T-Mobile (TMUS) Q3 2026 Earnings: Cost Cuts Lift Core EBITDA 10.8%

T-Mobile's Q3 2026 earnings showed core adjusted EBITDA growing 10.8% on lower operating costs, with both profit and cash ahead of what the company had guided. T-Mobile reported results for the quarter ended September 30, 2026 on October 28, 2026 through a Form 8-K earnings release, an Investor Factbook, its Form 10-Q and the earnings call [1][2][3][4][5].

Going into the quarter, three questions mattered. Could price increases from moving customers off older rate plans offset higher churn? Could UScellular integration and cost cuts keep core adjusted EBITDA growing about 8% while revenue growth slowed? And could cash flow in the iPhone upgrade season fund roughly $3.5 billion of shareholder returns per quarter? Revenue from the price increases came in ahead of plan, but account churn rose to 1.09%. Profit and cash both reached the levels the company had pointed to. Overall, the case that pricing and cost control are driving profit growth is stronger, but part of the improvement came from timing effects and a one-time spectrum sale.

T-Mobile is the second-largest US wireless carrier, with brands including T-Mobile, Metro by T-Mobile and Mint Mobile [6]. It earns most of its money from monthly bills on postpaid household and business accounts, where one account can carry phones, 5G home internet and fiber. Postpaid customers generated 81% of service revenue in 2025 [6].

Cost cuts pushed core EBITDA growth above revenue growth

Core adjusted EBITDA was $9.62 billion in Q3 2026, up 10.8% year over year and about $220 million above the company's guidance of roughly $9.4 billion [1][5]. The measure excludes integration, restructuring and other special items. It rose to 49.7% of service revenue from 47.6% a year earlier [2]. Service revenue grew only 6.2% over the same period, so most of the gap came from the cost side [1].

Lower selling, general and administrative (SG&A) expense was the main source of the margin gain. Excluding special items, SG&A was $5.778 billion, down 0.9% year over year, even though the prior-year quarter included only two months of UScellular [2]. The company said lower personnel and outside-services costs offset higher bad debt [2], and employee expenses fell 10.5% year over year [4]. As a result, about 80% of the increase in service revenue turned into core EBITDA. T-Mobile does not disclose realized synergies, so the savings cannot be split between UScellular integration and the company's own streamlining. Its $1.2 billion annual run-rate synergy target is unchanged [4].

The improvement also included offsets and timing effects. Cost of services excluding special items rose 4.6%, mainly from access fees paid to the fiber joint ventures, and bad debt and related losses reached 1.9% of total revenue versus 1.6% a year earlier [2]. Management said iPhone supply constraints pushed some device costs into Q4; the amount was not disclosed [3]. The company narrowed full-year core adjusted EBITDA guidance to $37.35 billion to $37.45 billion, raising the midpoint by $100 million [1]. That guidance implies Q4 growth of about 6% to 7%, because the boost from acquisitions falls away.

Upgrade-season cash covered returns, but the gain came from spending timing

Adjusted free cash flow was $5.071 billion in Q3 2026, up 5.3%, and covered $3.504 billion of buybacks and dividends [1][2]. The upgrade season did not visibly tie up cash in device installment plans: the postpaid upgrade rate was 2.8%, compared with 2.7% a year earlier [2].

The free cash flow increase came from lower capital spending, while operating cash flow fell 1.6% year over year [1]. The company said the 14% decline in capex reflected the planned timing of purchases, and full-year capex remains about $10 billion [1]. Operating cash flow fell mainly because inventory and accounts payable absorbed more working capital [4]. Leverage fell from 2.3x to 2.2x [2], but most of that improvement came from $2.9 billion in cash from the August sale of 800 MHz spectrum. The company expects to pay about $850 million of cash taxes related to that sale [4].

T-Mobile raised full-year adjusted free cash flow guidance to $18.7 billion to $18.8 billion and increased its quarterly dividend by 15% [1][2]. The constraint on shareholder returns is shifting toward spectrum. Management said the 2027 and 2028 spectrum auctions may take more of its capital [3], and the 10-Q shows that buybacks and dividends for 2026 through 2027 total up to approximately $30 billion [4].

Rate plan changes lifted revenue more than planned, with churn near its limit

Moving customers to current rate plans raised prices faster than planned. Postpaid average revenue per account (ARPA) rose 4.2% year over year, and postpaid net account additions were 274,000, above the guidance of about 250,000 [1][5]. The company raised full-year ARPA growth guidance to about 3.5% [3]. The cost was a monthly account churn rate 12 basis points higher than a year earlier, which the company attributed to more broadband-only accounts and the temporary effect of the rate plan changes [2].

Conclusion

The Q3 2026 report strengthens the view that pricing and cost control are driving profit growth, and cash was sufficient to fund shareholder returns. How long this lasts still needs to be tested, because Q3 included about one extra month of acquired business and device costs that were pushed into Q4. Based on full-year guidance, Q4 core adjusted EBITDA works out to about $8.95 billion to $9.05 billion [1]. The next tests are whether postpaid organic service revenue grows about 7% in Q4 as the company guided, whether churn holds steady through the holiday season, and how much of 2027 shareholder returns the company sets aside for spectrum auctions [3].

Sources

[1] TMUS 8-K filed 2026-10-28 · Q3 2026 earnings release (October 28, 2026; T-Mobile US Form 8-K, Exhibit 99.1 earnings release; https://www.sec.gov/Archives/edgar/data/1283699/000128369926000128/tmus09302026ex991.htm) [2] TMUS 8-K filed 2026-10-28 · Q3 2026 investor factbook (October 28, 2026; T-Mobile US Form 8-K, Exhibit 99.2 Investor Factbook; https://www.sec.gov/Archives/edgar/data/1283699/000128369926000128/tmus09302026ex992.htm) [3] TMUS Q3 2026 earnings call 2026-10-28 (October 28, 2026; T-Mobile US Q3 2026 earnings call transcript) [4] TMUS 10-Q filed 2026-10-28 · Q3 2026 (October 28, 2026; T-Mobile US Form 10-Q quarterly report; https://www.sec.gov/Archives/edgar/data/1283699/000128369926000129/tmus-20260930.htm) [5] TMUS Q2 2026 earnings call 2026-07-23 · Q3 2026 guidance (July 23, 2026; T-Mobile US Q2 2026 earnings call) [6] TMUS 10-K filed 2026-02-11 · operations, brands and service revenue mix (February 11, 2026; T-Mobile US Form 10-K annual report; https://www.sec.gov/Archives/edgar/data/1283699/000128369926000010/tmus-20251231.htm)