By Harshita Mary Varghese
July 23 (Reuters) – T-Mobile raised its forecast for annual adjusted free cash flow on Thursday and beat quarterly profit estimates, fueled by customer migration to pricier premium plans.
The telecom provider has been retiring some legacy wireless plans and moving affected customers to newer offerings, with unlimited premium data and device-upgrade options.
“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 told Reuters.
The company has been modernizing its wireless plan portfolio and enhancing benefits for legacy customers as part of a broader push to migrate subscribers to its newer “Experience” plans, he added.
Shares of the company were down about 1.3% in volatile premarket trading.
T-Mobile now expects adjusted free cash flow between $18.4 billion and $18.8 billion, an increase from its prior forecast of $18.1 billion to $18.7 billion.
The free cash flow raise is from continued efficiencies, particularly in cash income taxes, but also we have other working capital benefits as we deploy some advanced AI tools, finance chief Peter Osvaldik said in an interview with Reuters.
For the second quarter ended June, T-Mobile added net 277,000 postpaid accounts, higher than estimates of 259,000 additions by analysts polled by Visible Alpha.
The accounts represent customer billing relationships and can include multiple wireless lines used by families or businesses.
Quarterly average revenue per postpaid account rose 2% to $152.91, compared with $149.87 a year ago, while profit came in at $2.99 per share, compared with analysts’ average estimate of $2.59, according to data compiled by LSEG.
T-Mobile has expanded beyond wireless and into fiber through acquisitions and joint ventures, though analysts note its planned fiber footprint remains considerably smaller than that of AT&T and Verizon.
(Reporting by Harshita Mary Varghese and Jaspreet Singh in Bengaluru; Editing by Shinjini Ganguli)
