Company DCF analysis file
T-Mobile DCF Analysis
T-Mobile’s DCF must connect service economics to network, spectrum and customer-device funding. Reported operating cash and the issuer’s adjusted free-cash-flow measure have different comparison boundaries when receivable-sale classification changes. The annual profit and cash bridges below make those differences explicit before any growth or valuation assumption is introduced.
Read service and equipment revenue with their distinct cost base
Years ended December 31, 2024 and 2025; issuer financial-results supplement, consolidated annual columns, unaudited. Amounts use the monetary scale stated in each table caption. Source: annual financial statements. Reported lines retain the issuer’s scope; derived ratios use the displayed denominators.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Revenue | 81,400 | 88,309 |
| Service costs excluding D&A | 10,771 | 11,497 |
| Equipment costs excluding D&A | 18,882 | 21,277 |
| Sales / general / administrative | 20,818 | 23,470 |
| Impairment | 0 | 278 |
| Depreciation / amortization | 12,919 | 13,508 |
| Total operating expense | 63,390 | 70,030 |
| Operating income | 18,010 | 18,279 |
| Net income | 11,339 | 10,992 |
| Operating margin: derived | 22.1% | 20.7% |
Equipment revenue is not a stand-alone profitability proxy: device cost and the service relationship must be evaluated together. Keep device financing, customer credit and promotional assumptions consistent with the service case. A rising connection count does not itself identify either the earned service margin or the timing of cash receipts.
The annual comparison includes a changed acquisition perimeter. Reconcile the acquired operations and integration cost before attributing every cost or revenue change to the comparable network. Spectrum purchases and network property spending are different uses of cash; a measure deducting only one should not be presented as covering both.
Separate reported service receipts from device and other revenue
The annual supplement distinguishes service from equipment and other revenue. Postpaid, prepaid and wholesale are components of service, not amounts to add on top of its subtotal.
| Population | Revenue |
|---|---|
| Postpaid service | 57,932 |
| Prepaid service | 10,497 |
| Wholesale / other service | 2,877 |
| Service subtotal | 71,306 |
| Equipment | 15,972 |
| Other | 1,031 |
| Consolidated | 88,309 |
Use the service subtotal for a service-yield sensitivity and the equipment population for the device-financing schedule. Customer and account metrics can overlap different relationships; they are not an additional revenue pool. Changes in payment terms can alter cash conversion even with the same recognized service revenue.
Trace earnings into cash and reinvestment
Reconciliation source: annual earnings and cash-flow statements. Subtotals below are checkpoints, not extra amounts to add. Grouped adjustments are calculated from the disclosed cash-flow lines.
| Step | FY2025 |
|---|---|
| Operating income | 18,279 |
| Net interest expense | -3,774 |
| Other expense | -224 |
| Income tax | -3,289 |
| Net income: subtotal | 10,992 |
| Depreciation / amortization | 13,508 |
| Other reconciliation adjustments | 5,844 |
| Operating asset / liability changes | -2,394 |
| Operating cash: subtotal | 27,950 |
| Property / equipment cash purchases | -9,955 |
| Cash after these purchases: derived | 17,995 |
Other reconciliation combines share compensation, deferred tax, bad debt, receivable-sale losses, impairment and other adjustments. The operating-balance group includes installment receivables and leases as well as ordinary receivables, inventory and payables. Bad-debt expense is an earnings adjustment, not proof that the related device cash will be collected.
FY2024 operating cash of $22,293 million less $8,840 million of property purchases gives $13,453 million. The issuer’s $17,032 million adjusted free cash flow also included $3,579 million of investing-classified beneficial securitization proceeds. FY2025 has no equivalent separate addition. Compare the classification bridge before interpreting the change as operating improvement.
The FY2025 narrow $17,995 million residual precedes $2,568 million of spectrum and intangible purchases, acquisitions and other investing, and finance-lease principal. Deducting that spectrum line leaves $15,427 million before those further uses. This is a defined cash checkpoint, not a substitute for a complete enterprise or common-equity cash model.
Stress service contribution on the correct revenue denominator
Illustration: reduce service contribution by one percentage point of fixed FY2025 service revenue, with equipment contribution and remaining group expenses unchanged. This isolates service economics; it is not a forecast of churn, price competition or integration outcomes.
| Measure | Historical basis | Illustrative case |
|---|---|---|
| Service revenue | 71,306 | 71,306 |
| Operating income | 18,279 | 17,565.9 |
The exact pre-tax reduction is $713.06 million, displayed to one decimal. Any effect on receivables, customer-device investment, taxes and network spending must follow separately. A margin sensitivity cannot establish a cash or equity-value change without those schedules.
Keep interim reporting separate from the annual basis
Q2 2026 covers 2026-04-01 through 2026-06-30 and was released 2026-07-23. Revenue was $22,791 million in this quarter. Source: official Q2 2026 results.
The later quarter is separate from the full annual comparison and its acquisition perimeter. Roll the device-receivable, network, spectrum and financing schedules to the valuation date; do not annualize one quarter or combine the prior securitization presentation with a newer operating-cash definition.
Turn the financial basis into a DCF case
| Decision | Treatment |
|---|---|
| Service case | Link account and customer assumptions to service receipts, retention and delivery cost. |
| Device funding | Model equipment economics, installment collection and credit loss together. |
| Investment | Distinguish network property, spectrum, acquisition cash and lease financing. |
| Cash comparability | Reconcile securitization classifications before using annual adjusted free cash flow as a trend. |
| Valuation | Match tax, lease and financing conventions to the cash stream; reconcile dated cash, claims and dilution. |
A conventional enterprise bridge starts with operating earnings after an explicit operating tax assumption and funds the network, spectrum and operating balances needed by the service case. Starting from reported CFO requires interest, tax, lease and receivable-financing adjustments. A terminal cash margin must sustain both customer retention and the required network economics.
The T-Mobile company analysis explains the wider operating context. Use the company forecast tool and DCF calculator with explicit assumptions. Use the historical financials to define an explicit operating and reinvestment case, then supply valuation-date capital costs, claims and diluted shares. Check that each cash claim is counted once before deriving a per-share value.
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