T-Mobile has demonstrated a strong financial showing for the second quarter of 2026, exceeding market predictions due to a strategic shift of customers towards more expensive service plans and a notable increase in its postpaid subscriber base. This positive momentum highlights the company's successful efforts in enhancing its service offerings and attracting a larger segment of high-value customers, underpinning its robust market position and future growth prospects.
The telecommunications giant reported diluted earnings per share of $2.99, marking a 5% improvement over the previous year and comfortably outperforming the analyst consensus of $2.59. Furthermore, net income saw a 1% rise year-over-year, reaching $3.2 billion, even after accounting for $146 million in expenses associated with the UScellular merger. This financial strength was also reflected in service revenues, which ascended to $19.0 billion, a 9% increase from the prior year, with postpaid service revenues specifically climbing 13% to $15.9 billion.
Customer acquisition proved to be a key driver, with T-Mobile adding 277,000 net postpaid accounts during the quarter, surpassing the estimated 259,000 additions. The average monthly postpaid revenue per account also experienced a healthy 2% increase, moving from $149.87 to $152.91. This upward trend is largely a result of the company's strategy to retire older plans and guide customers towards newer tiers that combine unlimited premium data with attractive device upgrade incentives. Approximately 60% of new subscribers are opting for these top-tier offerings, according to Chief Operating Officer Jon Freier.
Looking ahead, T-Mobile has revised its full-year adjusted free cash flow forecast upwards, now expecting to achieve between $18.4 billion and $18.8 billion, a notable improvement from its earlier projection of $18.1 billion to $18.7 billion. Chief Financial Officer Peter Osvaldik attributed this enhanced outlook to greater efficiencies in cash income taxes and working capital benefits derived from the integration of artificial intelligence tools. The company's operating cash flow guidance was also elevated, now ranging from $28.4 billion to $28.8 billion. The core adjusted EBITDA, a non-GAAP metric, grew by 12% year-over-year to $9.5 billion, and adjusted free cash flow increased 4% to $4.8 billion. Capital expenditures for property and equipment saw a 13% increase, totaling $2.7 billion. The company also returned $3.3 billion to shareholders through share repurchases and dividends during the quarter, underscoring its commitment to shareholder value. Despite these strong results, T-Mobile shares experienced a slight dip of about 1.3% before the opening bell.
In summary, T-Mobile's second-quarter financial outcomes showcase robust performance, primarily fueled by strategic customer migration to premium plans and significant postpaid account growth. The company's proactive approach to optimizing its service portfolio and operational efficiencies, including leveraging AI, has positioned it for continued financial success and shareholder returns, as evidenced by its revised full-year projections.
