T-Mobile US, Inc. Q1 FY2026 Earnings Call

I would now like to turn the conference over to Cathy Yao, Senior Vice President of Investor Relations for T-Mobile US. Please go ahead.

Good afternoon, and welcome to T-Mobile's First Quarter 2026 Earnings Call. Joining me on our call today are Srini Gopalan, our President and CEO; Peter Osvaldik, our CFO; as well as other members of the leadership team. During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We encourage you to review the risk factors set forth in our SEC filings. Our earnings release, Investor Factbook and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found on our Investor Relations website. With that, let me now turn it over to Srini.

Thanks, Cathy, and good afternoon, everyone. We're here in Bellevue today ready to discuss another extraordinary quarter for T-Mobile. This quarter is a powerful demonstration that the strategy we outlined for you in February is working. Our strategy is driven by widening differentiation, providing customers with the best network, best value and best experience, all in the same place so that they don't need to make trade-offs anymore. We made strong progress on this strategy this quarter and nothing demonstrates this more succinctly than our NPS score. An industry-leading 45, over 20% higher than that of our next closest competitor. This widening differentiation gives us access to unprecedented growth opportunities, and our industry-leading growth this quarter is a testament to this. One of the largest of these growth opportunities is the 20 million-plus families and businesses who are network seekers not currently with T-Mobile. This is an opportunity with a lot of runway and one where we're making great progress. In fact, this quarter, among recent switchers who chose to come to T-Mobile from another carrier, the highest percentage ever said they chose us for one reason, network quality. Similarly, across multiple third-party surveys like HarrisX and from the analyst community, we've seen a strong improvement in the perception of our network. That's what's led us once again to grow our share of postpaid households in each of our cohorts in the top 100 cities. In smaller markets and rural areas where we have only 24% share of households, we continue to accelerate and capture more switching share with word of mouth driving strong momentum. In addition to our tremendous momentum in consumer across network seekers and other underpenetrated cohorts, our low share in T-Mobile for Business also continues to give us substantial growth runway. This quarter, we continued to capture share with our network superiority-led value proposition in T-Mobile for Business. Our industry-leading nationwide 5G Advanced network continues to allow us to drive TAM creation with advanced network solutions and leveraging that as a thoughtful cross-sell opportunity into traditional voice and broadband offerings. One example of our innovation in action is Major League Baseball's recent rollout of our automated ball-strike system, which uses the T-Mobile network to allow challenges to umpires' calls. Let's now turn to broadband. For yet another quarter, we were the fastest-growing ISP in America, adding over 0.5 million total broadband net additions with 5G broadband net adds accelerating year-over-year. 5G broadband continues to lead the industry in terms of customer experience, topping J.D. Power, Forbes, CNET, Consumer Reports and OpenSignal, just to name a few. Our 5G broadband speeds also continue to lead the peer group at over 50% faster than the next closest competitor. Fiber is tracking great, leveraging the T-Mobile brand to draw strong interest. And I'm excited about our announcement earlier today that we're entering into two additional joint ventures with leading infrastructure partners to acquire GoNetSpeed, Greenlight Networks and i3 Broadband as part of our returns-focused capital-efficient approach. Every piece of the business I've talked about so far helped drive our tremendous postpaid net account additions of 217,000 in Q1, which was up 6% year-over-year. But in addition to volume growth, as I said in February, we also have a double-digit advantage in back book pricing over our leading competitors. In Q1, that translated to a really strong postpaid ARPA growth of 3.9%, a powerful proof point that our unique and durable value proposition is resonating as we deepen relationships with customers. T-Ads and financial services, smart and thoughtful adjacencies that piggyback off the success and scale of our brand and ecosystem are also delivering strong incremental growth. Now even as we capitalize on our differentiation to drive growth, we consciously double down on the sources of this differentiation across best network, best value and best customer experiences. Let's start with the network. We're continuing to push the envelope of what's possible. We're excited to be rolling out live translation on beta soon, our first network native AI application that we demoed for you at our February event. Live translation uses language learning models embedded into our core and translates your voice into one of 80 different languages anywhere in the world. All you need is just one connected T-Mobile phone. Importantly, this is just the initial step in us building AI capabilities directly into our network core. Longer term, we see a world where our network becomes the connective tissue for physical AI and accommodates inferencing at the edge. As a step towards this, we're delighted to share today that we're connecting our 5G Advanced network to Figure AI's F03 humanoid robots, enabling seamless and reliable connectivity from the moment they power on. This partnership, amongst others, will allow us to explore how the T-Mobile 5G Advanced network and its capabilities, including assets like the network edge, can support the broader evolution of physical AI. This is an important stepping stone towards building an even more capable network of the future with 6G. On value leadership, which we guard zealously, we further strengthened our credentials with the rollout of our better value plan earlier this year, which offers access to our premium wireless experience to even more customers at a great value. Our other key differentiator is our customer experience. T Life is continuing to drive digital interactions with about 25 million monthly active users engaging with the app multiple times a month. T Life will also serve as the unified platform to support growth into considered adjacencies like financial services and advertising. In retail, we're well underway in our journey towards more experience-driven stores with several hundred already up and running. Our experience stores see higher premium mix, higher NPS scores than our traditional outlets. And over time, our mix shift will lead to fewer doors, but also more meaningful customer experiences. So even as our differentiation drives industry-leading growth, we continue to feed and stoke it so that the gap to competition only widens further. Pulling all this together, this is what drives the industry-leading financial growth we've delivered yet again across all key metrics in Q1. Our postpaid service revenue grew 15% year-over-year. Total service revenue grew 11%, a rate that's more than four times that of our next closest competitor. Our core adjusted EBITDA also grew an industry-leading 12% year-over-year, all of this while continuing to deliver industry-leading free cash flow margins of 24%. Alongside this incredible financial growth, we returned $6 billion to shareholders in the form of dividends and share buybacks. I'll end by saying our results speak for themselves. The unique differentiation we have as the Un-carrier continues to lead to best-in-class results. Just look at our NPS score. The best part of all of this is this team's hunger and the incredible passion our people have to truly delight customers means we're only at the beginning. Okay. Peter, over to you to provide an update on our guidance.

All right. Thanks, Srini. As you can see, our growing differentiation not only drove a strong start to the year, but also gives us the confidence to increase our guidance across multiple fronts. Starting with accounts, we are raising our expectation for total postpaid net account additions to be between 950,000 and 1,050,000 on the strength of the underlying momentum in the business. Turning to service revenues, we continue to expect to deliver full-year service revenue of approximately $77 billion, representing 8% growth with Q2 expectations of approximately $19 billion or up 9% year-over-year. As part of that service revenue growth, we continue to expect strong postpaid ARPA growth of between 2.5% and 3% for the full year. We are also raising our full-year core adjusted EBITDA guide, which is now expected to be between $37.1 billion and $37.5 billion, an increase of $100 million at the lower end of the range. As part of that, we expect Q2 core adjusted EBITDA of approximately $9.4 billion, up 10% year-over-year. Our expectation for full-year 2026 cash CapEx remains unchanged at approximately $10 billion as we continue to invest to further differentiate the network. And we now expect adjusted free cash flow to be between $18.1 billion and $18.7 billion for the full year, also an increase of $100 million at the lower end of the range. And finally, last week, we announced we are increasing our 2026 stockholder return authorization by up to $3.6 billion to a total authorization of up to $18.2 billion. And as always, we will continue to follow our disciplined capital allocation philosophy. To sum it all up, we continue to see strong momentum in the business and cannot be more excited for the future. So with that, I'll now turn the call back to Cathy to begin the Q&A.

Thanks, Peter. All right. Let's get to your questions.

We will start with a question on the phone. The first question today comes from Craig Moffett with MoffettNathanson.

Let me start with the reports that you're considering a merger with Deutsche Telekom. Can you talk about the logic behind that and as well as the logistics? Would that require a vote of the majority of the minority among Board members as independents? Exactly how would that work? And would there be any premium for U.S. shareholders?

Thanks, Craig. Let me pick that up. As a matter of policy, we don't comment on market rumors or speculation, nor is there anything specific to comment on anyway. However, the article has raised a lot of questions inbound on governance. We've looked into the governance. And what I've been told is hypothetically, if someone were to ever consider such a transaction reported in the article, that would specifically require a separate approval process by disinterested shareholders, what many of you refer to as majority of the minority. Thanks Craig.

The next question comes from Sam McHugh with BNP.

On the fiber JV you announced today, I just wonder if you've seen much movement in kind of the bid-ask spread on fiber assets as we started to see maybe fiber ARPUs come under pressure. I don't know if some of the commentary around broadband growth and pricing impacts your appetite for more fiber JV going forward.

Thanks, Sam. And as you well know and as I've read in all of your surveys, the reason we're doing fiber is much more because we see an equity value creation opportunity rather than the myth of convergence. And that sort of drives the way we think about these assets. So when you think about things like bid-ask spread or multiples or compression and the rest, each of these assets is a unique case. The way we think about it is, do we believe that this asset has a strong likelihood of giving us our target IRRs and those are in the double-digit level. And we look at each of these very, very specifically because as all of you know, each of these assets operates in a specific geography, operates in a specific competitive environment, in a specific pricing environment. So it's really hard to give you an overall sense of our bid-ask spreads changing, our multiples compressing, what's happening with pricing, et cetera, et cetera. What we know so far is our fiber JVs, the ones we've launched so far are well on track. They're delivering exactly what we expected. The lift from the T-Mobile brand and our distribution is completely in line with our expectations. And on the new JVs that we've done, we are very confident of our double-digit IRRs. That's kind of the criteria we'll use going forward as well. There is no magic number we're chasing on homes passed because I could put fiber on the street and claim multiple homes passed. We're looking for places where we can create true equity value. And that will drive — do we have appetite for cases which create true equity value and which tick the box for us in terms of actually being an opportunity that is monetarily sound? Yes. Are we going to chase a homes passed number? Absolutely not.

Thank you. Operator, next question please.

The next question comes from Sean Diffley with Morgan Stanley.

Let's move on to the next one.

The next question comes from John Hodulik with UBS.

Srini, could you comment on the competition you're seeing in the postpaid market? I think both of your competitors have talked about less handset subsidies going forward. And I think Verizon even pointed to what they saw was a less competitive market as they look out. So just any thoughts on that side. And then on the broadband, the greater than 500,000 was a great number. It sounds like you got some real strength in fixed wireless. How does the runway look there? Do you expect similar growth this year as we saw last year? And any issues constraining the network in terms of your ability to grow that base?

Thanks for that question, John. So first on competition and the broader way we think about competing in this market. I think sometimes we tend to over-rotate on promotions and specific subsidies and how all of that's playing out. In the end, the direction of flow gets driven by differentiation. And this is where our unique position of kind of best network, best value, best experience and therefore, no trade-offs for the customer really drives traffic in our direction. And that's what drove not just the 6% growth in accounts year-on-year, but also the near 4% growth in ARPA. That's the fundamental way we think of competing. Now all of that happened in a quarter where I'd say January was particularly competitive and particularly heavy in one-dimensional competition based on subsidies. I think February and March and going into April, we've seen some cooling down of that environment. But through that quarter, we focused very much on what differentiates us, and that differentiator is a much broader set of things than purely subsidy. And the way we think of it, and you saw a lot of our advertising, it was about savings you make every day rather than savings you simply make at the point you get a phone. It was about our network. It was about that more rounded broad proposition. And then we decide how hard and heavy we go based on CLVs, right? That ultimately is the test of how much volume we want in any quarter in the context of our overall guidance. That should give you some sense of the competitive dynamic.

Yes. No, I think you've got it exactly right, Srini. The way that we think about this is customers — we're providing customers the most important technology in their lives that they use every single day. And so how through both best network, best experience and best value, can we prove that to customers every single day, not once every 1,000 days when they're replacing their phone. And so that's where you've really seen us focus is having a great overall value message for our customers where they can save more with T-Mobile than anywhere else. In fact, $3,800 T-Mobile customers save relative to competitors over the last five years. And they can get a suite of benefits that they only get because they're T-Mobile customers. And these are benefits that really matter. They're not throwaway benefits, free Netflix subscription, et cetera. So I think the results that you saw in Q4 as well as in Q1 really demonstrate that, that's important to customers, and that's why they're choosing us at the rate that they are.

Thanks, Mike. Your question on broadband, let me just touch on the big picture. And André, it would be great if you can talk about some of the stats we're seeing in terms of how many more users and usage. We're very confident on the runway on fixed wireless access. Just to give you a sense of this, we said we would get to 15 million customers by 2030 a couple of months ago. Now how did we get to that 15 million? We basically divide the country into almost 36 million hexbins, order of magnitude. And we look at a hexbin level. We forecast the level of wireless traffic. And what is left is really fallow capacity. And then we subject that fallow capacity to saying, yes, we've got that fallow capacity, but let's put a reasonable market share on how much we can get to in fixed wireless access. And then we commit to a number. And that calculation we did for 2030, remember, assumes we buy no further spectrum. It doesn't assume 6G. It doesn't assume any further spectral efficiency improvement. That's the basis on which we got to the 15 million. We're tracking strong to that, and this quarter was another demonstration of it. So we feel very good about it. But André?

No. As Srini said, I think, one, we're very confident about the 2030 number. And I think one of the reasons that makes us very comfortable is what we're seeing today in reality. So not just the outstanding commercial performance we've had for many quarters in a row, but also the fact that all the leading indicators in terms of capacity and customer satisfaction continue to go up. We continue to increase our NPS. The average speeds our customers have on our product continue to go up quarter-over-quarter. The new routers we just launched, as we mentioned in February, have even higher speed than the existing routers. And all of this we've done while increasing by 80% the number of customers we have on the network in three years. So as Srini said, we plan very carefully. We have a very detailed plan for the next four to five years in terms of the capacity of the business and beyond that time frame to make sure that this is completely sustainable long, long term and we're seeing it come through every day, every quarter for our customers. So very, very confident on the runway we have.

Thanks, John. All right operator, let's go with the next one.

The next question comes from Michael Rollins with Citi.

Two topics, please. The first one is I was curious if you can unpack the contributors to the ARPA growth of about 4% year-over-year in terms of price actions, uptiering lines per account, the broadband update. Just some color on what you're seeing there. And then second, I was just curious if you can share what was happening with the postpaid account churn on a year-over-year basis. And given the comments of what you were just describing competitively in the answer to an earlier question, is that something that actually started to get better maybe through the quarter and into the second quarter?

Great. Thanks, Mike. Let me pick up the postpaid account churn piece, and I'll hand off to Peter for the ARPA piece. So postpaid account churn is doing exactly what we expected. When you look at the underlying postpaid phone churn, that was pretty stable. It was up about 3 basis points. Now there's two things that are worth explaining, given this is the first time we're reporting this metric. One, why is account churn higher than line churn? And two, why has account churn gone up more than line churn? The simple answer is basically math. There are two groups of customers who churn more than the average. One is new customers and the second is broadband-only customers. Now the reality is the weighting of these customers in accounts is higher than the weighting in lines. That's obvious when you look at broadband-only customers, but also with newer customers, we just haven't had enough time to grow that relationship. So the lines per account with newer customers tends to be less. So the two groups that churn quicker than the average have a higher weighting in accounts than they do in lines. That's why account churn is higher than line churn. Why has it increased more than line churn? Again, it's pure math. It's simply that our fastest-growing business by far is broadband, which structurally, and we've talked about this before, has higher churn than wireless. So that's what explains the postpaid account churn. Line churn looks great. We're really happy with where we are. Account churn is doing exactly what we thought it would do.

Yes. Probably just to add to that, I think one of your questions, Mike, was, did it get better in March? Well, I think you've heard some of our competitors kind of cherry-pick that March is better than December. That's true every single year. So yes, of course, we saw churn improvement in March. In terms of ARPA growth, it was all the factors, and that's the beauty of this model. Certainly, if you recall back last year, we did a round of rate plan optimizations that impacted particularly Q2 of last year. So you see a little bit of year-over-year impact on the comparatives in Q1 of this year from that. But it's also continually deepening the relationship, so an increase in lines per account, and that's across all product categories, the continued success that we're having with rate plan self-selection up the tiers continues to be at over 60% of new account lines are on our premium tier rate plans, value-add service attached. So it's really every element of the equation that we've been talking about before that's driving the ARPA increase. So again, Q2 will be a little bit different because Q1 didn't have the impact of the rate plan optimizations. But continually, for the full year, we're seeing strength of 2.5% to 3% growth. Remember, that includes the anticipated dilutive impacts of UScellular and the acquisitions of Metronet and Lumos. So the underlying organic growth of ARPA is even stronger than that 2.5% to 3%.

Thanks, Mike. All right. We're going to try Sean Diffley again in the queue. Sean, are you on this time?

Can you guys hear me?

Yes.

Sorry for the delay. I was hoping you could further elaborate on the inference at the edge opportunity, which you referenced. I think you said you signed a Figure AI deal. But maybe just flesh out why T-Mobile is better positioned than peers to capture this? Is it your network architecture, AI RAN, your spectrum position? And how should we think about the business model? Is this something where you'd have to buy GPUs? And how big could this revenue opportunity be?

Yes. So let me deal with the second part of the question, and then I'll hand over to Dr. John Saw. We might be here for a while. So just on the vision of this, from a do-we-need-to-buy-GPUs perspective. We're already starting to introduce large amounts of AI into our network. As we move closer towards AI RAN, in fact, even during things like Winter Storm Fern, you saw AI in our network being a big reason why things like antenna tilt being done automatically, things like optimizing our network, a self-healing network in many ways is not science fiction. It's reality. It's the way our network runs every day. Now as we do more and more AI in our network and as we build for more and more AI in our network, we will be building compute into our network. And just as in fixed wireless access, we have the concept of fallow capacity. As we build more AI into our network, we will generate a bunch of fallow compute, especially at the edge. Now the fallow compute plus low latency creates an incredible opportunity. Because if you're thinking of scale automation, it's impossible to do that without low latency. Just think of robots running into each other or remote heart surgery without low latency. Low latency has to be essential to any form of robotics or automation that you do. So the combination of low latency as well as fallow compute is what makes us excited about the opportunity. It's too early to size TAM. It depends on who you're listening to at any point in time, but all estimates of this market are very large. But John, do you want to talk about architecture and how we're different?

Sure, Sean. We are highly optimistic with the prospects of physical AI because when intelligence moves into the real world, you're going to start seeing a shift from generative AI to physical AI. When objects move that have built-in intelligence, we believe we have a big role to play. We saw this coming a while back. The big advantage we have is our 5G Advanced network that we have built. We are the only ones that have rolled out 5G Advanced nationwide. With that, we have a bunch of innovations that we have developed with 5G Advanced to increase spectral efficiencies and capacity, especially for the uplink, which is really needed for physical AI — things like uplink transmit switching, higher transmit power and uplink MIMO. This is why the latest iPhones and the latest Samsung phones actually perform best on our network. We didn't build a 5G Advanced network just for faster phones. We built it for physical AI and with an eye to the future. Now that we have a 5G Advanced network we can take on the extra capabilities that are needed to support edge inferencing for physical AI better than anybody else. We believe that we have a multiyear advantage over the competition for this.

Thanks, Sean. Operator, let's go to the next question in the queue, and then we'll probably flip over to social.

The next question comes from Kannan Venkateshwar with Barclays.

So maybe in the broadband business, when we think about the model you guys seem to be adopting, it's obviously a capital-efficient model of joint ventures combined with fixed wireless. But the trade-off, I guess, is there are some embedded inefficiencies of managing all these JVs. It's not clear what the economics are if it's symmetrical, but it would be great to get some sense of that as well. But the bigger question is, is there a path here where maybe you look at more scaled deals instead of trying to scale this in bits and pieces across multiple JVs?

Yes. Let me pick that up and André, you can add on to it. I think it's important to understand scale in the context of fiber. Scale in the context of fiber comes from two things: a national brand and local scale because scale in fiber is about local zoning, local permitting, local expertise in terms of digging trenches. The fact that you have it in one geography means nothing for the next geography you go into because quite often, zoning and permitting are completely different things. The important thing for us is local scale. We are not chasing a random number of x million spread all over. We're very focused on where we are creating that local scale so that we're meaningful in that community so that we can drive the right economics. To your point on scale deals, I think there are two or three different cuts to it. Are we interested in a scale deal purely for homes passed on fiber? No. Are we interested in mixed ILEC and different deals? No, we want to be first to fiber. And there would be exceptions where we'd look at it where some part of the footprint potentially has some non-first to fiber. But on the whole, we want to focus on first to fiber and driving the economics out of that. That's really the coherent strategy that we're executing. Fixed wireless access, of course, is a national product. André?

I think just to underpin a couple of things Srini said. One, we look at all of these partnerships and JVs from a shareholder value creation perspective. That also includes making sure we have partners that are experts in deploying fiber, experts in managing this deployment business, and have strong local footprint and the ability to build in an efficient manner in each of these geographies. So we're not looking at a master plan to have fiber everywhere. We're looking at each geography with each of the partners where it makes sense to build, where we can create value out of these builds. And the second thing, which is very important for us, is partners that bring the right technology. When we looked at each of these assets, it's very important for us that these are pure-play fiber assets. We've done it with the first two deals with Lumos and Metronet, and we've done it now with these two JVs that we set up. On the question about inefficiencies, the way we've built this is to make sure that we can take the advantages of scale where that scale is meaningful. That scale is meaningful in distribution. That scale is meaningful on brand. That's why T-Mobile has taken over all of the retail consumer operations for these assets. That scale is also important in terms of internal processes and IT. The way we've integrated the JVs is we have a common IT platform that runs across all of the JVs that allows us from the perspective of our customers and our frontline that these JVs all look like one single operation from our perspective and from our customers' perspective. So we take scale where scale matters; where it's more important to have local knowledge and local scale, we will take that.

Kannan, it just struck me that your reference to large deals potentially was you asking the question I get asked quite often, which is the cable story. As I've said before, we're not going to go do scale for scale's sake. Specifically, cable is not something we're interested in. We see our strength as attacking incumbents rather than becoming an incumbent. We see a huge opportunity to attack incumbents across fiber and fixed wireless access. That will be our key play.

Thanks, Kannan. We're going to go over to social. We'll go over to X from Walt Piecyk. T-Mobile is packaging Starlink as a backup for businesses using 5G Internet, branding it Super Broadband. Good sign for the T-Mobile–SpaceX relationship. MVNO next.

Thanks, Walt. Let me deal with some of that and then hand off to André on some of the pieces on Super Broadband. First, I think it's important to distinguish SpaceX, Starlink — are we talking broadband or Direct to Cell? We see them as two completely different businesses. We see the broadband business as actually a substitution to broadband, especially in rural areas. We see Direct to Cell very much as a complementary product. If you listen carefully to some of the things SpaceX talked about at Mobile World Congress, they were very clear in positioning it as a complementary product. Let me deal with the MVNO question, and then I can pass on to André on Super Broadband. On Direct to Cell as a whole, our partnership with SpaceX is very strong. We've worked closely with them to really invent an entire category, and that's been putting an end to dead zones. We're pleased with that. Most of the usage we're seeing is in national parks. And if anything, courtesy of the great network that Dr. Saw has built, we're seeing a lot less usage than we were originally thinking. But it's a great complementary product. As you look at the future, we're seeing multiple other space providers show up. The way this will evolve, we think, is as a complementary product; it will become more and more of a standard feature of a whole set of offerings. So in some sense, less differentiated. And we're good with that at the Un-carrier because this is our history. We go out there, innovate, create a breakthrough, solve a customer problem and then the others follow. While they're following, we're on to our next big thing. That's how we see Direct to Cell as a whole. On MVNOs, we've got a very clear philosophy. MVNOs make sense for us when it's a TAM expansion. TAM expansion happens because it's a new customer base that we couldn't target earlier. It's a new channel. An example of this is what we did with cable focused on SMB. It's not obvious to me how an MVNO with SpaceX or any other LEO operator fulfills those conditions.

Thanks, Srini. On Super Broadband, to ground the element, this is a broadband product, not a Direct to Cell product, and it's B2B only. We see this as an opportunity in B2B and we don't see any translation of this into the consumer space. First, this product is only possible because it's anchored on our 5G fixed wireless access product and the best network in America. That's the core anchor of the product. Second, what we're bringing to the market today — which we announced this morning — is anchored on an innovation by T-Mobile, which is our ability, within one single device and within one single network policy, to be able to aggregate and coordinate between 5G fixed wireless access for businesses and the second connection, which in this case, is satellite. That allows customers to solve three problems businesses face today. Number one is reliability and redundancy, which this product has incorporated by default. Number two is coverage. Using satellite and Starlink allows us to provide this service nationwide in every ZIP code in America, which is a challenge some of our customers face. Third, it's very simple from a customer perspective because to cover all your locations with primary and redundancy, you only need one contract, one provider and one management platform. We're very excited about this. When we talked in February, I said that business Internet was one of the areas where we thought there was opportunity and that we were going to announce something in a couple of months, and we did so today.

Thanks, André. Operator, let's go back to the queue.

The next question from the phone comes from Michael Ng with Goldman Sachs.

Just two, if I could. First, on cost synergies, how are you progressing against the $3 billion target exiting 2027? How much have you realized to date in 2026? Where have the key sources of those cost savings come from? And then as a housekeeping item, on the two JVs, anything you could share as it relates to how much you're contributing to the JVs or how much they should contribute to EBITDA on a run-rate basis once it closes?

Happy to take it. On the JVs, much like we did with the last ones, from an investment perspective we laid out in the press release that it's about $2.7 billion of investment across the two JVs when they close. At the time they close, we'll certainly give you a more complete update as appropriate around what it means from a subscriber perspective, increase in our target fiber households passed and all of those things. It's a little early because they haven't closed, so please hold on that. In terms of the cost synergies, I'm glad you asked just two months after we laid it out for you on how progress is going. Frankly, it's going really well. Remember what we laid out at Capital Markets Day: the sources of synergies are across a number of fronts, inclusive of customer care, retail, but you also have back-office efficiencies from AI and transformation. We're seeing great progress on that front. I would say the $2.7 billion that we laid out for you exiting 2027 certainly is on track. I would say most of that will come towards the last part of 2026 and then fully into 2027 and beyond. By the way, there's a lot more runway and opportunity than $2.7 billion; it's just that's what we see our way to phasing through to '27, leaving more runway into 2028. Probably not a lot of metrics I'll give you in the intervening two months that have created a lot of updates, but we are seeing great progress on many of them. One example is the use of an AI-powered chatbot that is capturing a lot of customer questions and addressing them, already containing about 60% of those. It's another proof point on the way we're going.

All right operator, next question please.

The next question comes from Peter Supino with Wolfe Research.

A question on the cost of getting new customers. Just running some simple math in your income statement, the cost of equipment sales versus equipment revenue produced a greater loss than a year ago by a few hundred million dollars. If I look at a rolling four-quarter average of that number for the last couple of years, it's gradually climbing. I'm wondering what the underlying trend in the business is that's driving up that loss. If it's positive ARPA or ARPU growth, should we expect that trend to continue?

There's a number of things there. If you focus on that one line item and then step back into the view of the business, one, you just have a larger base. Our upgrade rate was similar, and our acquisitions were higher as we see more share of switching and flow to T-Mobile. In a world where you do have device-centric promotionality that is driving switching as well as upgrades on a smart value-accretive CLV basis, you have a larger base doing the same upgrades and you're capturing more acquisitions. So naturally you're going to have a higher dollar amount associated with that. To your point, we are able — we tend to design our most premium device promotions to be associated with our most premium device plans. Customers see that as a great trade-off, inclusive of all the other value in those premium rate plans. You do see ARPA increases as a result of that. In fact, over 60% of lines on new accounts are taking our premium plans. So you really have to step back and say: not just that one line item, which I think this dynamic will continue to play out on, but what is it doing to the totality of the business? How is that doing? If you look at what we delivered, 217,000 postpaid account net additions up year-over-year and ARPA growth of 3.9%, that's what delivers the top-line service revenue that's so differentiated. By comparison, Verizon lost postpaid net accounts and had ARPU declines. If you step one level down, you see the formula here is more than device promotions. Best network, best value, best experience means customers are choosing to change their whole relationship and deepen that relationship, and that translates into core EBITDA leadership and free cash flow growth. Q1 started showing more of what we've promised with this differentiation; it's starkly different in terms of financial performance as well. So the equipment line item dynamic is part of a larger, positive story.

Operator, let's move on to our next question please.

The next question comes from Sebastiano Petti with JPMorgan.

Peter and Srini, good to see the increase in the capital allocation for the year of $3.6 billion to $18.2 billion. You had the accelerated share repurchase in the first quarter that you announced. Help us think about the appetite for additional share repurchases or an accelerated buyback program here. Related to the postpaid account metric, great to see the upgrade. Maybe help us think about where you are in the process of integration on the UScellular base and whether that perhaps led to some of that churn increase you talked about earlier on, and when should we anticipate churn perhaps converges with the legacy T-Mobile base?

On shareholder returns, you saw us execute in Q1 an acceleration and delivered $4.9 billion in share buybacks for a significant cumulative amount of buybacks and dividends returned to date. The Board authorized an increase of up to $3.6 billion. We'll approach this the way we've always approached it: we're focused on where we see this company relative to intrinsic value. We'll follow our capital allocation philosophy: investing in the core business, investing in value-accretive M&A and then shareholder returns consisting of a balanced dividend and share buyback approach. I won't discuss daily trading dynamics, but we will continue to act thoughtfully based on where we believe intrinsic value is and the discount relative to that.

I'll pick up on the UScellular integration piece. We closed the UScellular transaction on August 1st of last year, and we stopped promoting UScellular to new customers right before the holidays last year. We unified everything behind the T-Mobile brand, even in UScellular-branded stores; we're acquiring all new accounts under the T-Mobile brand. We're now beginning the final throes of the customer migration. We've done a lot of the network-oriented migration, that's behind us. Now we're handling the customer migration. It's a relatively small base, about 4 million customers. We have recent experience integrating Sprint, and we've applied many learnings to this migration effort in terms of communications and how we're mapping customers over, ensuring they're getting all the benefits and understanding the full T-Mobile value proposition. All of that's going extremely well. We'll be working through that over the spring, summer and fall, and we expect to substantially wrap it up this year. That leaves an incredibly bolstered network advantage in smaller markets and rural areas where we're continuing to do quite well. You heard Srini talk about where our share position is in smaller markets and rural areas of 24%. We're continuing to win switching share in postpaid and have led the industry for twelve quarters in a row.

Just one clarification, Sebastiano: the math I was laying out about account churn did not include UScellular as a contributor. That behaved exactly like we expected; this was more a weighted average math explanation.

Let's move on to our next question.

The next question comes from Brandon Nispel with KeyBanc Capital Markets.

Over the last couple of quarters, you gave an organic ARPA growth. Could you give that organic ARPA growth this quarter? Also, looking at the guide for service revenue in Q2, it seems like the trend on ARPA growth needs to come down a bit — is that right? And looking at your guidance to hit $77 billion, we need to reaccelerate that — I want to confirm that and get your thoughts.

You're right on the ARPA piece. Remember, last year we did rate plan optimizations that benefited Q2 of last year but not Q1. So you'll see that comparative impact in Q1 of this year. Yes, Q2 ARPA year-over-year will be nearer to about 2% simply because of the dynamics of the rate plan optimizations and the dilutive effect we anticipated around UScellular and the acquisitions of Metronet and Lumos. We will see an acceleration in the second half of the year. On giving organic versus inorganic ARPA, we moved away from that because it can be subject to interpretation — for instance, when a UScellular customer expands their relationship post-merger, is that organic or inorganic? Or when fiber-only customers expand into phone and other products, how do you allocate that? We're focused on being transparent and avoiding artful distinctions, so we're not providing organic versus inorganic ARPA at this time.

Thanks, Brandon. Operator, let's do one last question please.

The last question today comes from Timothy Horan with Oppenheimer.

With basically the highest quality service out there on almost every metric, you're at roughly a 20% price discount versus your peers. Can you get that pricing to parity over time? With quality service, you might not even impact subscriber growth, but how are you thinking about pricing longer term?

I'll take that. The way we think about pricing power is ARPA growth. We don't fixate on one number. We love that our back book is at a lower price than our front book — our existing customers pay less than new customers. That's rare in an annuity business and creates incredible dynamics because as you bring on customers, you're growing ARPA as well as volume. When you have best network, best experience and best value, that creates a position of no trade-offs. We will protect our position on best value. We won't look at it as a single variable and simply raise prices to remove a perceived discount. From time to time, we will do thoughtful moves on pricing — typically more-for-more moves where we give customers more because many plans would be outdated. We may bring plans up to date with newer, better plans, and that may or may not come with a price change. We don't see a world where we just sharply increase pricing to eliminate a 20% gap. Titrat-ing volume and value and maintaining our position of best network, best value, best experience is what creates long-term shareholder value and customer loyalty. It's what creates our NPS advantage, 20% ahead of everyone else.

All right. Thanks, Tim, and thanks, everybody, for joining us today. We're looking forward to connecting with you again soon. In the meantime, if you have other questions, please contact the Investor Relations or media departments. Thank you.