T-Mobile: Wall Street Expects Only Marginal Revenue Growth

Why Wall Street Expects T-Mobile’s Earnings to Fall in 4Q15

(Continued from Prior Part)

T-Mobile’s revenue in 4Q15

In the previous part of this series, we learned that Wall Street expects T-Mobile’s (TMUS) adjusted-EPS (earnings per share) to fall significantly year-over-year in 4Q15. Wall Street anticipates marginal year-over-year growth in the wireless carrier’s revenue. As per consensus estimates from Wall Street analysts, T-Mobile’s revenue is expected to increase ~0.6% year-over-year to reach ~$8.2 billion in 4Q15.

Consensus versus actual performance in recent quarters

As you can see in the above bar chart, T-Mobile’s revenue was significantly lower than Wall Street estimates in 3Q15. However, in 4Q14, 1Q15, and 2Q15, the wireless carrier did beat Wall Street analysts’ consensus revenue estimates. In 4Q14, the company’s revenue was ~3.4% above analyst expectations.

T-Mobile’s revenue in 3Q15

Earlier in 3Q15, T-Mobile’s revenue rose ~6.8% year-over-year to reach ~$7.8 billion. T-Mobile’s service revenue rose ~10.9% year-over-year to ~$6.3 billion in 3Q15. The postpaid component drove the year-over-year growth in this revenue stream during the quarter.

Let’s move on to equipment revenue. This stream fell ~9.3% year-over-year to ~$1.4 billion in 3Q15. As per the company, this decline in 3Q15 equipment revenues came from fewer devices sold as well as the adoption of its leasing plan, Jump! On Demand.

Wireless revenue: Verizon, AT&T, and Sprint in calendar 4Q15

In 4Q15, Verizon’s (VZ) wireless revenue grew 1.2% year-over-year to ~$23.7 billion. AT&T’s (T) year-over-year decline in wireless revenue from domestic operations was ~4.9%. This revenue stream reached ~$18.9 billion during the quarter. Meanwhile, Sprint’s (S) wireless revenue fell ~9% year-over-year to ~$7.7 billion in that quarter.

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Browse this series on Market Realist:

• Part 1 - Why Wall Street Expects T-Mobile’s Earnings to Fall in 4Q15