T-Mobile Lifts Free Cash Flow Forecast on Strong Premium Plan Adoption

T-Mobile US, Inc. (TMUS) has raised its forecast for annual adjusted free cash flow and reported second-quarter profits that surpassed analyst expectations. The improved outlook is fueled by a successful strategy of migrating customers to more expensive premium plans, which is boosting key revenue metrics.

Second-Quarter Highlights

The telecommunications provider posted strong results for the quarter ending in June, beating market estimates on several key metrics. The company's performance was driven by both customer growth and increased spending per customer.

• Quarterly Profit: T-Mobile reported a profit of $2.99 per share, significantly higher than the average analyst estimate of $2.59, according to data from LSEG.
• Customer Growth: The company added a net 277,000 postpaid accounts, exceeding the 259,000 additions forecast by analysts polled by Visible Alpha.
• Revenue Per Account: Average revenue per postpaid account (ARPA) rose 2% year-over-year to $152.91.

Upgraded Outlook and Strategy

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Following the strong quarter, T-Mobile upgraded its financial guidance for the full year. The company now expects adjusted free cash flow to be between $18.4 billion and $18.8 billion, an increase from its previous forecast of $18.1 billion to $18.7 billion.

Company executives attributed the improved forecast to operational efficiencies. In an interview with Reuters, finance chief Peter Osvaldik cited benefits from cash income taxes and the deployment of advanced AI tools to improve working capital. The results reflect T-Mobile's push to modernize its plan portfolio, retiring legacy offerings and moving subscribers to its newer "Experience" plans, which feature unlimited premium data. Chief Operating Officer Jon Freier told Reuters that about 60% of new customers are choosing the company's most premium plans.

Market Context

Despite the positive results and upgraded forecast, shares of T-Mobile were down approximately 1.3% in premarket trading. The company's strategy includes expanding beyond its core wireless business into fiber internet, though analysts note its footprint in this area remains smaller than that of competitors like AT&T and Verizon.