T-Mobile expects to net 5-5.5M postpaid customers in 2022

T-Mobile released its 2022 outlook alongside fourth quarter and full-year earnings Wednesday, with the operator expecting to add between 5 million and 5.5 million net postpaid customers this year.

That comes after T-Mobile added 5.5 million postpaid net customers, again beating its previous guidance of 5.1 to 5.3 million, in 2021.

Ahead of the earnings results New Street Research analysts wrote that for the past seven years, “T-Mobile has consistently beaten its initial guidance on postpaid net adds by a healthy margin,” on average achieving around 1 million above the top end of the outlook. Still, the firm said it wouldn’t be surprised if the company was more conservative for 2022 based on uncertainty around industry growth and changes in the competitive environment.

For net postpaid adds, New Street thought T-Mobile might guide in the range of 3.5-4 million, and that “anything better would be a great result.”

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Once results hit ahead of the earnings call, New Street’s Jonathan Chaplin provided a quick update on the guidance in a note to investors.

“Bottom line: its great. Based on our recent work…we have been confident about the trajectory of the business, but nervous that mgmt. might take a more cautious than normal tack on guidance, given unusual levels of uncertainty in the market,” wrote Chaplin. “The guidance is better than we feared.”

New Street thinks T-Mobile can reach 6 million net postpaid adds, with Wall Street consensus at 5 million “likely going up.”

Part of the previously mentioned uncertainty relates to growth this year with industry net adds of more than 9 million, at least 50% higher than the usual trend, according to New Street. The firm said it’s hard to know if that growth will smoothly slide back to normal levels (around 6 million) or drop well below before recovering.  

“To add to the uncertainty, cable has launched new aggressive pricing that has driven a sharp rise in net adds and will be an even greater headwind in 2022. Competitive dynamics between the big three national carriers remain uncertain. Finally, Dish is due to launch a postpaid retail brand this year,” the firm wrote ahead of T-Mobile earnings.

T-Mobile already pre-released preliminary Q4 results, including 844,000 net postpaid phone subscribers and 1.10% postpaid phone churn. It also added 224,00 fixed wireless broadband adds, ending the year with 646,000 home internet customers as the operator made a stronger push into that segment. On the prepaid side, T-Mobile reported 49,000 net adds, versus 84,000 in Q4 2020.

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T-Mobile’s total customer tally at the end of 2021 stood at 108.7 million.

“T-Mobile had our strongest year ever. We didn’t just meet the bold goals we set for 2021 around customer growth, profitability, merger synergies and network buildout – we crushed all of them,” said T-Mobile CEO Mike Sievert, in a statement. “Our industry-leading year-end results – adding 1.2 million postpaid accounts and 5.5 million postpaid customers, extending Ultra Capacity 5G to 210 million people – show that the Un-carrier is experiencing the greatest growth momentum in wireless. And we’re poised to sustain that position into 2022 and beyond as we continue to execute on our winning playbook and consistently make investments that have enabled our success.”

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In Q4 service revenues increased 5.5% to $14.96 billion and were up 15.8% year over year for the full year 2021 to $58.4 billion. T-Mobile reported total revenues of $20.78 billion in Q4, up 2.2% from the same quarter a year prior.  

Fourth quarter adjusted EBITDA was $6.3 billion.

Higher Sprint merger-related costs drove a decline in net income, both in Q4 and the full year 2021 to $422 million and $3 billion, respectively. T-Mobile said merger-related costs totaled $1.2 billion in Q4 and $3.1 billion for the full year. It’s been working to migrate customers to the T-Mobile network and at the end of 2021 said approximately 64% of Sprint customers had transitioned. The network migration is expected to wrap up by mid-2022.

For 2022 guidance, T-Mobile expects merger costs to increase to between $4.5 billion - $5 billion, with synergies between $5 billion and $5.3 billion. 

It’s planning for capital expenditures between $13 billion and $13.5 billion this year.