T-Mobile Raises Lower End of Free Cash Flow Forecast to $18.7 Billion
Key Facts
On October 28, T-Mobile raised the lower end of its 2026 annual adjusted free cash flow forecast to $18.7 billion from $18.4 billion, while keeping the upper end at $18.8 billion, according to its earnings release. That represents a modest improvement in the forecast range, with the lower end rising while the ceiling was unchanged. Chief Financial Officer Peter Osvaldik told Reuters that the expected increase in free cash flow came mainly from strong performance in the core business. In the third quarter, adjusted free cash flow was $5.1 billion, up 5% year over year. But net cash from operating activities fell 2% to $7.3 billion over the same period.
The company reported third-quarter revenue of $23.58 billion, compared with a consensus estimate of $23.15 billion, while earnings per share came to $3.22, topping an estimate of $2.89, according to data cited by Investing.com. Service revenue rose 6% year over year to $19.4 billion. Postpaid service revenue increased 9% to $16.3 billion. Net income was $3.5 billion, up 27% from the same period a year earlier. Diluted earnings per share also rose 34% to $3.22.
T-Mobile added a net 274,000 postpaid accounts during the quarter, bringing the total to 35.0 million accounts, up 3% year over year. Average revenue per account was $155.73, up 4% from a year earlier. Osvaldik told Reuters that more than 60% of the lines in new accounts chose the company's higher-tier plans. The shift coincides with growth in postpaid service revenue, but does not change the company's stated explanation for raising its free cash flow forecast: it attributed the increase mainly to core business performance. Chief Executive Srini Gopalan described the quarter's results as further evidence that the combination of network, value and customer experience supports sustainable and profitable growth.
A comparison of cash results shows adjusted free cash flow improved while operating cash moved in the opposite direction during the quarter. The former rose 5% year over year to $5.1 billion, while the latter fell 2% to $7.3 billion. The company returned $3.5 billion to shareholders in the third quarter, including $2.4 billion in share buybacks and $1.1 billion in cash dividends. Those payments were part of an authorization for shareholder returns of up to $18.2 billion through December 31, 2026. Cash uses during the period therefore included buybacks and dividends, alongside funding for the company's operations.
The initial 2026 outlook put adjusted free cash flow at between $18.0 billion and $18.7 billion, with service revenue expected to be about $77.0 billion. In its July update, the company kept its forecast for adjusted core operating earnings at between $37.1 billion and $37.5 billion. Third-quarter 2025 data show service revenue of $18.2 billion, up 9% year over year, while net income was $2.7 billion and diluted earnings per share were $2.41. These comparisons place the current quarter's results within the revenue and earnings trajectory the company had previously reported. The new guidance did not include a change to the upper end of adjusted free cash flow.
On customer offerings, the company plans a broad launch of its new T-Mix plans in November. The plans let customers choose benefits such as streaming subscriptions and food delivery services, then switch them instead of receiving fixed benefits tied to plan tiers. The move comes as the company reports that more than 60% of lines in new accounts chose its higher-tier plans. T-Mobile had set October 28, 2026, for its third-quarter earnings call at 4:30 p.m. Eastern time. It said earnings materials would be available at about 4:05 p.m. that day.