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T-Mobile Reports Strong Q2 2018 Performance on August 1

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T-Mobile beats estimates

T-Mobile (TMUS) impressed investors by delivering robust results for the second quarter of 2018 after the market closed on August 1. It exceeded Wall Street expectations for earnings, although it missed on revenues. The company has been consistently delivering better-than-expected earnings results for the past two years.

For the quarter, it posted adjusted EPS of $0.92, which was 37% higher YoY (year-over-year) and 5.7% higher than Wall Street’s expectations. Revenues grew 4% YoY to $10.57 billion, but that marginally missed analysts’ expectations of $10.66 billion by 0.8%.

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Growth drivers in Q2

Higher revenues, strong service revenues, consistent customer additions, lower churn rates, and strong adjusted EBITDA growth have been driving T-Mobile’s earnings.

In the second quarter, this third-largest wireless carrier added ~1.6 million net customers, bringing its total customer base to 75.6 million as of June 30, nearly 8.7% higher YoY. It added 686,000 postpaid phone customers in the quarter and had a record low postpaid phone churn rate of 0.95%.

The company also posted strong ~6.5% growth in service revenues to $7.9 billion in the quarter, boosted by its strong customer base. Adjusted EBITDA increased 7% YoY to ~$3.2 billion.

Stock rises on upbeat results 

T-Mobile stock rose 1.08% in after-hours trading on August 1. The increase was based on strong quarterly earnings results and the pending $26.5-billion merger with Sprint (S), which delivered solid fiscal Q1 2018 results, beating both earnings and revenues.

The Sprint–T-Mobile merger is currently under review. The alliance is expected to pose a threat to the top two wireless carriers, AT&T (T) and Verizon (VZ). The combined company is expected to have more than 126 million customers, whereas AT&T and Verizon have 141 million and 150 million subscribers, respectively.

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