Key facts
- T-Mobile increased its forecast for annual adjusted free cash flow.
- The company's quarterly profit exceeded analyst estimates.
- Customer migration to premium plans is fueling growth.
- The new free cash flow forecast is between $18.4 billion and $18.8 billion.
- T-Mobile added 277,000 postpaid accounts in the second quarter.
- Average revenue per postpaid account increased by 2% year-over-year.
T-Mobile raised its annual adjusted free cash flow forecast and beat quarterly profit estimates, driven by customers migrating to pricier premium plans. The telecom provider is retiring legacy wireless plans and moving affected customers to newer offerings that include unlimited premium data and device-upgrade options.
Chief Operating Officer Jon Freier stated that new customers are adopting the company's most premium plans at a rate of about 60% of total sales. This migration is part of a broader strategy to move subscribers to its newer "Experience" plans.
The company now expects adjusted free cash flow to be between $18.4 billion and $18.8 billion, an increase from its prior forecast of $18.1 billion to $18.7 billion. Finance chief Peter Osvaldik attributed the raise to continued efficiencies, particularly in cash income taxes, and working capital benefits from deploying AI tools.
In the second quarter, T-Mobile added a net 277,000 postpaid accounts, exceeding analyst estimates of 259,000. Average revenue per postpaid account rose 2% to $152.91, and profit came in at $2.99 per share, surpassing the average estimate of $2.59.