industry-leading customer growth, service revenue growth (~5% CAGR through 2027), and adjusted EBITDA growth (~7% CAGR through 2027).

The company’s business plan supports ~$80 billion in capacity for investments and shareholder returns through 2027

T-Mobile reported third-quarter revenue of $20.16 billion, topping the analyst estimate of $20.01 billion. EPS of $2.61 surpassed the analyst estimate of $2.41.

The topline performance reflects record ARPA (postpaid average revenue per account) growth in seven years and higher-than-expected postpaid phone net additions.

T-Mobile US added 415,000 broadband customers in the third quarter, hitting a 6 million total customer milestone. The postpaid phone net customer additions were 865,000, surpassing Oppenheimer estimates by 65,000, beating Verizon Communications Inc VZ and AT&T Inc T combined. Postpaid net account additions were 315,000 for the quarter.

In October, T-Mobile US said it expects net customer additions of 5.6 million-5.8 million (up from the prior 5.7 million) and core adjusted EBITDA of $31.6 billion-$31.8 billion.

Sievert told Bloomberg that T-Mobile’s fixed-wireless product will reach 12 million subscribers. He weighed whether the company could surpass the milestone.

Investors can gain exposure to T-Mobile US through Invesco BuyBack Achievers ETF PKW and The Communication Services Select Sector SPDR Fund XLC.

Price Action: TMUS stock is up 1.72% at $232.79 at the last check on Tuesday.

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