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Will T-Mobile Be Able to Achieve EBITDA Target in 2018?

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T-Mobile’s EBITDA

Now let’s take a look at T-Mobile’s (TMUS) adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth trend over the last few quarters. The telecom company’s adjusted EBITDA expanded significantly YoY from $3.0 billion in the second quarter of 2017 to $3.2 billion in the second quarter of 2018.

This growth in adjusted EBITDA was mainly due to higher prepaid and postpaid service revenues, the positive impact from the new revenue recognition accounting standard of $84.0 million, and the positive impact to cost of services of $70.0 million associated with hurricane-related insurance reimbursement. Additionally, T-Mobile’s adjusted EBITDA margin increased from 40% in the second quarter of 2017 to 41% in the second quarter of 2018.

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T-Mobile expects its adjusted EBITDA for the full-year 2018 to be between $11.5 billion and $11.9 billion. This target excludes future spectrum gains and includes anticipated leasing revenues of $0.6 billion to $0.7 billion. Including the approximate impact of the new revenue recognition accounting standard, adjusted EBITDA is anticipated to grow by an additional $0.2 billion to $0.5 billion for a total guidance range of $11.7 billion to $12.4 billion.

T-Mobile’s peer comparison of EBITDA margin

Verizon (VZ) reported consolidated adjusted EBITDA margin of 36.8% in the second quarter, whereas AT&T’s (T) combined domestic wireless operations EBITDA margin was 44.1% during the same quarter. Meanwhile, Sprint (S) reported a consolidated adjusted EBITDA margin of 57.1% in the first fiscal quarter of 2018 (quarter ending June).

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