T-Mobile beat its quarterly profit guide by $220 million but raised the year by $100 million

T-Mobile US raised its full-year profit guidance with its results for the September 2026 quarter, but by less than the quarter had just beaten its own forecast. Core adjusted EBITDA, the company's non-GAAP measure of earnings before interest, tax, depreciation and amortisation, which leaves out revenue from leased devices, came to $9.62 billion last quarter. In July management had guided to about $9.4 billion, so the beat was roughly $220 million. The full-year guide went up by $100 million at its midpoint.

The quarter was strong on more than profit. Service revenue, what customers pay for wireless and broadband service as opposed to handsets, and the number of new postpaid accounts net of those that left, both came in above what management guided in July. The quarter before had cleared the same $9.4 billion EBITDA guide as well, by $137 million.

The gap between the beat and the raise has to land somewhere, and it lands in the fourth quarter. Take the new midpoint, subtract the EBITDA already earned in the first nine months, and about $9.0 billion is left for the last three months of the year. Calculated that way, the guide implies a fourth quarter roughly $0.6 billion below the third.

Chief financial officer Peter Osvaldik gave several reasons for a softer finish, two of them about timing. The holiday season is normally the most promotional stretch of the year, so profit tends to dip from the third quarter to the fourth. And device supply was tight in the third quarter, which pushed some handset costs into the fourth, because "we don't recognize the cost until we actually ship it and fulfill it". Both are about when costs fall in the year. The other reading is caution: the quarterly guide was beaten both last quarter and the quarter before, so the implied fourth quarter may simply be a bar the company expects to clear.

Earning more on each customer helped. Postpaid ARPA, average monthly revenue per postpaid account, rose 4.2% from a year earlier, and management lifted its full-year ARPA growth guidance to about 3.5%, from a lower range. It named three causes: more customers choosing premium plans, customers adding lines and services, and its own rate plan changes.

Those rate plan changes came with a cost management had flagged. In July it warned they would raise account churn, the monthly share of accounts that leave, for a while. Account churn duly rose to 1.09% from 0.97% a year earlier. Price is only part of that. Accounts now include more customers who take only home broadband or fiber, and they leave more often than phone customers; the base also absorbed accounts from the UScellular acquisition. For the fourth quarter the chief financial officer expects the holidays to lift churn again: "So churn implicitly would go up, account churn as well."

Postpaid phone churn, which would show how phone customers alone reacted, was 0.85% in the quarter before. Asked for it on the call this time, the chief financial officer said the company had not given that figure and was concentrating on account additions and account churn. He added that phone churn was roughly what management had expected.

The service revenue guide moved down. Full-year service revenue is now expected at about $76.8 billion, against about $77 billion in July. Management put that on wholesale and prepaid, where the customers of Boost, a reseller on its network, are rolling off faster than expected. Calculated from the reported figures, service revenue outside postpaid fell 7.5% from a year earlier last quarter, while postpaid service revenue kept growing, helped by the UScellular accounts. That is how the revenue guide and the profit guide can move in opposite directions in the same results. Management said it will give 2027 guidance with its fourth-quarter results.