T-Mobile beats Q1 expectations, raises 2021 guidance

T-Mobile delivered better-than-expected first quarter financial results on Tuesday and raised its guidance for fiscal 2021 based on Sprint synergies. The company reported first quarter net income of $933 million, with diluted earnings of or 74 cents a share and revenue $19.8 billion. Wall Street was expecting first quarter revenue of $18.9 billion with non-GAAP earnings of 57 cents a share. 

The carrier added 1.4 million net additions in the first quarter, along with 1.2 million postpaid. T-Mobile's postpaid churn came in at 1.98%, a slight decrease for the company.

By the numbers:

·         The company ended the quarter with 103.4 million customers.

·         T-Mobile added 773,000 postpaid phone net additions in Q1.

·         Service revenue in the first quarter was $14.2 billion, driven by the Sprint merger.

·         Prepaid net customer additions were 151,000.

·         T-Mobile said it covers 295 million people with Extended Range 5G.

·         The carrier said its Ultra Capacity 5G covers 140 million people, with expectations to reach 200 million people by the end of 2021.

In terms of guidance, T-Mobile is raising its 2021 outlook and expects to add between 4.4 million and 4.9 million net postpaid customer additions, merger costs of $2.7 billion to $3 billion, and adjusted EBITDA between $22.8 billion to $23.2 billion.

On its Sprint synergies, the company said it accelerated merger synergy realization faster than expected, driving material growth and profitability simultaneously. T-Mobile said approximately 20% of Sprint customers were moved to the T-Mobile network by the end of Q1, and approximately 50% of Sprint customer traffic is now carried on the T-Mobile network, more than double from last quarter. The company expects merger synergies to be between $2.8 billion and $3.1 billion in 2021, up from its prior guidance of $2.7 billion to 3.0 billion.

"T-Mobile is operating with a synergy-backed model, which allows us to simultaneously grow customers and profits while also investing big in the business," said T-Mobile CEO Mike Sievert. "And with the rapid expansion of free cash flows likely ahead for us, we are positioned to have great strength and flexibility from a balance sheet perspective."

Shares of T-Mobile were up nearly 3% after hours.