T-Mobile posted a mediocre quarter late Thursday night, but don't tell that to its fearless CEO Mike Sievert.
In fact, Sievert and his team believe T-Mobile has enough momentum among consumers to seek higher prices where it makes sense.
T-Mobile offers “unprecedented” value, the often energetic Sievert told Yahoo Finance Live. He reiterated the company's commitment to being the lowest-cost wireless carrier, even if it would raise prices.
Shares of the telecom giant fell more than 3% in premarket trading on Friday as the company missed analyst forecasts for earnings and postpaid net subscriber growth.
The result was impacted by items that could be recorded as one-off expenses but still impacted overall profits and initial investor reaction.
“We had some unique items in the quarter, including the issuance of SoftBank true-up shares and some accelerated depreciation charges, but these did not impact the liquidity of the business,” a T-Mobile spokesperson told Yahoo Finance via email .
T-Mobile issued 48.75 million common shares to Softbank at the end of the fourth quarter. The issuance reflects the satisfaction of certain conditions as part of T-Mobile's merger with Softbank's Sprint. However, the issuance increased the company's share count, reducing diluted earnings per share.
The company also forecasts adjusted operating profit growth to slow in 2024 compared to 2023.
“We believe T-Mobile set 2024 guidance conservatively, although bulls were likely hoping for more and more was needed for the stock as expectations were beaten/raised,” KeyBanc analyst Brandon Nispel said in a note to clients , which Yahoo Finance viewed.
T-Mobile's results come amid a mixed quarter from rival AT&T this week and a better-than-expected performance from Verizon.
Sievert maintains that T-Mobile is still in growth mode, with 5.7 million net subscriber additions in 2023 and a double-digit percentage improvement in operating profit – no small feat in the competitive telecommunications industry.
The story goes on
Its business should also benefit from the launch of satellites through its partnership with SpaceX to provide services in rural areas, Sievert said.
It also has about $16 billion in cash remaining under a previous share repurchase plan. T-Mobile repurchased $13.2 billion in shares in 2023.
This is how T-Mobile's quarter developed.
The profit overview
Net sales: +1% YoY to $20.48 billion vs. estimate of $19.68 billion
Adjusted EPS: +41.5% YoY to $1.67 vs. estimate of $1.91
Postpaid net access: 1.6 million versus an estimated 1.72 million
Postpaid Churn: 0.96% vs. estimated 0.91%
What else caught our eye: the forecast for 2024
Net customer growth in the postpaid sector is expected to be between 5 and 5.5 million. In 2023, T-Mobile recorded 5.7 million net customer additions.
Adjusted operating profit grows “approximately” 9% at the midpoint. In 2023, adjusted operating profit increased 10% year over year.
Average revenue per user (ARPU) is expected to increase by 2%.
Brian Sozzi is Editor-in-Chief of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
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