TMUS Q4 Earnings Beat Estimates on Solid Demand for Postpaid Services

Core Insights - T-Mobile, US, Inc. (TMUS) reported strong fourth-quarter 2025 results, exceeding both revenue and earnings estimates, driven by significant postpaid customer growth [1][9] Financial Performance - Net income for Q4 was $2.1 billion or $1.88 per share, a decline of 29.5% year-over-year from $2.98 billion or $2.57 per share, attributed to increased operating and interest expenses [2] - Adjusted EPS was $2.14, surpassing the Zacks Consensus Estimate of $2.03 [2] - Total revenues reached $24.33 billion, up from $21.87 billion in the same quarter last year, exceeding the consensus estimate of $23.63 billion [3] Segment Results - Total service revenues were $18.7 billion, reflecting a 10.5% year-over-year increase from $16.9 billion, primarily driven by strong demand for postpaid services [4] - Postpaid services generated $15.37 billion in revenues, marking a 13.9% increase year-over-year [4] - Prepaid service revenues were $2.58 billion, down from $2.68 billion in the previous year [6] Customer Growth - T-Mobile added 2.4 million postpaid net customers and 261,000 postpaid net accounts during the quarter, with a postpaid phone churn rate of 1.02% [5] - Postpaid average revenues per account increased to $150.17 from $146.28 year-over-year [5] Operating Metrics - Total operating expenses rose to $20.59 billion from $17.28 billion in the prior year, leading to a decline in operating income to $3.73 billion from $4.58 billion [8] - Core adjusted EBITDA was $8.4 billion, up 7% year-over-year [8] Cash Flow and Liquidity - Cash generated from operating activities was $6.65 billion, compared to $5.54 billion in the prior year [10] - Adjusted free cash flow increased to $4.18 billion from $4.08 billion year-over-year [10] - As of December 31, 2025, T-Mobile had $5.59 billion in cash and cash equivalents and $79.64 billion in long-term debt [11] Future Outlook - T-Mobile expects postpaid net customer additions to be between 900,000 and 1 million for the upcoming period [12] - Core adjusted EBITDA is projected to be between $37 billion and $37.5 billion, with cash from operating activities estimated at $28 billion to $28.7 billion [12] - Adjusted free cash flow is anticipated to be in the range of $18 billion to $18.7 billion, with capital expenditures around $10 billion [12]