Key Takeaways From T-Mobile’s Q4 Earnings, Updates On The Sprint Merger

by Trefis Team
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T-Mobile (NASDAQ:TMUS) published its Q4 2018 results on Thursday, reporting stronger than expected earnings that were driven by robust postpaid phone additions. In this note, we provide a brief overview of the company’s results and some updates on the company’s planned merger with Sprint.

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Updates On The Postpaid Phone Business

T-Mobile added a total of 1.4 million postpaid subscribers, a Q4 record while adding 1 million postpaid phone customers (its best holiday quarter in four years), in line with the preliminary figures it published in early January (related: T-Mobile Could Keep Its Solid Postpaid Momentum Going). For 2019, the company has guided for branded postpaid net customer additions of 2.6 to 3.6 million. While this marks a decline from the 4.46 million net adds in 2018, the company typically increases its guidance as the year progresses. Things remained mixed on the branded postpaid phone ARPU front, with the metric standing at $46.29 in Q4, down by about 0.2% year-over-year, driven partly by a higher mix of more value-focused plans. For full-year 2019, the company expects branded postpaid phone ARPU to remain relatively stable compared to 2018.

T-Mobile-Sprint Merger On Track 

T-Mobile remains upbeat about the prospects of its planned merger with Sprint, noting that it expects regulatory approval during the first half of this year, with the deal now in the final stages of the regulatory review process. While the FCC and Department of Justice continue to review the transaction, T-Mobile’s CEO has indicated that the merger has been approved by 15 of the required 19 state public utility commissions. The merger was also ratified by U.S. national security officials in mid-December, a crucial step, as both companies are controlled by foreign investors. Executives from both companies are expected to testify in front of lawmakers at the U.S. House next week.

In selling the deal to regulators, the two companies have been emphasizing that a merger would be positive for U.S. wireless customers while helping the United States push forward with the deployment of next-generation 5G networks. For instance, the carriers committed to keeping their service charges at or below current levels for three years post the deal close in a recent letter to the FCC. T-Mobile says that the deal would have a multiplicative effect on total available network capacity, effectively reducing the costs of carrying each gigabyte of data. The carrier intends to use Sprint’s deep portfolio of 2.5 GHz spectrum, along with its 600 MHz spectrum to run its network, previously noting that a merged company could have 8x the 5G capacity that either carrier could have on a standalone basis, with 15x the effective speed.

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