Data breach takes the sheen off T-Mobile's strong financials

T-Mobile US posted a solid set of results this week, but it hasn’t all been plain sailing.

Service revenue for the three months to 30 December totalled $15.52 billion, up 3.7% year-on-year. Adjusted EBITDA grew 3.3% to $6.83 billion, while earnings per share (EPS) came in at $1.18, up from $0.34 a year ago.

EPS comfortably topped expectations. Analyst consensus according to FactSet – which was cited by various outlets including The Wall Street Journal – had it at $1.07 per share. However, while T-Mobile’s earnings were a hit, its total revenues were a miss, coming in at $20.27 billion in Q4, 2.5% lower compared to the previous year, and below analyst expectations of $20.64 billion.

In terms of net profit, the absence of costs relating to the merger with Sprint helped to drive Q4 net earnings to $1.48 billion from $422 million. Full-year profit was down 14.4% to $2.59 billion.

The market wasn’t blown away by the performance – nor was it particularly phased either – and T-Mobile’s shares traded sideways for the day, closing at just less than $151.

As for the operational performance, well T-Mobile has already shared its customer numbers for full-year 2022 – which might go some way to explaining the lack of movement in its share price – so there is little point in revisiting those. But in Q4, it netted 314,000 postpaid accounts, broadly flat on the previous year, and 927,000 postpaid phone customers, up from 844,000.

Postpaid phone churn improved to 0.92% from 1.1%. Churn also fell at the prepaid business, coming in at 2.93%, down from 3.01%t. T-Mobile ended December with 113.6 million total customers, which includes fixed-wireless, up from 108.72 million a year earlier.

“With record postpaid account and customer net adds that translated into industry-leading postpaid service revenue and cash flow growth, T-Mobile absolutely smashed 2022 by once again focusing on putting customers first,” declared T-Mobile CEO Mike Sievert, in a statement on Wednesday.

Its customer base could be about to get just a little bit larger. Rumours recently resurfaced that T-Mobile has an eye on Mint Mobile, the MVNO owned by Hollywood actor and entrepreneur Ryan Reynolds. The price tag being touted is said to be in the region of $600 million-$800 million.

T-Mobile US probably shouldn’t get too carried away though, which is a tall order because the self-styled ‘uncarrier’ very much enjoys getting carried away.

The telco recently admitted to suffering yet another data breach, this time affecting 37 million customers. This time, the hack might not be limited to its own user base. Various outlets reported this week that Google Fi, which offers MVNO services primarily via T-Mobile’s network, has warned some of its users that the hack suffered by its host network provider may have compromised their personal information. While Google didn’t specifically name T-Mobile, that’s where fingers are inevitably pointing. Worryingly, a report by Security Week cited anecdotal evidence that some of those affected had been the target of SIM swap attacks.

Despite its customer data difficulties, T-Mobile is optimistic about its prospects for 2023. It expects net customer additions in the range of 5 million to 5.5 million, and core adjusted EBITDA to grow by 10% to between $28.7 billion and $29.2 billion. Synergies from the Sprint merger are forecast to be in the range of $7.2 billion to $7.5 billion, while merger-related expenses before tax are expected to be approximately $1 billion.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.