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Analysts No Longer Concerned about T-Mobile’s 2015, Following Successful Q4 2014

February 20, 2015 - Written By Alexander Maxham

On Thursday, T-Mobile officially announced their financial numbers for Q4 of 2014, as well as their year end numbers for 2014. T-Mobile exceeded expectations. In fact, a number of analysts were a bit skeptical that T-Mobile could turn a profit in 2014 with their uncarrier moves and huge subscriber growth. However, T-Mobile say the biggest change in profit year over year in Q4. At about 19.4%. T-Mobile’s adjusted EBITDA for the fourth quarter was $1.75 billion which was a nice 4.2% ahead of what analysts had expected. The company also had a full year EBITDA of $5.636 billion which was in their forecast but in the low end. T-Mobile had forecasted between $5.6 billion and $5.8 billion for the year.

Analysts are feeling really good after T-Mobile’s Q4 2014 results, which came out on Thursday. Analysts had a bit of skepticism last year, but this year analysts are saying that T-Mobile has fundamentals on it’s side for 2015. Especially with the cost savings from shutting down the MetroPCS CDMA network this year. So what about guidance from T-Mobile? Well the outspoken T-Mobile CEO told USA Today yesterday “Our guidance is, we won’t stop”. Which has been Legere’s MO for quite a while now.

In 2015, T-Mobile expects to have adjusted EBITDA of around $6.8 to $7.2 billion. Which means about 21-28 percent growth year-over-year. This is according to Wells Fargo analyst Jennifer Fritzsche. “This growth is driven by multiple factors, including the ramping up of MetroPCS decommissioning synergies, a focus on family plan activations, which tend to have lower customer acquisition costs and lower churn than single-line plans, and greater operating leverage as T-Mobile US grows the scale of its business, ” Jennifer wrote in a research note on Friday. She continued “This growth, along with the moderation of working capital investment required for its EIP receivables, should allow T-Mobile US to generate meaningful [free cash flow] in 2015.”

T-Mobile has had quite the momentum lately, it’ll be interesting to see if it continues in 2015, or starts to plateau. John Legere did say that T-Mobile is now #3 ahead of Sprint, but Sprint still says they are number three. Will be interesting to see how that changes in the next quarter or two.  How many of you are excited to see what T-Mobile can do in 2015? Let us know in the comments down below.