T-Mobile (NASDAQ: TMUS), in its 4Q23 and full-year 2023 earnings call, reported growth in customers, service revenues, profitability, and cash flow that are being generated from its integrated network platform. The company claimed that at the end of 2023, it covered 98 percent of Americans with its 5G network, and reached its goal of covering 300 million people with its Ultra Capacity 5G that utilizes 2.5 GHz spectrum. When the network integration was completed at the end of 2022, T-Mobile’s network consisted of 79,000 LTE and 5G macrocells and 41,000 small cells/ DAS nodes, Inside Towers reported.
The company reported 119.7 million total retail postpaid and prepaid subscribers at year end 2023. T-Mobile’s capital expenditures were $9.8 billion, slightly above its prior 2023 guidance of $9.4-9.7 billion. Capex levels declined sequentially throughout the year, dropping from $3 billion in Q1 to $1.6 billion in Q4. T-Mobile is guiding to full year 2024 capex of $9 billion at the midpoint, an eight percent YoY reduction. The company expects to spend 30 percent of its full year capex in 1Q24.
Peter Osvaldik, T-Mobile CFO commented, “We expect cash capex to be between $8.6 billion and $9.4 billion as we deliver a capital efficiency unmatched in the industry on the back of our network integration and 5G leadership. Our pull forward of capex into 2022 and 2023 has provided us with a broad multilayer 5G network on which we can now deploy additional spectrum for capacity across those existing radios without material incremental capex required.”
The company reported a total of over $37 billion in capex to integrate its network with Sprint and to expand its 5G footprint in the 2020-2022 period. With this activity essentially complete, T-Mobile is scaling its strategic network builds to focus on high value customers and select market segments.
In 4Q23, T-Mobile added 1.6 million net postpaid customers, including 934,000 postpaid phone customers; both metrics surpassed AT&T ‘s and Verizon’s reported numbers. During the year, T-Mobile added 2.1 million high speed internet subscribers to reach 4.7 million fixed wireless access connections at the end of 2023. The company says it is still on track to reach 7-8 million HSI connections by 2025, at a pace of roughly 400,000 per quarter. It also suggested it will raise monthly rates for the service.
Full year postpaid service revenues grew 6 percent year-over-year to $48.7 billion, driven by T-Mobile’s growing customer base and stable average revenue per user. T-Mobile’s net income jumped 221 percent YoY to $8.3 billion. The company attributed its strong profitability to its revenue growth, cost synergies from the Sprint merger, and lower depreciation and amortization expenses.
T-Mobile’s core adjusted EBITDA, which excludes certain non-recurring items, grew 10 percent YoY to $29.1 billion. It generated $18.6 billion of 2023 net cash from operating activities. The company used its strong cash flow to invest in its network, pay down debt, and return capital to shareholders.
T-Mobile provided a bullish outlook for 2024. It expects to grow its core adjusted EBITDA by approximately 9 percent, net cash from operating activities by approximately 18 percent, and adjusted free cash flow by approximately 22 percent at the mid-point of its guidance ranges. The company also projected 5 million to 5.5 million postpaid customers net adds in 2024. “We have growth opportunities in other areas like smaller markets and rural areas, which is 40 percent of the U.S. population, and where we continue to see growth,” Osvaldik said.
By John Celentano, Inside Towers Business Editor