United States

CUSTOMER DEVELOPMENT

Chart: Customer development USA
thousands
   Dec. 31, 2016 Dec. 31, 2015 Change Change % Dec. 31, 2014
United States          
Mobile customers 71,455 63,282 8,173 12.9 % 55,018
Branded customers a 54,240 49,326 4,914 10.0 % 43,501
Branded postpaid a 34,427 31,695 2,732 8.6 % 27,185
Branded prepay a 19,813 17,631 2,182 12.4 % 16,316
Wholesale customers a 17,215 13,956 3,259 23.4 % 11,517
 
a On September 1, 2016 T-Mobile US sold its marketing and distribution rights to certain of T-Mobile US’ existing co-branded customers to a current wholesale partner for nominal consideration (the MVNO Transaction). Upon the sale, the MVNO Transaction resulted in a transfer of 1,365 thousand branded postpaid customers and 326 thousand branded prepay customers to wholesale customers. Prospectively from September 1, 2016, net customer additions for these customers are included within wholesale customers. Ending customers as of September 30, 2016 reflect the transfers in connection with the transaction.

At December 31, 2016, the United States operating segment (T-Mobile US) had 71.5 million customers compared to 63.3 million customers at December 31, 2015. Net customer additions were 8.2 million for the year ended December 31, 2016, compared to 8.3 million net customer additions for the year ended December 31, 2015 due to the factors described below.

Branded customers. Excluding the sale of marketing and distribution rights to certain of T-Mobile US’ existing co-branded customers to a current wholesale partner (the MVNO Transaction) branded postpaid net customer additions were 4,097 thousand for the year ended December 31, 2016, compared to 4,510 thousand branded postpaid net customer additions for the year ended December 31, 2015. Branded postpaid net customer additions for the year ended December 31, 2016 were lower compared to the year ended December 31, 2015, primarily due to higher deactivations resulting from a growing branded postpaid customer base, partially offset by a lower branded postpaid churn rate as well as an increase in the number of qualified branded prepay customers migrating to branded postpaid plans.

Branded prepay net customer additions were 2,508 thousand (excluding the MVNO Transaction) for the year ended December 31, 2016, compared to 1,315 thousand branded prepay net customer additions for the year ended December 31, 2015. The increase was due primarily to success of the MetroPCS brand, continued growth in new markets and distribution expansion, partially offset by an increase in the number of qualified branded prepay customers migrating to branded postpaid plans.

Wholesale customers. Wholesale net customer additions were 1,568 thousand (excluding the MVNO Transaction) for the year ended December 31, 2016, compared to wholesale net customer additions of 2,439 thousand for the year ended December 31, 2015. The decrease was due primarily to higher deactivations from certain MVNO partners.

DEVELOPMENT OF OPERATIONS

millions of €  
    2016 2015 Change Change % 2014
Total revenue   33,738 28,925 4,813 16.6 % 22,408
Profit from operations (EBIT)   3,685 2,454 1,231 50.2 % 1,405
EBIT margin % 10.9 8.5     6.3
Depreciation, amortization and impairment losses   (5,282) (3,775) (1,507) (39.9) % (2,839)
EBITDA   8,967 6,229 2,738 44.0 % 4,244
Special factors affecting EBITDA   406 (425) 831 n. a. (52)
EBITDA (adjusted for special factors)   8,561 6,654 1,907 28.7 % 4,296
EBITDA margin (adjusted for special factors) % 25.4 23.0     19.2
Cash Capex   (5,855) (6,381) 526 8.2 % (5,072)

Total revenue

Total revenue for the United States operating segment of EUR 33.7 billion in 2016 increased by 16.6 percent compared to EUR 28.9 billion in 2015. In U. S. dollars, T-Mobile US’ total revenues increased by 16.3 percent year-on-year due primarily to service revenue growth resulting from increases in T-Mobile US’ average branded customer base from strong customer response to T-Mobile US’ Un-carrier initiatives, success of the MetroPCS brand and continued growth in new markets. Additionally, equipment revenues increased due primarily to higher lease revenues resulting from the launch of the JUMP! On Demand program at the end of the second quarter of 2015. With JUMP! On Demand, revenues associated with leased devices are recognized over the term of the lease rather than when the device is delivered to the customer. An additional factor driving the increase in equipment revenues included an increase in the number of devices sold and a higher average revenue per device sold.

EBITDA, adjusted EBITDA, adjusted EBITDA margin

Adjusted EBITDA increased by 28.7 percent to EUR 8.6 billion in 2016, compared to EUR 6.7 billion in 2015. In U. S. dollars, adjusted EBITDA increased by 28.7 percent in 2016, compared to 2015. Adjusted EBITDA was positively impacted by increased branded postpaid and prepay service revenues resulting from strong customer response to T-Mobile US’ Un-carrier initiatives and the ongoing success of promotional activities; lower losses on equipment due primarily to an increase in lease revenues, which are recognized over the lease term, resulting from the launch of T-Mobile US’ JUMP! On Demand program at the end of the second quarter of 2015. Additionally, the costs of leased devices, which are capitalized and depreciated over the lease term, are excluded from adjusted EBITDA. Additionally, focused cost control and synergies realized from the decommissioning of the MetroPCS Code Division Multiple Access (CDMA) network contributed to the adjusted EBITDA increase during 2016. These effects were partially offset by an increase in strategic investments to support T-Mobile US’ growing total customer base, including higher employee-related costs, higher commissions driven by an increase in T-Mobile US’ branded customer additions and higher promotional costs. Adjusted EBITDA margin increased to 25.4 percent in 2016, compared to 23.0 percent in 2015 due to the factors described above.

Adjusted EBITDA in 2016 excludes EUR 0.4 billion special factors primarily related to non-cash gains from spectrum license transactions, partially offset by costs relating to the decommissioning of the MetroPCS CDMA network and stock-based compensation costs. Overall, EBITDA increased to EUR 9.0 billion in 2016, compared to EUR 6.2 billion in 2015 due to the factors described above, including the impact of special factors.

EBIT

EBIT increased to EUR 3.7 billion in 2016, compared to EUR 2.5 billion in 2015. This was driven by higher adjusted EBITDA, partially offset by higher depreciation expense related to devices leased under T-Mobile US’ JUMP! On Demand program launched at the end of the second quarter of 2015, as well as increases from the continued build-out of T-Mobile US’ 4G/LTE network, resulting in increased depreciation expense in 2016.

Cash capex

Cash capex decreased to EUR 5.9 billion in 2016, compared to EUR 6.4 billion in 2015, due primarily to EUR 2.2 billion of spectrum licenses acquired primarily through the U. S. FCC auction in January 2015 compared with payments of EUR 1.7 billion for the acquisition of spectrum licenses in 2016 as T-Mobile US continues to invest in network capex for the build-out of the 4G/LTE network.