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T-Mobile US, Inc. (NASDAQ:TMUS) Q4 2023 Earnings Conference Call January 25, 2024 4:30 PM ET
Company Participants
Jud Henry - Senior Vice President and Head, Investor Relations
Mike Sievert - President and Chief Executive Officer
Peter Osvaldik - Executive Vice President and Chief Financial Officer
Jon Freier - President, Consumer Group
Michael Katz - President, Marketing, Strategy and Products
Janice Kapner - Executive Vice President and Chief Communications and Corporate Responsibility Officer
Callie Field - President, T-Mobile Business Group
Ulf Ewaldsson - President, Technology
Conference Call Participants
Simon Flannery - Morgan Stanley
Craig Moffett - MoffettNathanson
Jonathan Chaplin - New Street
John Hodulik - UBS
Michael Rollins - Citi
Eric Luebchow - Wells Fargo
Bryan Kraft - Deutsche Bank
Kannan Venkateshwar - Barclays
Ric Prentiss - Raymond James
Peter Supino - Wolfe Research
Timothy Horan - Oppenheimer
Gregory Williams - TD Cowen
Operator
Good afternoon. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] You may also submit a question via X by sending a tweet to @TMobileIR or @MikeSievert using the $TMUS. Please note this event is being recorded.
I would now like to turn the conference over to Jud Henry, Senior Vice President and Head of Investor Relations for T-Mobile US. Please go ahead, sir.
Jud Henry
All right. Welcome to T-Mobile's Fourth Quarter and Full Year 2023 Earnings Call. Joining me on the call today are Mike Sievert, our President and CEO; Peter Osvaldik, our CFO; and as well as other members of the senior leadership team.
During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review.
Our earnings release, investor fact book and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the Quarterly Results section of the Investor Relations website.
With that, let's get it over to Mike to tell us about our results.
Mike Sievert
Thanks, Jud. Welcome, everybody. As you can see, if you're viewing online, I'm here with a good cross-section of our senior team once again. We're coming to you today from Bellevue, Washington and looking forward to a great discussion.
But first, I'd like to take a moment to reflect on a historic year for T-Mobile and the exciting momentum that we bring into 2024. '23 was another year for T-Mobile of industry-leading growth in both customers and key financials, including all-time record results across many metrics.
It was also a year where T-Mobile became established as the overall network leader. Built on our extensive advantages in 5G. And it was the year that we effectively completed the biggest arguably the most successful telecommunications merger integration in the world, delivering synergies bigger and faster than even our own ambitious goals and doing it while also accelerating 5G investment in this country to the benefit of consumers and businesses.
Our remarkably consistent, best value best network strategy, delivered industry-leading postpaid phone net additions of 3.1 million in 2023. This was driven by our highest postpaid phone gross adds in company history, up 2% for the year and up 6% in Q4. And by our lowest postpaid phone churn in company history for the year.
Our net adds essentially matched our great results from '22 despite industry postpaid phone net adds decreasing year-over-year. You know what that means? It means that our unique formula enabled us to take a higher share of postpaid phone net adds than a year ago. In fact, '23 was our highest share of postpaid phone net adds since the merger, showing the ongoing durability of our differentiated strategy.
And we finished the year on a high note, with Q4 postpaid phone net adds of 934,000 highest in the industry by a wide margin, and we did it with rising ARPA, up almost 2% delivering industry-leading growth in postpaid service revenue and core EBITDA in Q4 while also nearly doubling our adjusted free cash flow.
Let's talk about Broadband. We added over 2.1 million customers in '23, our biggest growth year yet with more net new customers than the other largest providers combined, as our product just continues to resonate in the market. And we finished strong with 541,000 nets in Q4, making us one of the largest ISPs in the nation with 4.8 million customers and counting at year-end.
At T-Mobile, our network is the key enabler of our growth, not only for the success that we've had to date, but also for years to come. I predicted years ago that our well-established 5G leadership would eventually translate into overall network leadership, and that was proven loud and clear in 2023.
By leading third parties like Ookla and OpenSignal, time and again, with T-Mobile sweeping every category of their test for overall network performance. Listen, it boils down to this. T-Mobile has the broadest and the deepest and the most advanced 5G network in the US today. And we have the assets and capabilities to further extend our network leadership in '24 and beyond.
Okay. One final network point, we recently celebrated a pivotal moment in our ground-breaking alliance with SpaceX. By kicking off testing of direct satellite to cellular communications, our teams are really excited about what's coming.
Let me just remind you of one thing. Our network leadership still isn't yet fully recognized by millions of network seekers who are still potential future customers for T-Mobile. And yet that same network leadership is already driving our strong win share, particularly in underpenetrated areas like enterprise and government and also in smaller markets and rural areas in our consumer business. Let me just double-click on that growth momentum.
T-Mobile for Business, delivered the highest postpaid phone net adds in company history in 2023. And we exited the year with great momentum, with Q4 being our highest quarterly net adds ever.
Meanwhile, in our Consumer Group, we continued to grow our share of households, both in smaller markets and rural areas where we are well on our way to our 2025 targets and even in the top 100 markets, where we grew our share year-over-year on the strength of our network and our compelling value proposition.
We're executing our balanced growth playbook with great and consistent success. And the best part is we still have a lot of room to run. All of this added up to delivering the highest consolidated service revenue growth in the industry in '23.
And it was an industry that continues to grow service revenues and cash flows while simultaneously seeing customers win from healthy competition that delivers more value and better networks.
On that all-important postpaid service revenue metric, we delivered 6% growth in 2023, way above our next closest competitor. That growth led to core adjusted EBITDA growth of over 10% and free cash flow growth of nearly 80%. All of this enables our substantial stockholder return model, which has returned $17 billion to stockholders so far through the end of '23, including our first-ever quarterly dividend in Q4.
Now Peter will share our guidance with you in a moment. But the short version is this. We see continued strong customer and revenue growth, translating into rapid growth in cash flows in 2024 and beyond, and supporting our ambitious plans for shareholder returns that we've already shared with you.
Before I wrap up, because this is a year-end report, I want to touch on some of the ways we're building a connected world where everyone can thrive. We believe reliable and affordable wireless and internet service is a necessity for all in today's highly connected and digital world. And that's why we are so proud to have connected nearly 6 million students. And provided $6.4 billion in products and services so far under our flagship initiative Project 10Million and our other education initiatives.
T-Mobile US, Inc. (NASDAQ:TMUS) Q4 2023 Earnings Conference Call January 25, 2024 4:30 PM ET
Company Participants
Jud Henry - 高级副总裁兼投资者关系主管
Mike Sievert - 总裁兼首席执行官
彼得奥斯瓦尔迪克 - 执行副总裁兼首席财务官
Jon Freier - 消费者集团总裁
迈克尔·卡茨 - 营销，战略和产品总裁
珍妮丝·卡普纳 - 执行副总裁兼首席传播和企业责任官
Callie Field - President, T-Mobile Business Group 凯莉·菲尔德 - 特尚移动商业集团总裁
Ulf Ewaldsson - 总裁，技术
Conference Call Participants
西蒙·弗兰纳利 - 摩根士丹利
Craig Moffett - MoffettNathanson 克雷格·莫菲特 - 莫菲特纳桑森
乔纳森·钱普林 - 纽街
John Hodulik - 瑞银证券
迈克尔·罗林斯 - 花旗 (Citi)
Eric Luebchow - 沃尔斯法戈
Bryan Kraft - 德意志银行
Kannan Venkateshwar - 巴克莱
Ric Prentiss - 林曼咋斯
彼得·瑟皮诺 - 沃尔夫研究
Timothy Horan - Oppenheimer 蒂莫西·霍兰 - 欧本海默
格里高利·威廉姆斯 - TD Cowen
Operator
下午好。所有参与者将处于听模式。【操作员指示】在今天的演示结束后，将有机会提问。【操作员指示】您也可以通过X向@TMobileIR或@MikeSievert发送推文，使用$TMUS提出问题。请注意本次活动正在记录中。
我现在要把会议交给T-Mobile US的高级副总裁兼投资者关系负责人Jud Henry。请开始吧，先生。
Jud Henry
好的。欢迎参加 T-Mobile 2023 年第四季度和全年收益电话会议。今天与我们通话的有我们的总裁兼首席执行官 Mike Sievert、我们的首席财务官 Peter Osvaldik，以及其他高级领导团队成员。
在此通话中，我们将会提出前瞻性声明，这涉及风险和不确定因素，可能导致实际结果与我们的前瞻性声明大相径庭。我们在美国证券交易委员会的文件中提供了一份全面的风险因素清单，我鼓励您仔细阅读。
我们的收益发布、投资者事实手册以及与我们业绩相关的其他文件，以及本次通话中讨论的根据美国通用会计准则和非美国通用会计准则之间的调节，均可在投资者关系网站的季度业绩部分找到。
这样，让我们把话题转到 Mike，让他告诉我们关于我们的结果。
Mike Sievert
谢谢，Jud。 欢迎大家。 正如您所看到的，如果您正在在线观看，我再次和我们的高级团队的精英代表们在一起。 今天我们来自华盛顿贝尔维尤，期待有一个很棒的讨论。
但首先，我想花点时间回顾一下 T-Mobile 的历史性一年，以及我们带入 2024 年的激动人心的态势。 ’23 年对于 T-Mobile 又是一个行业领先的增长年份，包括客户数量和关键财务数据，在许多指标上都创下了创纪录的成绩。
这也是一个 T-Mobile 成为全球网络领军者的年份。基于我们在 5G 领域的广泛优势。这也是我们成功完成了可能是世界上最成功的电信并购整合的一年，实现了比我们自己雄心勃勃的目标更大更快的协同效应，并且还加速了对本国 5G 投资，使消费者和企业受益。
我们的极具连续性、最佳价值和最佳网络战略，在2023年交付了业界领先的后付费手机净增用户达310万。这是由我们公司历史上最高的后付费手机总增长用户推动的，年增长2%，第四季度增长6%。以及我们公司历史上最低的后付费手机用户流失率。
我们的净增长基本上与我们在'22年取得的出色业绩相匹配，尽管行业后付费手机净增长与去年同期相比有所下降。你知道这意味着什么吗？这意味着我们独特的公式使我们能够占据比一年前更高的后付费手机净增份额。事实上，'23年是自合并以来我们获得的后付费手机净增份额最高的一年，显示了我们差异化策略持续的耐久性。
我们在年底时表现亮眼，Q4后付费手机净增长达到了 934,000，遥遥领先于行业其他公司，且我们的平均月收入每用户（ARPA）在上升近 2% 的同时推动了 Q4 后付费服务收入和核心 EBITDA 增长，几乎将调整后的自由现金流翻倍。
让我们谈谈宽带。我们在23年增加了超过210万名客户，这是我们迄今增长最快的一年，净新增客户数量超过其他最大供应商的总和，因为我们的产品在市场上持续受到认可。我们在第四季度以541,000个净增长完成强劲，并成为全国最大的ISP之一，在年底时已有480万名客户和持续增长。
在 T-Mobile，我们的网络是我们长期增长的关键推动力，不仅是迄今为止取得成功的关键，也是未来多年的关键。我多年前就预测过，我们成熟的 5G 领导地位最终将转化为整体网络领导地位，而这在 2023 年显然已得到清楚证明。
通过像Ookla和OpenSignal这样的第三方机构的领导，T-Mobile一再以其全面网络性能测试中的每一项类别横扫。听着，归根结底，T-Mobile在美国拥有最广泛、最深入和最先进的5G网络。我们还拥有资产和能力，可以在2024年及以后进一步扩展我们的网络领先地位。
好的。在网络方面的最后一个关键地方，我们最近庆祝了我们与SpaceX历史性联盟的一个重要时刻。通过启动直接卫星到移动通信的测试，我们的团队对即将到来的事情感到非常兴奋。
让我提醒你一件事。我们的网络领导地位仍未得到数百万寻求网络的潜在未来T-Mobile客户的充分认可。而这个同样的网络领导地位已经在推动我们的强劲市场份额，特别是在企业和政府等未充分渗透的地区，以及在我们的消费者业务中的小市场和农村地区。让我更详细地说明这种增长势头。
T-Mobile 商务部门在2023年取得了公司历史上最高的后付费手机净增长。我们以强劲的势头结束了这一年，第四季度的净增长是我们有史以来最高的季度净增长。
与此同时，在我们的消费者群体中，我们在较小的市场和农村地区继续增加我们的家庭份额，我们已经在走向2025年目标的道路上取得了很大进展。即使在前100个市场，我们也凭借强大的网络和有吸引力的价值主张实现了年度份额增长。
我们执行平衡增长策略取得了巨大而持续的成功。最棒的部分是我们还有很多空间可以发展。所有这些综合起来，使我们在'23年取得了行业内最高的综合服务收入增长。
而且这是一个行业，它不断增长服务收入和现金流，同时看到客户从健康竞争中获益，带来更多的价值和更好的网络。
在至关重要的后付费服务收入指标上，我们在2023年实现了6%的增长，远远超过我们最接近的竞争对手。这种增长导致了核心调整后的EBITDA增长超过10%，自由现金流增长了近80%。所有这些都使我们的股东回报模式实现了重大进展，截至'23年底已为股东返还了170亿美元，包括我们有史以来的首次季度股息在第四季度发放。
现在 Peter 很快会和大家分享我们的指导。但简短版的内容是：我们看到持续强劲的客户和收入增长，将转化为 2024 年及以后现金流快速增长，并支持我们对股东回报的雄心勃勃计划，这些已经与大家分享过了。
在我总结之前，因为这是年度报告，我想谈谈我们正在打造一个人人都能茁壮发展的互联世界的一些方式。我们相信在今天高度互联和数字化的世界中，可靠和价格实惠的无线和互联网服务对每个人来说都是必需的。这就是为什么我们引以为豪地将近600万名学生连接在一起。我们在我们的旗舰项目10Million和其他教育倡议下迄今已提供了64亿美元的产品和服务。
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