T-Mobile's 10% EBITDA Explosion Could Make Savvy Investors Filthy Rich

Core Insights - T-Mobile's Q4 results showed a strong operational performance despite a miss on EPS estimates due to severance costs, with service revenue growing 10% YoY to $18.7 billion [1] - The company added 2.4 million postpaid customers in Q4 and received the highest network quality ratings in five out of six U.S. regions [1] - T-Mobile's guidance for 2026 includes a core adjusted EBITDA target of $37 billion to $37.5 billion, indicating a 10% growth at the midpoint [1] Financial Performance Highlights - T-Mobile reported a core adjusted EBITDA of $8.4 billion, up 7% YoY, and a net income of $2.1 billion, down from $2.98 billion in Q4 2024 [1] - Revenue for the quarter was $24.33 billion, slightly below the implied estimate of $24.66 billion, with EPS at $1.88 compared to the estimate of $2.10, impacted by $0.26 from severance costs [1] - Operating cash flow increased by 20% to $6.65 billion, while adjusted free cash flow reached $4.2 billion [1] Customer Growth & Operational Momentum - The company added 2.4 million total postpaid net customers in Q4, including 962,000 postpaid phone net additions, and continued broadband expansion with 558,000 net additions [1] - Total broadband customers reached 9.4 million, with 8.5 million being 5G broadband subscribers [1] - Postpaid phone churn increased to 1.02%, rising 10 basis points YoY [1] 2026 Guidance & Outlook - Management projects aggressive growth for 2026, targeting core adjusted EBITDA of $37.0 billion to $37.5 billion and adjusted free cash flow of $18.0 billion to $18.7 billion [1] - Capital expenditures are expected to be around $10.0 billion [1] - CEO Srini Gopalan expressed confidence in the company's future growth prospects [1] Capital Returns - T-Mobile returned $3.6 billion to shareholders in Q4 through $2.5 billion in share repurchases and $1.1 billion in dividends [1] - Cumulative returns since Q3 2022 total $45.4 billion, with a new $14.6 billion program authorized through December 2026 [1] - The next dividend of $1.02 per share is payable on March 12, 2026 [1]