T-Mobile US, Inc. (NASDAQ: TMUS) has unveiled an ambitious three-year plan at its capital markets day event, outlining its strategy for continued growth, value creation, and share taking in wireless and broadband while expanding into new businesses. The company has set out to extend its network leadership, transform customer experiences using AI technology, profitably grow its wireless business, continue leading broadband growth, and grow new businesses.
The company's plan builds on its track record of providing value for consumers while delivering strong business results. T-Mobile exceeded the ambitious goals it set at its previous capital markets day in 2021, including unlocking $8 billion in run rate synergies from the Sprint merger and delivering over $30 billion of cumulative adjusted free cash flow from 2020 through 2023.
The next era of T-Mobile’s growth leadership is expected to deliver outsized financial results and stockholder returns. The company anticipates industry-leading growth in various financial metrics. For instance, it expects service revenue growth to accelerate at a compound annual growth rate of approximately 5% at the midpoint from 2023 to 2027, reaching $75 to $76 billion in 2027. Additionally, core adjusted EBITDA growth is anticipated to be industry-leading, with a target of $38 to $39 billion in 2027, representing a compound annual growth rate of approximately 7% at the midpoint from 2023 to 2027 and an increase of approximately $10 billion compared to 2023 at the high-end of guidance. Adjusted free cash flow is also expected to grow at a compound annual growth rate of 8% at the midpoint from 2023 to 2027, reaching $18 to $19 billion in 2027.
T-Mobile’s capital allocation philosophy remains unchanged, with the company expecting to maintain a prudent 2.5 times leverage target and committing to balanced capital allocation. The company also announced a 35% increase in its cash dividend per share from the previous quarter.
T-Mobile’s transformative and profitable growth plan supports approximately $80 billion in capacity through 2027 for investments and stockholder returns, including funding announced acquisitions and up to $50 billion in stockholder returns through dividends and share repurchases.
The market has reacted to these announcements by moving the company's shares -2.3% to a price of $198.02. For the full picture, make sure to review T-Mobile US's 8-K report.
