T-Mobile US Inc (NYSE:TMUS) Q1 2019 Earnings Conference Call - Final Transcript
Apr 25, 2019 • 04:30 pm ET
J. Braxton Carter
due to slower customer growth and the impact of promotions.
In terms of customer quality, our results in the first quarter continued to be strong. Total bad debt expense and losses from sale receivables were $108 million or 0.98% of total revenues compared to $106 million or 1.01% in the first quarter of 2018. So, let's get to 2019 guidance; we expect branded postpaid net customer additions to now be between 3.1 million and 3.7 million, significantly up from our prior guidance of 2.6 million to 3.6 million.
This guidance takes into account our long-term strategy to balance growth and profitability, a continuation of the lower switcher volume we've seen in recent quarters, in our pursuit of growth adjacencies. We expect adjusted EBITDA to be in the range of $12.7 billion to $13.2 billion, unchanged from prior guidance. This guidance takes into account leasing revenues of $600 million to $700 million in 2019.
It also takes into account our network expansion, and particularly the 600-megahertz and 5G rollouts. Pre-close merger-related costs are still expected to be $350 million to $500 million in 2019 depending on timing of the potential close. For Q2 alone, we expect Sprint merger-related costs of $200 million to $250 million, a significant increase from Q1. These costs will be excluded from adjusted EBITDA but will impact net income and cash flows. We target cash CapEx of $5.4 billion to $5.7 billion, excluding capitalized interest, which is expected to amount to approximately $400 million in 2019. This was also unchanged from our prior guidance. CapEx will continue to be front end loaded with Q2 expected to be a slight step down from Q1 levels.
Finally, we expect free cash flow to increase at a three-year CAGR of 46% to 48% from full-year 2016 to full-year 2019 unchanged from our prior range. Our free cash flow CAGR guidance does not assume any material net cash outflows from securitization going forward, and it excludes merger costs from a cash basis.
Well, let's get to your questions. As during last quarter's earnings call, I would ask you to focus your questions on our operational results. Also, we cannot answer any questions related to the current millimeter wave auctions, due to the quiet period around these auctions. You can ask questions via phone or via Twitter. We'll start with a question on the phone.
Operator, first question please.