T-Mobile lifts cash-flow forecast as premium plans pull in customers
T-Mobile beat second-quarter profit expectations and nudged up its free-cash-flow outlook after gains in premium accounts.
By Sal Moretti · Money Reporter
3 min read
T-Mobile raised its annual cash-flow forecast after a second quarter powered by richer customer plans, stronger account growth and a profit haul that topped Wall Street’s expectations.
The wireless carrier reported net income of $3.2 billion for the quarter, equal to $2.99 a share, according to MarketWatch. That was 5% higher than a year earlier and above the $2.59-a-share consensus estimate compiled by FactSet.
Chief Financial Officer Peter Osvaldik described the quarter to MarketWatch as “rinse-and-repeat” performance, pointing to continued momentum as the company works through the aftereffects of its UScellular deal.
Premium plans do the heavy lifting
T-Mobile added 277,000 postpaid net accounts in the quarter, MarketWatch reported. That beat the FactSet consensus call for 272,300 additions.
The company has shifted its focus toward account growth rather than subscriber growth. T-Mobile has said that approach better reflects the value of households and accounts with several lines, which represent most of its postpaid phone business.
Management also says its newer premium plans are changing the customer mix. Chief Operating Officer Jon Freier told MarketWatch that 60% of new customers joining T-Mobile chose an extended premium plan.
Those plans, introduced last year under the Experience branding, include features such as premium unlimited data, streaming benefits and a five-year price guarantee, according to MarketWatch. T-Mobile has described the plans as attracting higher-quality accounts.
Average revenue per postpaid account reached $152.91 in the second quarter, up 2% from the prior year. FactSet’s consensus expects that metric to pick up later in 2026, reaching $154.60 in the fourth quarter, for 2.8% year-over-year growth, as the drag from lower-revenue UScellular customers fades.
Cash-flow outlook gets a bump
T-Mobile kept most of its full-year forecast intact but lifted its adjusted free-cash-flow guidance. The company now expects adjusted free cash flow of $18.4 billion to $18.8 billion, compared with its prior range of $18.1 billion to $18.7 billion.
Osvaldik told MarketWatch that free-cash-flow margin is one of the clearest measures of long-term value creation because it shows how much service revenue remains after capital spending.
The company reported a 25% free-cash-flow margin for the second quarter and is aiming for 24% for the full year, according to MarketWatch.
The UScellular transaction remains part of the story. T-Mobile completed that merger deal about a year ago, and Osvaldik told MarketWatch that earnings per share should strengthen over time as temporary merger-related expenses, including the closure of duplicate stores and networks, move further into the rearview.
Buybacks and dividends keep rolling
T-Mobile also continued returning cash to shareholders. The company bought back $2.2 billion of stock during the second quarter and paid $1.1 billion in dividends, according to MarketWatch.
Since starting its capital-return program in 2022, T-Mobile has put $54.6 billion toward shareholder returns.
Osvaldik told MarketWatch that the company’s broader approach to capital allocation remains steady. MarketWatch reported that T-Mobile’s framework, outlined by the company in February, includes a leverage target of 2.5 times.
This story draws on original reporting from MarketWatch.