T-Mobile said it has increased its projection for annual adjusted free cash flow and delivered quarterly results that topped analyst estimates as more subscribers select higher-priced, premium wireless plans.
The carrier has been phasing out certain legacy plans and moving subscribers to newer options that include unlimited premium data and device-upgrade features, part of a deliberate portfolio modernization effort. "We are seeing new customers really kind of adopt our most premium plans at a rate of about 60% of total sales," Chief Operating Officer Jon Freier said.
Executives described the migration to the firm’s newer "Experience" plans as a central component of efforts to boost average revenue and monetization of the base. In addition to upgrading plan features for new customers, T-Mobile said it is enhancing benefits for existing legacy customers as it transitions them into the updated lineup.
Management raised the outlook for adjusted free cash flow to a range of $18.4 billion to $18.8 billion, up from an earlier forecast of $18.1 billion to $18.7 billion. Finance chief Peter Osvaldik attributed the revision to ongoing efficiencies, particularly reductions in cash income taxes, and to working capital improvements tied in part to deploying advanced AI tools.
Operational metrics for the second quarter ended in June showed net additions of 277,000 postpaid accounts, beating the 259,000 additions estimated by analysts polled by Visible Alpha. Postpaid accounts refer to customer billing relationships and can encompass multiple wireless lines for families or businesses.
Average revenue per postpaid account climbed 2% year-over-year to $152.91, up from $149.87 in the year-ago quarter. Profit per share for the quarter was $2.99, outpacing analysts’ consensus estimate of $2.59 compiled by LSEG.
Beyond its wireless business, T-Mobile has expanded into fiber services through acquisitions and joint ventures. Company and analyst commentary noted, however, that T-Mobile’s planned fiber footprint remains substantially smaller than those of some competitors, including AT&T and Verizon.
Bottom line: T-Mobile’s shift of customers toward premium plan tiers and identified efficiency gains helped push adjusted free cash flow guidance higher and supported better-than-expected quarterly earnings and revenue metrics for postpaid accounts.