Reading T-Mobile’s EBITDA Trend in 4Q17



T-Mobile’s EBITDA trend

In the preceding part of this series, we discussed T-Mobile’s (TMUS) revenue trend for the past few quarters. Now let’s take a look at T-Mobile’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth in 4Q17.

T-Mobile’s adjusted EBITDA expanded significantly on a YoY (year-over-year) basis in 4Q17, from $2.6 billion in 4Q16 to $2.7 billion. According to the company, this growth in adjusted EBITDA was primarily due to higher service revenues and gains on disposal of spectrum licenses.

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Additionally, T-Mobile’s adjusted EBITDA margin fell to 35% in 4Q17, down from 36% in 4Q16, primarily due to lower volumes and, more specifically, a lower upgrade rate. In 4Q17, T-Mobile’s operations in Texas, Florida, and Puerto Rico experienced losses related to hurricanes. The telecom company experienced a loss of $53.0 million in adjusted EBITDA during 4Q17.

Peer comparison of EBITDA margins in 4Q17

According to company filings, Verizon Communications (VZ) reported a consolidated adjusted EBITDA margin of 35.7% in 4Q17, while AT&T’s (T) combined domestic wireless operations EBITDA margin was 32.7% for the same quarter.

Meanwhile, Sprint (S) reported a consolidated adjusted EBITDA margin of 45.9% in fiscal 3Q17 (quarter ending December 2017). Notably, Sprint is enjoying a higher margin than competitors due to significant cost reductions and higher equipment contributions.

In the next part, we’ll look at T-Mobile’s postpaid phone customer net additions trend over the past few quarters.


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