T-Mobile's Q1 Earnings Beat Estimates on Solid Customer Growth

T-Mobile, US, Inc. TMUS reported impressive first-quarter 2025 results, with both bottom and top lines surpassing the respective Zacks Consensus Estimate. This Bellevue, WA-based wireless service provider reported a top-line expansion backed by industry-leading postpaid customer growth. T-Mobile follows a multi-layer approach to 5G, with dedicated standalone 5G deployed nationwide across 600 MHz, 1.9 GHz and 2.5 GHz bands.

TMUS’ Net Income

Net income in the first quarter was $2.95 billion or $2.58 per share, up from $2.37 billion or $2 in the year-ago quarter. The 24.4% year-over-year growth was primarily driven by the top-line expansion. The bottom line exceeded the Zacks Consensus Estimate of $2.45 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

TMUS’ Revenues

Net sales were $20.88 billion, up from $19.59 billion in the year-ago quarter, driven by solid growth in service and equipment revenues. The top line beat the consensus estimate of $20.57 billion.

Segment Results for TMUS

Total Service revenues were $16.92 billion, up from $16.09 billion in the year-ago quarter. The segment’s net sales missed our revenue estimate of $16.94 billion. The 5.2% year-over-year growth was primarily driven by solid demand for postpaid services. Net sales from Postpaid Services contributed $13.59 billion in revenues, up 7.6% year over year.

During the quarter, T-Mobile added 1.3 million postpaid net customers and 205,000 postpaid net accounts, both being the best in the industry. Postpaid phone net customer additions were 495,000, the best in the industry. The postpaid phone churn rate was 0.91%. High-speed Internet total customer additions were 424,000. Postpaid average revenues per account rose to $146.22 from $140.88 in the year-ago quarter.

Net sales from Prepaid services were $2.64 billion, up from $2.4 billion in the year-earlier quarter. Prepaid net customer additions were 45,000, with a churn rate of 2.68%. Wholesale and other service revenues decreased to $688 million from $1.06 billion in the year-earlier quarter. Prepaid average revenues per user declined to $34.67 from $37.18 in the year-ago quarter.

Equipment revenues were $3.7 billion, up from $3.25 billion in the year-ago quarter. The segment revenues beat our estimate of $3.38 billion. This improvement was primarily attributed to a higher average revenue per device sold, owing to an increase in the high-end phone mix.

Other revenues were $257 million, up from the prior-year quarter’s tally of $247 million.

Other Details for TMUS

Total operating expenses increased to $16.08 billion from $15.59 billion in the year-ago quarter. Operating income rose to $4.8 billion from $3.99 billion. T-Mobile recorded core adjusted EBITDA of $8.3 billion compared with $7.65 billion a year ago, backed by solid growth in service revenues.

TMUS’ Cash Flow & Liquidity

In the March quarter, T-Mobile generated $6.84 billion of cash from operating activities compared with $5.08 billion in the prior-year quarter. Adjusted free cash flow was $4.39 billion, up from $3.34 billion in the year-earlier quarter.

As of March 31, 2025, the company had $12 billion in cash and cash equivalents, with $76 billion of long-term debt. During the quarter, it repurchased 10.1 million shares for $2.4 billion.

TMUS’ Outlook

For 2025, the company expects postpaid net customer additions to be between 5.5 million and 6 million. Core adjusted EBITDA is estimated to be $33.2-$33.7 billion. It anticipates cash from operating activities within $27-$27.5 billion. TMUS expects adjusted free cash flow in the band of $17.5-$18 billion. Capital expenditure is anticipated to be around $9.5 billion.

TMUS’ Zacks Rank & Stocks to Consider

T-Mobile currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks that investors may consider.

InterDigital IDCC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the trailing four quarters, InterDigital delivered an earnings surprise of 158.41%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.

CommScope Holding Company, Inc. COMM sports a Zacks Rank #1 at present. Headquartered in Hickory, NC, CommScope is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company currently operates in three segments — Connectivity and Cable Solutions, Networking, Intelligent Cellular and Security Solutions and Access Network Solutions. CommScope has an established global manufacturing and distribution footprint. Its strategically located manufacturing hubs optimize product delivery timelines.

United States Cellular Corporation USM sports a Zacks Rank of 1 at present. In the last reported quarter, it delivered an earnings surprise of 150%.

U.S. Cellular has taken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing a superior quality network and national coverage. U.S. Cellular is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research