TMUS Builds on Strong Service Revenue Growth: Can it Continue?

T-Mobile, US, Inc. TMUS is benefiting from sustained momentum in its service business. In the second quarter of 2026, total service revenues increased 9% year over year to $19 billion, while postpaid service revenues jumped 13% to $15.9 billion.

A major contributor is the continuous expansion of T-Mobile’s postpaid account base. Postpaid accounts reached 34.7 million in the second quarter, up from 31.5 million a year earlier. The acquisitions of UScellular and Metronet have also increased the number of customers. The company also reports that postpaid average revenue per account rose to $152.91, up 2% year over year. There are several factors driving the ARPA. Continued adoption of 5G broadband is raising customers per account. Its business vertical is benefiting from the growing demand for 5G Advanced networks and associated enterprise solutions.

Another positive factor is customer migration toward higher-value plans. Management said more than 60% of customers on new accounts are selecting premium rate-plan tiers. This is also supporting ARPA growth.

The company’s strong focus on improving network and customer experience remains an important driver for customer acquisition and retention. Its customer-centric approach is also evident from the company’s recent disaster response efforts. It has proactively deployed network resources, backup power and connectivity solutions to support its customers during harsh weather conditions. Such initiatives can strengthen customer trust and boost retention. These factors are driving the service revenue growth.

How Are Competitors Faring?

The company faces competition from AT&T, Inc. T and Verizon Communications, Inc. VZ. In the second quarter of 2026, AT&T added more than 1 million Advanced Connectivity customers, including 646,000 Internet net adds and 432,000 postpaid phone net adds. Advanced home Internet revenues rose 27.3% year over year, and 42.5% of advanced home Internet customers also had an AT&T postpaid wireless plan. AT&T continues to invest in fiber and fixed wireless to expand advanced Internet reach and deepen household convergence with wireless.

Verizon continues to broaden its addressable market through fiber expansion and broadband growth, while strengthening convergence opportunities. In second-quarter 2026, Verizon added 348,000 broadband subscribers, including continued contributions from fixed wireless access and fiber, increasing total fixed wireless access and fiber broadband connections to approximately 17.1 million.

TMUS’ Price Performance, Valuation & Estimates

T-Mobile has declined 28% over the past year against the industry’s growth of 74.7%.

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Going by the price/earnings ratio, the company’s shares currently trade at 14.68, lower than the 37.54 for the industry.

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TMUS’ earnings estimates for 2026 and 2027 have increased over the past 60 days.

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T-Mobile currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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