UNSTOPPABLE

2018 Annual Report

Message from John
Fueling the Un-carrier Revolution. The Un-carrier is all about putting customers first. Where the other guys see numbers, we see people. It's the reason every decision we make is centered around doing what's right by the customer and solving their pain points. 2018 was another incredible year for T-Mobile, and it's clear that our customer experience obsession is paying off! When customers join T-Mobile, they get more value for their money, with the best customer service in the industry, and all on the nation's fastest 4G LTE network in 2018. Our investments in new geographies, underpenetrated segments and a completely new model for customer care translated into accelerated customer growth and record financials. All the while, we've been rapidly building out our network and expanding our coverage as we set the stage for a 5G era. As of December 31, 2018, we covered more than 325 million people on 4G LTE. At T-Mobile we built a culture that values diversity and inclusion, a commitment to our customers and a responsibility to our communities and environment. It's these values that are at the core of our DNA and differentiate us from the rest. We have the people, the brand and the leadership to be UNSTOPPABLE!
Accelerated customer growth. In 2013, the Un-Carrier set out to disrupt a stupid, broken, arrogant industry and change wireless for good. Since that time, we've seen accelerated customer growth, resulting in an increase to our customer base of more than 46 million and ending 2018 with a total customer base of 79.7 million.
2018 Customer Highlights
7.0M
Total Net Customer Additions
  • We added more than 5 million total net customers for the 5th year in a row.
4.5M
Postpaid Net Customer Additions
  • Best annual results in 3 years.
  • 4 years in a row leading the industry.
3.1M
Branded Postpaid Phone Net Customer Additions
  • Nearly 4x Verizon and AT&T combined.
  • 5 years in a row leading the industry.
460K
Branded Prepaid Net Customer Additions
  • Accelerated growth QoQ after the rebranding of Metro by T-Mobile.
Record breaking financials. Translating customer growth into strong financial results. In 2018, we produced strong financial results by effectively balancing growth and profitability. This was our fifth consecutive year successfully translating customer growth into industry-leading Total Revenue and Service Revenue percentage growth year-over-year. In addition to our record-high revenues, we also delivered strong net income, record-high Adjusted EBITDA, strong Net Cash from operating activities and record Free Cash Flow. Further proof that the Un-Carrier strategy is working.
TMUS Stock Price
+63.3% in 3 Years
2018 Financial results
  • Total Revenue
  • Service Revenue
  • Net Income
  • Adjusted EBITDA
  • Operating Income
  • Net Cash Provided by Operating Activities
  • Free Cash Flow
  •  
Total Revenue
6.7%

YEAR OVER YEAR

  • Record-high Total Revenue
  • Leading the industry for the 5th year in a row for Total Revenue percentage growth YoY
Service Revenue
6.1%

YEAR OVER YEAR

  • Record-high Service Revenue
  • Leading the industry for the 5th year in a row for Service Revenue percentage growth
Net Income
22.6%

YEAR OVER YEAR

excluding the impact of the Tax Cuts and Jobs Act of $2.2B in 2017

36.3%

YEAR OVER YEAR

including the impact of the Tax Cuts and Jobs Act of $2.2B in 2017

  • Strong Net Income
Adjusted EBITDA
10.6%

YEAR OVER YEAR

  • Record-high Adj. EBITDA
  • 5th year in a row growing Adj. EBITDA YoY
Operating Income
8.6%

YEAR OVER YEAR

  • Record-high Operating Income
Net Cash Provided by Operating Activities
1.8%

YEAR OVER YEAR

Free Cash Flow
30.3%

YEAR OVER YEAR

  • Record-high Free Cash Flow

Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Definitions, explanations and reconciliations to the comparable GAAP metrics are provided in our annual report on Form 10-K.

A network second to none. Thanks to our blazing-fast network, we were able to deliver record financials in 2018.
The nation's fastest 4G LTE network. In 2018, according to Speedtest Intelligence® data from Ookla, we averaged 4G LTE download speeds of 33.4 Mbps, and averaged 4G LTE upload speeds of 12.1 Mbps – completing our fifth consecutive year leading the industry with the nation's fastest 4G LTE network in both download and upload speeds.
Deploying 600mHz spectrum. In 2018, we successfully deployed 600 MHz low-band spectrum using 5G-ready equipment, at a furious pace. By the end of 2018, we had reached more than 2,700 cities and towns in 43 states and Puerto Rico, and had 29 compatible devices. Combining the 600 MHz spectrum and 700 MHz spectrum, we had deployed low-band spectrum to 301 million people – providing better coverage for our customers than ever before as we set the stage for a 5G era.
Expanding our coverage and breadth.
T-Mobile continues to increase and expand the footprint, and increase the capacity of our network to better serve our customers. We are now covering 99% of Americans with 4G LTE: that's more than 325 million people — up from 322 million the year prior and approaching effective network population coverage in parity with Verizon.

We cover 99% of Americans with LTE. Image does not depict coverage. Visit T-Mobile.com for coverage details.

Paving the way for the future. Extending our reach: New geographies and new segments.
Expanding our Distribution Footprint. Since the beginning of 2016, we've increased our retail footprint by 35 million people, and now cover more than 265 million people. This allows even more Americans, particularly in rural America, to join the Un-carrier revolution.
Nationwide improvement in rural & suburban coverage. Our nationwide rural and suburban coverage has significantly improved after our furious rollout of the 700 MHz and 600 MHz spectrum. Combined, we've deployed low-band spectrum to 301 million people. This is only the beginning; there's still more work to be done. If our merger with Sprint is approved, The T-Mobile will offer massive benefits to our rural customers in wireless, video, enterprise and in-home broadband.
T-Mobile continues to see success after the 2017 launch of the T-Mobile ONE Unlimited 55+ plan, giving Americans age 55 and up unlimited talk, text and LTE data for just $70 a month for two lines w/AutoPay discount using eligible payment method. All because we want to give a huge thank-you to the generation that created today's wireless industry!
In April of 2018, we launched T-Mobile ONE Military with half off family lines—providing the biggest military discount in wireless. That's because we want to thank you for your service. In addition, we committed to hiring 10,000 veterans and military spouses within the next five years, and expanding LTE coverage to U.S. military communities.
Back in 2015, we went after the business market with Un-Carrier 9.0, attacking the old-guard carriers' last stronghold to revolutionize businesses of all sizes by offering transparent pricing at the best rates, alongside many other benefits. In 2018, T-Mobile for Business celebrated its best year yet, with record total customer net additions. But there's still more work to be done!
The best care in wireless ... just got better.
It's no surprise T-Mobile is known for its world-class customer care — loving customers is in our DNA! In August 2018, we shook things up a bit with the launch of our 15th Un-Carrier move: Team of Experts!
We took the traditional care model and flipped it on its head by bringing people to people and removing the hated Interactive Voice Response (IVR), eliminating one of the biggest customer service pain points in our industry – or any industry, for that matter. As it turns out, it's good for business. After the launch of Team of Experts, we began experiencing our highest level of customer satisfaction at our lowest cost to care. In fact, we ranked at the top of the 2019 J.D. Power U.S. Wireless Customer Care Full-Service Study. This was our third consecutive win, and marks the 17th time T-Mobile has ranked at the top among full-service providers! In addition, we received the highest scores for most satisfied customers in wireless from two independent studies, HarrisX and YouGov, for the second year in a row.
Where Passion Meets Purpose. We've built a culture at T-Mobile that values a commitment to our customers, diversity, and inclusion, as well as a responsibility to our community and environment.
A commitment to our customers. Our culture begins and ends with keeping customers at top of mind. It's been six years and 15 Un-carrier moves dedicated to solving customer pain paints and challenging convention. The secret sauce to our success all boils down to one thing: our team of dedicated and customer experience-obsessed employees. It's no wonder T-Mobile was named J.D. Power's best in customer service for full-service wireless providers for the third consecutive year.
Diversity & Inclusion. We've built a culture at T-Mobile that values diversity and inclusion. And not just because it's the right thing to do. Our diverse employees and customers help us break down barriers and rewrite the rules. It's our commitment to inclusion across race, gender, age, religion, identity, and experience that drives us forward every day. It's no wonder we ranked #12 in Fortune's 100 Best Companies to Work For in the category for diversity.
Responsibility to community and sustainability. The Un-carrier is changing wireless for good — and doing good for our communities and environment. It's about leaving the world a better place, empowering employees to give back to local communities, giving youth and military access to opportunity, and making an industry-leading commitment to renewable energy.
Supercharging the Un-carrier. In April of 2018, T-Mobile and Sprint reached a definitive agreement to come together to form The New T-Mobile.
Combined, they will create a new, bigger, supercharged company to deliver the nation's first real 5G network that is both broad and deep — covering big cities to rural America. As we believe, the 5G revolution should be for everyone, everywhere, not just those in dense urban areas. We remain confident and optimistic that once regulators review the facts, they will recognize the pro-competitive and pro-consumer benefits. The combined company will be an aggressive competitor in wireless, broadband and beyond, resulting in lower prices for consumers and creating more jobs starting Day One. By 2024, The New T-Mobile network will have approximately double the total capacity and triple the total 5G capacity of T-Mobile and Sprint combined, with 5G speeds four to six times what they could achieve on their own. With Sprint's expansive 2.5 GHz spectrum, T-Mobile's nationwide 600 MHz spectrum, and other combined assets, The New T-Mobile plans to create the highest-capacity network in U.S. history.

ARE
YOU
WITH
US?

Six years ago, the Un-carrier set out to change wireless for good. In this time, we've made it our mission to listen to our customers and solve their pain points with the launch of 15 Un-carrier moves. We're only getting started — and we won't stop.

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Important Additional Information

In connection with the proposed transaction, T-Mobile US, Inc. (“T-Mobile”) has filed a registration statement on Form S-4 (File No. 333-226435), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on October 29, 2018, and which contains a joint consent solicitation statement of T-Mobile and Sprint Corporation (“Sprint”), that also constitutes a prospectus of T-Mobile (the “joint consent solicitation statement/prospectus”), and each party will file other documents regarding the proposed transaction with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The documents filed by T-Mobile may be obtained free of charge at T-Mobile’s website, at www.t-mobile.com, or at the SEC’s website, at www.sec.gov, or from T-Mobile by requesting them by mail at T-Mobile US, Inc., Investor Relations, 1 Park Avenue, 14th Floor, New York, NY 10016, or by telephone at 212-358-3210. The documents filed by Sprint may be obtained free of charge at Sprint’s website, at www.sprint.com, or at the SEC’s website, at www.sec.gov, or from Sprint by requesting them by mail at Sprint Corporation, Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B679, Overland Park, Kansas 66251, or by telephone at 913-794-1091.

 

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. 

 

Cautionary Statement Regarding Forward-Looking Statements

This communication contains certain forward-looking statements concerning T-Mobile, Sprint and the proposed transaction between T-Mobile and Sprint. All statements other than statements of fact, including information concerning future results, are forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transaction, including anticipated future financial and operating results, synergies, accretion and growth rates, T-Mobile’s, Sprint’s and the combined company’s plans, objectives, expectations and intentions, and the expected timing of completion of the proposed transaction. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements, including the risks and uncertainties detailed in the Form S-4, as well as in T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and in its subsequent reports on Form 10-Q, including in the sections thereof captioned “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” as well as in its subsequent reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and www.t-mobile.com. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Given these risks and uncertainties, persons reading this communication are cautioned not to place undue reliance on such forward-looking statements. T-Mobile assumes no obligation to update or revise the information contained in this communication (whether as a result of new information, future events or otherwise), except as required by applicable law.