T-Mobile US, Inc. (TMUS) Earnings

Management highlights

- Network Leadership & Innovation • Achieved a record high NPS of 46, the highest NPS ever for wireless among the top three U.S. carriers, leading all competitors • Won third consecutive Best Mobile Network award from Ookla, swept all OpenSignal quality and performance awards over the last five years, and won all 13 national benchmark categories from P3, including AI Services Champion • Rolled out beta for network-native live translation AI, embedding AI models directly into the core network in preparation for future edge-based physical AI use cases • Successfully handled surging traffic during the 2026 sports-heavy summer using network slicing, small cells, and new AI-powered Dynamic CX that autonomously adjusts capacity for crowd events - Customer Growth & Market Share • Gained postpaid household share across all cohorts in top 100 markets, smaller markets, and rural areas; holds 24% household share in rural/smaller markets (which represent 40% of the U.S. population), leaving significant room for further growth • Integration of the acquired US Cellular business is progressing well, and is accelerating rural market growth • 5G broadband now delivers fiber-equivalent download speeds over Wi-Fi with the latest router generation, and won J.D. Power's top customer satisfaction award for home internet; continues to be the fastest-growing ISP in the U.S. • The T-Mobile Visa co-branded credit card launch was one of Capital One's most successful co-brand launches ever, and is on track to become one of Capital One's top co-brand programs by new account volume • T-Life monthly active users surpassed 30 million following the successful 10-year T-Mobile Tuesdays Member Month promotion - Strategic Positioning • Core strategy remains delivering the best network, best value, and best customer experience to eliminate customer trade-offs, and capture share from network-seeking customers (over 20 million potential households and businesses still untapped) • Fiber joint ventures are performing as expected, reaching ~20% penetration in the first 12 months of buildout; fiber and FWA are complementary, as fiber customers free up wireless fallow capacity for additional FWA customers. T-Mobile prioritizes value creation over vanity home pass targets • Hired Chris Sambar as new Chief Enterprise Officer starting in August to accelerate enterprise segment growth

Guidance

- Full-year 2026 postpaid net account additions guidance maintained at 950,000 to 1,050,000; Q3 2026 postpaid net additions are expected to hit approximately 250,000, with temporary elevated churn from legacy rate plan modernization concentrated in low-line accounts - Full-year 2026 total service revenue guidance maintained at approximately $77 billion, representing 8% year-over-year growth; Q3 2026 service revenue is expected to reach ~$19.3 billion, up 6% year-over-year - Full-year 2026 postpaid ARPA growth guidance maintained at 2.5% to 3%, with management noting results are tracking toward the 3% upper end of the range - Full-year 2026 cash capex guidance remains unchanged at approximately $10 billion - Adjusted full-year 2026 free cash flow guidance was increased to $18.4 billion to $18.8 billion, a $200 million upward revision at the midpoint, driven by lower-than-expected cash income taxes - Q3 2026 Core Adjusted EBITDA is expected to reach ~$9.4 billion, up 8% year-over-year, with full-year core adjusted EBITDA tracking to ~10% year-over-year growth - Management reaffirmed the long-term target of 15 million FWA subscribers by 2030, built on conservative market share assumptions that do not include additional future spectrum allocations

Segment performance

Segment-level financial performance breakdown was not explicitly provided in the call transcript. Key consolidated results are: 13% year-over-year growth in postpaid service revenue, 9% year-over-year growth in total service revenue, 12% year-over-year growth in Core Adjusted EBITDA, and a 25% industry-leading free cash flow margin. Postpaid net account additions reached 277,000 in Q2, with 2% year-over-year ARPA growth. Customer lifetime value (CLV) increased by a healthy double-digit percentage year-over-year, and 60% of new account customers selected premium plans. The 5G broadband (FWA) segment delivered industry-leading net customer growth with healthy ARPUs, and T-Mobile for Business continued to gain market share driven by a network superiority-led value proposition.

Risks & headwinds

- Legacy rate plan modernization is expected to cause temporary elevated churn in Q3 2026, though the impact is concentrated in accounts with fewer lines, and the impact to postpaid phone churn is lower - Upcoming spectrum auctions in 2027 (CBAN 2.0) and 2028 (2.7 GHz) require capital allocation that will partially offset near-term shareholder repurchase activity, though management maintains a disciplined framework for balancing investment and returns - Future unanticipated AI-driven traffic growth could create network capacity pressures, though management notes existing capacity is sufficient and new spectrum allocations will add additional headroom - LEO satellite broadband could create new competitive pressure for FWA, particularly in rural markets, though management notes product performance advantages and sufficient market scale for multiple providers

Analyst Q&A

• Q: How does T-Mobile balance volume versus price growth this year, and what is the competitive backdrop?

  A: Management frames the balance around maximizing customer lifetime value (CLV) rather than prioritizing one over the other. Port-in ARPUs are already 20% higher than port-out ARPUs, showing current positioning delivers both strong value and volume. Excluding M&A impacts, postpaid ARPA grew 3.7% year-over-year in Q2, and management reaffirmed the 2.5-3% full-year ARPA growth target while maintaining growth aspirations for both volume and ARPA.

• Q: Can you discuss how your fallow capacity model holds up given rising FWA and potential AI-driven traffic growth, and is future spectrum for FWA or AI?

  A: Management clarified that while FWA represents a large share of current network traffic, it uses only a small share of total available capacity, well within the bounds of the existing fallow capacity model that guided the 15 million FWA subscriber target (which did not include any new spectrum). AI training traffic is currently concentrated in wired data centers, but T-Mobile has already upgraded to 5G Advanced to prepare for future mobile AI traffic growth. New future spectrum will cement overall network leadership, rather than being dedicated to a single use case, and will add incremental FWA capacity beyond the existing 15 million target.

• Q: How is LEO satellite broadband impacting your FWA business, and would you consider partnering to expand satellite offerings?

  A: T-Mobile management notes there is a large enough market for both FWA and LEO, but current FWA is a far superior product (delivering fiber-like Wi-Fi speeds, with a higher NPS than competing broadband offerings) that is positioned as a premium service, not just a discount option. Two-thirds of T-Mobile's FWA customers are in the top 100 urban markets, where LEO has inherent capacity constraints from beam sizing, so T-Mobile does not see significant competitive risk. Management sees no incremental value from a broader satellite partnership today, as FWA already serves the addressable market effectively.

• Q: How does the sequential acceleration of service revenue growth in Q4 2026 break out across segments?

  A: The Q4 acceleration will be driven by both continued postpaid account volume growth and expanding ARPA across the postpaid base, with strong ongoing growth from 5G broadband. Wholesale revenue is now expected to be roughly flat for the full year (in line with prior expectations of planned Dish and Trackphone roll-offs), with typical seasonal Q4 strength. Prepaid migration to postpaid continues as a healthy dynamic, lifting overall CLV, and the prepaid segment remains stable, providing a pipeline of future postpaid customers.