T-Mobile US stock holds near highs as 2023 free cash flow and subscriber growth support valuation

T-Mobile US stock is trading near its recent highs as strong 2023 free cash flow, double-digit core adjusted EBITDA growth, and a higher dividend announced for 2024 underpin the valuation after the Sprint integration.

T-Mobile US, Inc. (ISIN US8725901040) stock is trading close to its recent peak after the company reported strong 2023 financials with free cash flow of $13.6 billion and continued subscriber growth, which together support the Nasdaq-listed carrier's current valuation and capital-return plans.

Free cash flow of $13.6 billion in 2023

According to the companys 2023 annual report available via its investor relations site, T-Mobile US generated free cash flow of $13.6 billion in 2023, a sharp increase from $7.7 billion in 2022 as integration costs from the Sprint merger declined and capital intensity eased.

The same report shows that net income for 2023 came in at $8.3 billion, compared with $2.6 billion in 2022, demonstrating how merger-related synergies and lower expenses have flowed through to the bottom line during the year.

Core adjusted EBITDA up double digits

In its 2023 results, T-Mobile US reported core adjusted EBITDA of $29.2 billion for 2023, up from $26.4 billion in 2022, reflecting growth of roughly 11% year over year as the carrier continued to scale its 5G network and optimize its cost base after the Sprint transaction.

The company also highlighted that its total postpaid accounts and lines increased over the same period, with management emphasizing in its filings that continued account growth, including in higher-value segments, helped drive the improvement in earnings and cash flow metrics.

Dividend and capital returns grow

T-Mobile US introduced a regular dividend for shareholders in 2023 and subsequently communicated that it plans to increase the annual dividend per share for 2024 compared with the initial level, aligning cash returns with the higher free cash flow generation after the bulk of the Sprint integration work.

The company has also been running sizeable share repurchase programs, using part of its free cash flow and balance-sheet capacity to buy back stock, which can support earnings per share over time and is an important element of the equity story around T-Mobile US stock.

5G network and Magenta MAX plans

On the product side, T-Mobile US has continued to emphasize its flagship Magenta MAX postpaid plans and its broad 5G coverage in the United States, which it markets as offering high-speed connectivity for both consumer and business customers.

The carrier positions these offerings together with fixed wireless access products as a way to capture additional share in both mobile and home broadband markets, building on the capacity it gained from the Sprint spectrum portfolio.

T-Mobile US stock and valuation backdrop

Recent market data from major financial portals show that T-Mobile US stock is trading near the upper end of its 52-week range, with a market capitalization in the range of around $200 billion as investors price in the improved free cash flow profile and ongoing capital returns.

Given the combination of $13.6 billion in 2023 free cash flow, core adjusted EBITDA of $29.2 billion, and the step-up in dividends and buybacks versus 2022, T-Mobile US now operates with a financial profile that differs markedly from earlier in the integration phase when cash generation was still heavily absorbed by merger-related costs.

T-Mobile US stock at a glance

• Company: T-Mobile US, Inc.
• ISIN: US8725901040
• Ticker: NASDAQ: TMUS
• Trading venue: Nasdaq
• Sector / Industry: Communication Services / Wireless Telecommunication Services
• Index membership: S&P 500