United States

CUSTOMER DEVELOPMENT

thousands
  June 30, 2018 Mar. 31, 2018 Change
June 30, 2018/
Mar. 31, 2018
 %
Dec. 31, 2017 Change
June 30, 2018/
Dec. 31, 2017
 %
June 30, 2017 Change
June 30, 2018/
June 30, 2017
 %
Mobile customers 75,619 74,040 2.1 72,585 4.2 69,562 8.7
Branded customers a 61,049 59,941 1.8 58,715 4.0 56,451 8.1
Branded postpaid a 40,082 39,065 2.6 38,047 5.3 36,158 10.9
Branded prepay a 20,967 20,876 0.4 20,668 1.4 20,293 3.3
Wholesale customers b 14,570 14,099 3.3 13,870 5.0 13,111 11.1
a Due to certain acquisitions by T-Mobile US at the beginning of 2018, the number of branded postpaid customers as of the first quarter of 2018 included an adjustment of 13 thousand and the number of branded prepay customers as of the first quarter of 2018 included an adjustment of 9 thousand.
b T-Mobile US believes current and future regulatory changes have made the Lifeline program offered by T-Mobile US’ wholesale partners uneconomical. T-Mobile US will continue to support its wholesale partners offering the Lifeline program, but has excluded the Lifeline customers from the reported wholesale subscriber base resulting in the removal of 160 thousand and 4,368 thousand reported wholesale customers as of the beginning of the third quarter of 2017 and the beginning of the second quarter of 2017, respectively.

At June 30, 2018, the United States operating segment (T-Mobile US) had 75.6 million customers, compared to 72.6 million customers at December 31, 2017. Net customer additions were 3.0 million for the first half of 2018, compared to 2.5 million net customer additions for the first half of 2017 due to the factors described below.

Branded customers. Branded postpaid net customer additions were 2,022 thousand for the first half of 2018, compared to 1,731 thousand branded postpaid net customer additions for the first half of 2017. The increase in branded postpaid net customer additions was due primarily to continued growth in existing and greenfield markets, the growing success of new customer segments such as T-Mobile for Business, T-Mobile ONE TM Unlimited 55+ and T-Mobile ONE Military, higher gross customer additions due to higher connected devices, specifically the Apple watch, and lower postpaid churn in the first half of 2018, partially offset by lower gross customer additions as a result of more aggressive promotions and the launch of Un-carrier Next – All Unlimited with taxes and fees in the first quarter of 2017 and higher deactivations from a growing customer base.

Branded prepay net customer additions were 290 thousand for the first half of 2018, compared to 480 thousand branded prepay net customer additions for the first half of 2017. The decrease was due primarily to higher deactivations from a growing customer base of T-Mobile US’ MetroPCS brand, partially offset by lower migrations to branded postpaid plans.

Wholesale customers. Wholesale net customer additions were 700 thousand for the first half of 2018, compared to 264 thousand for the first half of 2017. The increase was due primarily to lower deactivations driven by the removal of Lifeline program customers during 2017.

DEVELOPMENT OF OPERATIONS

millions of €
  Q1 2018 Q2 2018 Q2 2017 Change % H1 2018 H1 2017 Change % FY 2017
TOTAL REVENUE   8,455 8,821 9,236 (4.5) 17,277 18,218 (5.2) 35,736
Profit from operations                  
(EBIT)   1,137 1,201 1,328 (9.6) 2,338 2,331 0.3 5,930
EBIT margin % 13.4 13.6 14.4   13.5 12.8   16.6
Depreciation, amortization and impairment losses   (1,223) (1,321) (1,308) (1.0) (2,544) (2,695) 5.6 (5,019)
EBITDA   2,360 2,522 2,635 (4.3) 4,882 5,025 (2.8) 10,949
Special factors affecting EBITDA   28 (32) (4) n. a. (4) 0 n. a. 1,633
EBITDA
(ADJUSTED FOR SPECIAL FACTORS)
  2,332 2,553 2,640 (3.3) 4,885 5,025 (2.8) 9,316
EBITDA margin (adjusted for special factors) % 27.6 28.9 28.6   28.3 27.6   26.1
CASH CAPEX   (1,143) (1,353) (8,463) 84.0 (2,495) (9,905) 74.8 (11,932)

Total revenue

Total revenue for the United States operating segment of EUR 17.3 billion in the first half of 2018 decreased by 5.2 percent, compared to EUR 18.2 billion in the first half of 2017. In U.S. dollars, T-Mobile US’ total revenues increased by 6.0 percent year-on-year due primarily to growth in service revenue from increases in T-Mobile US’ average branded customer base primarily from the continued growth in existing and greenfield markets, the growing success of new customer segments, along with lower postpaid churn in the first half of 2018, and higher connected devices.

EBITDA, adjusted EBITDA

In euros, adjusted EBITDA decreased by 2.8 percent to EUR 4.9 billion in the first half of 2018, compared to EUR 5.0 billion in the first half of 2017. Adjusted EBITDA margin increased to 28.3 percent in the first half of 2018, compared to 27.6 percent in the first half of 2017. In U.S. dollars, adjusted EBITDA increased by 8.6 percent during the same period. Adjusted EBITDA increased due primarily to an increase in branded postpaid and prepay service revenues as discussed above, the positive impact from IFRS 15 and the positive impact of the reimbursements from our insurance carriers, net of costs incurred related to hurricanes, of USD 128 million received in the first half of 2018. T-Mobile US continues to work with its insurance carriers and expects additional reimbursement related to these hurricanes in future periods. These increases were partially offset by higher employee-related costs, costs related to managed services, commissions, costs related to the proposed Sprint transaction, higher costs associated with network expansion, an increase in net losses on equipment sales, and lower gains on disposal of spectrum licenses.

EBITDA decreased by 2.8 percent to EUR 4.9 billion in the first half of 2018, compared to EUR 5.0 billion in the first half of 2017. In U.S. dollars, EBITDA increased to USD 5.9 billion in the first half of 2018, compared to USD 5.4 billion in the first half of 2017, due to the factors described above.

EBIT

EBIT remained consistent at EUR 2.3 billion in the first half of 2018 and in the first half of 2017. In U.S. dollars, EBIT increased by 12 percent during the same period primarily driven by higher EBITDA, partially offset by higher depreciation expense.

Cash capex

Cash capex decreased to EUR 2.5 billion in the first half of 2018, compared to EUR 9.9 billion in the first half of 2017. In U.S. dollars, cash capex decreased to USD 3.0 billion, compared to USD 10.9 billion during the same period, due primarily to a decrease in spectrum licenses acquired in the first half of 2018.