T-Mobile US Financial Model

• Total assets: Approximately $200 billion to $220 billion.
• Key asset categories: Licenses and Intangible Assets (primarily FCC spectrum licenses, representing over 40% of total assets), Property and Equipment (network infrastructure), and Equipment Installment Plan (EIP) Receivables.
• Goodwill & intangibles as % of total assets: Very high (50% to 60%) due to the historical Sprint merger and the massive value of FCC spectrum licenses.
• Working capital profile:
• Days Sales Outstanding (DSO): 30 to 45 days (elevated by long-term EIP receivables).
• Days Inventory Outstanding (DIO): 15 to 25 days (handset inventory).
• Days Payable Outstanding (DPO): 60 to 80 days.
• Net working capital as % of revenue: Typically negative.
• Is working capital positive or negative?: The company operates with negative net working capital, using supplier financing and deferred revenue to fund operations, though EIP receivables consume cash during high-volume quarters.
• PP&E: Consists of cell site equipment, switching nodes, and fibre assets. Useful lives range from 3 to 20 years.
• Right-of-use assets / operating leases: Highly material. T-Mobile leases space on communication towers (from AMT, CCI, SBAC), representing tens of billions in lease liabilities.

• Capex as % of revenue: 12% to 15% of total revenues.
• Maintenance capex vs. growth capex: The majority is now maintenance and capacity augmentation, as the initial nationwide 5G macro buildout is largely complete. Growth capex is directed towards rural expansion and fixed wireless capacity.
• Major capex programmes underway or planned: Network densification, C-band and 3.45 GHz spectrum deployment, and fibre joint venture contributions.
• Capitalised software / development costs: Material, with occasional impairment charges recognised when software projects are abandoned.
• M&A pattern: Strategic acquirer focusing on spectrum assets, regional operators (UScellular), and adjacent broadband infrastructure (Lumos, Metronet).
• Typical acquisition multiple paid: Varies widely; spectrum is purchased at auction rates ($/MHz-POP), while operating companies are acquired at 7x to 10x EBITDA.

• Total debt: Approximately $70 billion to $75 billion.
• Debt/EBITDA ratio: Target Core Adjusted EBITDA leverage ratio is approximately 2.0x.
• Credit rating: Investment grade (BBB- / Baa3 or equivalent).
• Key debt instruments: Senior unsecured notes, term loans, and a revolving credit facility.
• Maturity profile: Well-laddered with average maturities exceeding 5 years.
• Interest rate profile: Predominantly fixed-rate senior notes.
• Covenants: Standard investment-grade incurrence covenants; no restrictive financial maintenance covenants on the majority of the senior notes.
• Share repurchase programme: Highly active. The company announced a $52 billion capital allocation envelope for 2026 to 2027, with up to $30 billion earmarked for shareholder returns.
• Dividend policy: Initiated a quarterly dividend recently, with a low payout ratio but a commitment to double-digit annual growth per share.

• Operating cash flow conversion: OCF to Net Income is typically 2.0x to 2.5x due to massive non-cash D&A and deferred tax provisions.
• Free cash flow margin: Adjusted Free Cash Flow as a percentage of Service Revenues is approximately 22% to 25%.
• Major non-cash items: Depreciation, spectrum amortisation, stock-based compensation, and deferred income taxes.
• Working capital cash flow impact: EIP receivables are a major use of cash when device sales spike, though the company mitigates this by selling tranches of receivables to off-balance-sheet facilities.
• Capex intensity: High absolute dollars (approximately $9.5 billion to $10.0 billion annually) but declining as a percentage of revenue post-5G build.
• Cash tax rate vs. GAAP effective tax rate: Cash taxes are significantly lower than the GAAP effective tax rate due to accelerated depreciation on network assets.

1. Assumptions: Hardcoded drivers for subscriber additions, ARPU growth, churn rates, margin profiles, capex guidance, and WACC.
2. Operating Metrics: Beginning subscribers, gross additions, churn, net additions, and ending subscribers for both Postpaid and Prepaid segments. Calculates ARPU and ARPA.
3. Income Statement: Revenue split by Postpaid, Prepaid, Wholesale, Equipment, and Other. Expenses split by Cost of Services, Cost of Equipment Sales, SG&A, and D&A. Calculates Core Adjusted EBITDA.
4. Balance Sheet: Assets including Cash, Accounts Receivable, EIP Receivables, Inventory, PP&E, Operating Lease ROU Assets, and Spectrum Licenses. Liabilities including Accounts Payable, Deferred Revenue, Operating Lease Liabilities, and Long-Term Debt.
5. Cash Flow Statement: Reconciles Net Income to OCF (adding back D&A, SBC, deferred taxes, and working capital changes). Deducts Cash Capex and Spectrum Purchases to reach Free Cash Flow. Tracks debt issuance, buybacks, and dividends.
6. Debt & Interest Schedule: Tracks balances of senior notes and term loans. Calculates interest expense based on weighted average interest rates and models debt paydown.
7. Lease Schedule: Models the capitalised operating leases for cell towers, calculating the ROU asset amortisation and lease liability interest components.
8. DCF Valuation: Calculates Unlevered Free Cash Flow, applies WACC, calculates Terminal Value using a perpetuity growth rate, and bridges Enterprise Value to Equity Value to determine the implied share price.

1. `Postpaid Service Revenue = Average Postpaid Accounts x Postpaid ARPA x 12`
2. `Prepaid Service Revenue = Average Prepaid Customers x Prepaid ARPU x 12`
3. `Total Service Revenues = Postpaid Service Revenue + Prepaid Service Revenue + Wholesale and other service revenues`
4. `Equipment Revenue = Total Devices Sold x Average Revenue Per Device`
5. `Cost of Equipment Sales = Equipment Revenue x (1 + Equipment Subsidy Margin %)`
6. `Core Adjusted EBITDA = Total Service Revenues + Equipment Revenues + Other Revenues - Cost of Services - Cost of Equipment Sales - SG&A (excluding SBC and special items)`
7. `Core Adjusted EBITDA Margin = Core Adjusted EBITDA / Total Service Revenues`
8. `Depreciation Expense = Beginning PP&E x Blended Depreciation Rate`
9. `Adjusted Free Cash Flow = Net Cash Provided by Operating Activities - Cash Purchases of Property and Equipment`
10. `Ending Postpaid Customers = Beginning Postpaid Customers + Postpaid Gross Additions - (Beginning Postpaid Customers x Postpaid Churn Rate)`
11. `Interest Expense = Average Total Debt x Weighted Average Interest Rate + Lease Liability Interest`
12. `Net Debt = Total Short-Term Debt + Total Long-Term Debt - Cash and Cash Equivalents`

The Assumptions sheet dictates the subscriber growth and pricing inputs on the Operating Metrics sheet. The Operating Metrics sheet calculates total subscribers and ARPU, which directly feed the revenue lines on the Income Statement. The Income Statement generates Net Income, which is the starting point for the Cash Flow Statement. The Cash Flow Statement calculates capital expenditures, which feed the PP&E balance on the Balance Sheet and the D&A calculation on the Income Statement. The Debt & Interest Schedule uses cash flow deficits or surpluses from the Cash Flow Statement to model revolver drawdowns or debt paydowns, which updates the debt balances on the Balance Sheet and feeds Interest Expense back to the Income Statement. This creates a circular reference between Interest Expense, Net Income, Cash Flow, and Debt Balances, requiring a toggle switch to break the loop during structural edits.

• Revenues and Assets: Entered and displayed as positive numbers.
• Expenses: Entered as positive numbers in their specific schedules but subtracted in aggregation formulas (e.g., Gross Margin = Revenue - COGS).
• Liabilities and Equity: Entered and displayed as positive numbers.
• Cash Flow Statement: Cash inflows (e.g., Net Income, D&A add-back, debt issuance) are positive. Cash outflows (e.g., Capex, working capital increases, share repurchases, dividends) are negative.

• Core Adjusted EBITDA Reconciliation: T-Mobile focuses heavily on "Core Adjusted EBITDA", which excludes device lease revenues and special items (like severance). The model must clearly bridge GAAP Operating Income to this non-GAAP metric.
• Equipment Installment Plans (EIP): The securitisation and sale of EIP receivables distort operating cash flows. The model must account for the cash proceeds from the sale of receivables to accurately reflect working capital dynamics.
• Spectrum License Accounting: Spectrum licenses are indefinite-lived intangible assets. They should not be amortised in the income statement. Applying a standard amortisation schedule to total intangibles will massively understate Net Income.
• Operating Lease Capitalisation: Cell tower leases are capitalised. The D&A and interest components of these leases must be modelled correctly, as they impact the bridge between EBITDA and Net Income.
• Share Repurchase Impact: T-Mobile is executing a massive buyback programme (up to $30 billion over 2026-2027). The model must dynamically reduce the outstanding share count to calculate accurate EPS and per-share valuation metrics.
• Capitalised Software: The company capitalises significant software development costs. Impairments of these costs (e.g., $208 million in Q3 2025) should be treated as non-recurring special items.
• Wholesale Revenue Decline: Wholesale revenues are structurally declining due to the internalisation of MVNOs. Extrapolating historical total service revenue growth without separating the wholesale drag will overstate future revenues.
• Capex Normalisation: Capital expenditures peaked during the 5G buildout and are now normalising around $9.5 billion to $10.0 billion. Modelling capex as a constant percentage of growing revenue will unfairly penalise free cash flow in the terminal years.

• "Core Adjusted EBITDA margin should be in the 45% to 48% range of Service Revenues; flag if outside this band."
• "Cash Capex should remain between $9.5 billion and $10.5 billion annually; flag if the model scales this above $11.0 billion."
• "Adjusted Free Cash Flow conversion (FCF / Service Revenue) should be approximately 22% to 25%."
• "Postpaid phone churn should remain below 1.00% (historically runs at 0.86% to 0.92%)."
• "Debt to Core Adjusted EBITDA should remain near the company's 2.0x target."
• "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
• "Equipment gross margin should be negative or near zero; flag if the model generates significant profit from device sales."
• "Share count must decrease annually in line with the $10 billion+ annual share repurchase assumptions."

• Filings: SEC EDGAR (T-Mobile US, Inc. 10-K, 10-Q, 8-K) and the T-Mobile Investor Relations website.
• Key Peers: Verizon Communications (VZ), AT&T Inc. (T).
• Industry Data: Opensignal (network performance reports), J.D. Power (customer care metrics), and FCC spectrum auction results.
• Consensus Estimates: Bloomberg or FactSet for forward-looking EPS and EBITDA estimates.
• Proprietary Data: TeleGeography for broadband market share, Comscore for fixed wireless internet adoption rates.

• T-Mobile US Q4 2024 Earnings Release and Factbook
• T-Mobile US Q4 2025 Earnings Release and Guidance
• T-Mobile US 2024 and 2025 Annual Reports on Form 10-K
• Quartr Earnings Summaries for TMUS
• Stock-Analysis-on.net Common-Size Income Statement Data