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.