T-Mobile US (TMUS) FY 2025 Annual General Meeting June 06, 2025 11:00 AM ET Speaker0 The T Mobile US Inc. Annual Meeting. This time, I'd like to turn the floor over to Tim Huckus. Sir, please go ahead. Speaker1 Good morning, and welcome to the two thousand twenty five Annual Meeting of Stockholders of T Mobile US Inc. My name is Tim Hertges, and I'm the Chairman of the Board of Directors. I will preside over today's meeting. Thank you all for joining us today and for your interest in T Mobile. Before the fo ...

Industry Overview - The Zacks Wireless National industry is facing high capital expenditures for infrastructure upgrades, uncertainty from tariff threats, supply-chain disruptions due to geopolitical tensions, and high customer inventory levels. However, it is expected to benefit from accelerated 5G rollout and increased fiber densification in the long run [1][4]. Current Market Dynamics - T-Mobile US, Verizon Communications, and Gogo are positioned to gain from rising demand for scalable infrastructure to support sustainable networks, driven by the proliferation of the Internet of Things (IoT), wireless traction, and solid broadband momentum [2]. Industry Description - The industry includes firms providing a wide range of communication services such as wireless, wireline, data/broadband, video, managed networking, and cloud-based services to both retail consumers and businesses. It also encompasses edge computing services for optimized application traffic routing [3]. Challenges Facing the Industry - High raw material prices and tariff impositions have disrupted supply chains and inflated equipment costs, impacting profitability. Increased competition from over-the-top service providers and price-sensitive customer retention strategies are expected to intensify challenges [4][6]. Growth Opportunities - The deployment of 4G LTE Advanced technologies and expansion of fiber optic networks are enhancing data speeds and capacity. The use of C-Band spectrum is expected to improve coverage in both rural and urban areas, leading to significant customer experience enhancements as the 5G ecosystem evolves [5]. Financial Performance - The Zacks Wireless National industry has outperformed the S&P 500 and the broader Zacks Computer and Technology sector over the past year, with a growth of 27.3% compared to 10.8% for the S&P 500 and 9.2% for the sector [9]. Valuation Metrics - The industry is currently trading at a trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) of 9.38X, significantly lower than the S&P 500's 16.85X and the sector's 16.58X. Over the past five years, the industry has seen a range from 5.88X to 9.78X [12]. Notable Companies - **Gogo**: Focused on business aviation connectivity, Gogo has restructured its business model post-divestiture of its commercial in-flight connectivity division, improving liquidity and unlocking new opportunities. It has delivered an earnings surprise of 129.5% on average over the last four quarters [14]. - **T-Mobile**: A leading national wireless service provider, T-Mobile has achieved record-low churn rates and significant postpaid customer growth, supported by its Ultra Capacity 5G network. The stock has gained 37.1% over the past year with a long-term earnings growth expectation of 17.2% [17]. - **Verizon**: As a full-service wireless carrier, Verizon is expanding its fiber-optic networks and deploying advanced technologies to enhance data speeds. The stock has gained 5.5% over the past year and maintains a strong operational focus [20].

Core Viewpoint - T-Mobile (TMUS) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on a company's changing earnings picture, specifically the consensus of EPS estimates from sell-side analysts [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, largely due to institutional investors using these estimates to calculate fair value [4][6]. - Rising earnings estimates for T-Mobile indicate an improvement in the company's underlying business, suggesting that investors may respond positively by pushing the stock price higher [5][10]. Earnings Estimate Revisions for T-Mobile - For the fiscal year ending December 2025, T-Mobile is expected to earn $10.56 per share, reflecting a 9.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for T-Mobile has increased by 1.4%, indicating a positive trend in earnings expectations [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - T-Mobile's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Insights - T-Mobile and Verizon are major players in the U.S. telecommunications industry, each with distinct competitive advantages and challenges [3][19]. Verizon's Position - Verizon boasts one of the most efficient wireless networks in the U.S., focusing on customer-centric planning and strategic investments to enhance its 5G capabilities [4][19]. - The company has launched Verizon Frontline Network Slice to provide dedicated 5G capacity for frontline workers, enhancing public safety communications [5]. - Verizon Business Assistant, powered by generative AI, aims to streamline interactions for small business owners, indicating a diversification of revenue streams [6]. - Despite these strengths, Verizon faces intense competition from T-Mobile and AT&T, leading to increased promotional spending that pressures margins [7][19]. T-Mobile's Position - T-Mobile is experiencing growth in postpaid services and has rolled out a nationwide 5G advanced network that incorporates AI and machine learning for optimal resource utilization [8][10]. - The company supports a wide range of platforms, including IoT devices and wearables, enhancing user experience with low latency and high throughput [9][10]. - T-Mobile is actively diversifying its operations through acquisitions, such as Blis and Vistar Media, to strengthen its advertising solutions and expand broadband access [12]. - However, T-Mobile also faces competitive pressures that strain pricing and margins, necessitating significant investments in network advancements and promotions [11][19]. Financial Estimates - The Zacks Consensus Estimate projects T-Mobile's 2025 sales and EPS growth at 5.91% and 9.32%, respectively, with a recent EPS estimate improvement of 1.44% [13]. - For Verizon, the 2025 sales growth is estimated at 1.71%, with EPS projected to increase by 2.18%, showing no change in EPS estimates over the past 60 days [14]. Price Performance - T-Mobile's shares trade at a forward P/E ratio of 21.24, significantly higher than Verizon's 9.2, indicating differing market valuations [17]. - Over the past year, T-Mobile has outperformed with a gain of 45.4%, compared to Verizon's 9.7% increase and the industry's growth of 34.4% [20].

Core Points - Verizon Communications Inc. challenged T-Mobile US, Inc. regarding savings claims in its advertising materials, leading to a recommendation from the National Advertising Division (NAD) to discontinue these claims [1][5] - T-Mobile modified its savings claims to explicitly reference streaming services but still conveyed that consumers switching from Verizon could save 20% based solely on plan costs [2][3] - NAD found that T-Mobile's disclosures were not clear about the conditions under which the 20% savings claim applied, including the requirement to purchase three lines of service at a specific tier [4] Group 1 - The NAD recommended that T-Mobile discontinue the challenged savings claims due to misleading implications about savings [5] - T-Mobile expressed disappointment with the NAD's decision and plans to appeal to the National Advertising Review Board (NARB) [5] - The NAD's findings highlight the importance of clear and conspicuous advertising disclosures to avoid consumer confusion [4][8] Group 2 - The National Advertising Division serves as an independent body that reviews advertising truthfulness and promotes fair competition [8] - BBB National Programs, which oversees the NAD, has been enhancing consumer trust in business for over 50 years through various self-regulation programs [7]

Company Overview - T-Mobile has outlined an aggressive multiyear business plan aimed at transforming the company from a Challenger to a Champion in the wireless ecosystem, focusing on continued postpaid share gains [4]. Industry Insights - The telecommunications industry is experiencing growth, with service revenues and profitability on the rise. From 2022 to 2024, the industry saw a 50% increase in free cash flows while also providing more value to consumers [5]. - T-Mobile has consistently outperformed its competitors in terms of customer growth, service revenue, and free cash flow generation, attributed to durable advantages built over time [5].

T-Mobile US (TMUS) FY Conference Summary Industry Overview - The telecom industry is experiencing growth, with service revenues and profitability on the rise. From 2022 to 2024, the industry grew free cash flows by 50% while enhancing consumer offerings [4][5] - T-Mobile has consistently outperformed competitors in customer growth, service revenue, and free cash flow generation [4][5] Company Positioning and Strategy - T-Mobile aims to transition from a challenger to a champion in the wireless ecosystem, focusing on three key advantages: best network, best value, and superior customer experiences [4][5] - The company is undergoing a digital transformation to enhance customer experience further [6] Subscriber Growth and Market Dynamics - T-Mobile is confident in achieving its highest-ever total postpaid guidance, with strong performance in gross additions and net subscriber growth [8][9] - The competitive environment remains favorable, with T-Mobile positioned as a net share taker in the industry [9][10] - In Q1, T-Mobile reported the highest postpaid gross and net additions, with service revenue three times that of the nearest competitor [10][11] Churn and Rate Plan Optimization - The increase in churn in Q1 was primarily due to rate plan optimizations, which were communicated to customers in March and implemented in April and May [12][13] - T-Mobile anticipates that churn will stabilize as customers adjust to the new rate plans [12] Growth Segments - T-Mobile is focusing on growth in smaller markets, rural areas, enterprise, and government sectors, with significant opportunities remaining in these segments [18][19] - The company is also seeing growth in fixed wireless and has plans to expand its network in underpenetrated areas [19][20] Fiber and Broadband Initiatives - T-Mobile's broadband segment has seen success with new pricing and packaging, leading to record net additions and ARPU growth [32][33] - The company aims to reach 12 million broadband subscribers by the end of 2028, with significant improvements in speed and customer satisfaction [35][36] Financial Performance and Guidance - T-Mobile raised its service revenue guidance to a 6% year-over-year increase, with half of this growth attributed to acquisitions [52] - The company is investing in customer net additions and digitalization while maintaining a strong EBITDA growth outlook [54][55] Macro Environment and Consumer Sentiment - The telecom industry is resilient to macroeconomic changes, with communications becoming a higher priority for consumers [57][58] - T-Mobile's premium plans have a 60% activation rate among new accounts, indicating strong consumer demand for higher-value offerings [61] Capital Allocation and M&A Strategy - T-Mobile has a capital allocation plan of $80 billion through 2027, with a focus on M&A, shareholder returns, and strategic investments [65][66] - The company is open to exploring value-accretive fiber opportunities but currently has no immediate M&A announcements [72] Advertising and Adjacent Opportunities - T-Mobile is enhancing its advertising capabilities through partnerships and acquisitions, aiming to improve targeting and measurement for advertisers [69][70] - The company is considering investments in adjacent businesses that leverage its distribution and brand strengths [72] T-Satellite Offering - T-Mobile's T-Satellite service is positioned as a unique offering that enhances connectivity and drives customer value, particularly in premium rate plans [75][76] This summary encapsulates the key points from the T-Mobile US FY Conference, highlighting the company's strategic positioning, growth opportunities, financial performance, and future outlook in the telecom industry.

Core Viewpoint - The Schall Law Firm is investigating T-Mobile US, Inc. for potential violations of securities laws related to misleading statements and undisclosed information affecting investors [1][2]. Financial Performance - T-Mobile reported Q1 2025 financial results on April 24, 2025, indicating the addition of only 495,000 net postpaid phone customers, which fell short of consensus expectations [2]. - Following the disappointing results, T-Mobile's shares experienced a decline of over 11.2% the next day [2].

Core Viewpoint - T-Mobile has demonstrated significant stock performance, gaining 53.5% over the past year, outperforming the Wireless National industry and the S&P 500, while facing competition from Verizon and AT&T [1] Group 1: Market Position and Performance - T-Mobile leads in the 5G market, utilizing the mid-band 2.5 GHz spectrum for deployment, which offers high speed and extensive coverage, providing a competitive advantage over AT&T and Verizon [2] - The company has outperformed Verizon, which gained 11.8%, but underperformed AT&T, which surged 63.9% during the same period [1] Group 2: Network Resilience and Technology - T-Mobile is enhancing its network infrastructure to withstand extreme weather events, employing AI through its Self-Organizing Network (SON) to identify and address outages in real-time [3] - The integration of Dataminr's AI-powered alert systems and T-Satellite connectivity allows users to maintain communication during network disruptions, showcasing T-Mobile's commitment to customer service and technological advancement [4] Group 3: Customer Growth and Engagement - The company has seen solid growth in postpaid customers, with 1.3 million net additions and 424,000 net high-speed Internet additions, driven by updated pricing plans and a focus on network modernization [5] - T-Mobile's customer-oriented approach, including low-priced service plans and promotional activities, is aimed at increasing customer engagement despite competitive pressures [8] Group 4: Financial Outlook and Valuation - Earnings estimates for T-Mobile have increased, with a 1.44% rise for 2025 to $10.56 and a 1.54% increase for 2026 to $12.54, indicating positive investor sentiment [9] - The company is trading at a premium valuation with a price/earnings ratio of 22.16, significantly higher than the industry average of 13.81 [11] Group 5: Strategic Initiatives and Future Positioning - T-Mobile's initiatives in network expansion, direct-to-cell satellite services, and support for small businesses position it well to maintain a dominant role in the telecommunications sector [14] - The company has a trailing four-quarter average earnings surprise of 10.89%, suggesting potential for further stock price appreciation [15]

Core Viewpoint - T-Mobile US, Inc. is under investigation for potential securities fraud and unlawful business practices following disappointing first-quarter financial results that led to a significant drop in stock price [1][2]. Financial Performance - T-Mobile reported adding only 495,000 postpaid phone net customers in Q1 2025, which fell short of consensus expectations of 506,557 net customers [2]. - Following the earnings report, T-Mobile's stock price decreased by $29.41 per share, or 11.22%, closing at $232.77 per share on April 25, 2025 [2]. Legal Investigation - Pomerantz LLP is investigating claims on behalf of T-Mobile investors regarding possible securities fraud or other unlawful business practices by the company and its officers or directors [1]. - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud [3].