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The Phone Payment That Keeps CustomersNarrow moat

T-Mobile US (TMUS) — moat facet

T-Mobile's customers owe $7.2 billion on phone instalments, and two-year bill credits make leaving expensive.

T-Mobile sells most phones on instalment plans, and the unpaid balance is a switching cost. Equipment installment plan receivables were $7,173 million net at 30 June 20261, and T-Mobile financed $3,958 million of new device purchases in that quarter alone2. The balance stays owed whether or not the customer stays with the plan.

T-Mobile device financing and contract obligations ($M)7,173EIP receivables, net (Jun 2026)3,958New EIP financed, Q2 20263,524Equipment revenues, Q2 2026T-Mobile US Investor Factbook Q2 2026
More financed than sold in the quarter.

The promotional structure deepens it. Many phone deals are delivered as monthly bill credits over two years, which the customer forfeits by leaving early. T-Mobile's remaining performance obligations for postpaid contracts with subsidized devices and promotional bill credits were $2.7 billion at the end of 2025, recognised over about 24 months3.

This is a moat built from accounting as much as loyalty. It does not make customers happier; it makes leaving more expensive.

T-Mobile funds part of the book in the bond market: it issued $2.0 billion of asset-backed notes secured by $2.6 billion of instalment receivables4.

The financing is now larger than the sales it funds in some quarters. T-Mobile financed $3,958 million of devices in the June 2026 quarter5, more than the $3,524 million of equipment revenue it recorded6. Much of what a customer buys from T-Mobile is bought on credit from T-Mobile.

The hold is strongest after the holiday season. The upgrade rate reached 3.8% in the fourth quarter of 20257, and each upgrade starts a new instalment plan and, often, a new set of bill credits. The quarter that costs T-Mobile most in handsets is also the one that resets the most switching costs for the next two years.

The financing works while customers keep paying. The receivable balance growing much faster than equipment revenue would mean T-Mobile was lending more per phone to hold customers, which is a weaker form of loyalty than a better network.

Moat trajectory: Holding steady

EIP receivables $7,173M at June 2026.

The number that tests this moat
Reported
Equipment installment plan receivables, net, latest quarter
$7,173M (30 June 2026)

The phone debt that ties customers to the account; growing much faster than equipment revenue would mean T-Mobile is buying loyalty with credit.

Source: T-Mobile US Investor Factbook, Q2 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
Credit Risk in the Phone Book
T-Mobile's bad debt and receivable losses rose to 1.8% of revenue in Q2 2026 from 1.3%.
References
  1. ReportedEquipment installment plan receivables were $7,173 million net at 30 June 2026, and T-Mobile financed $3,958 million of new device purchases in that quarter alone.
    T-Mobile US Investor Factbook for Q2 2026, Form 8-K exhibit 99.2 - quarterly revenue lines, postpaid accounts, churn, ARPA and its drivers, upgrade rate, bad debt, margins, balance sheet and leverage ratios - quarterly revenue lines, operating income, net income, Core Adjusted EBITDA, cash flow, bad debt and margins. — Q2 2026 · publ. 23 July 2026 · source ↗
  2. ReportedEquipment installment plan receivables were $7,173 million net at 30 June 2026, and T-Mobile financed $3,958 million of new device purchases in that quarter alone.
    T-Mobile US Investor Factbook for Q2 2026, Form 8-K exhibit 99.2 - quarterly revenue lines, postpaid accounts, churn, ARPA and its drivers, upgrade rate, bad debt, margins, balance sheet and leverage ratios - quarterly revenue lines, operating income, net income, Core Adjusted EBITDA, cash flow, bad debt and margins. — Q2 2026 · publ. 23 July 2026 · source ↗
  3. ReportedT-Mobile's remaining performance obligations for postpaid contracts with subsidized devices and promotional bill credits were $2.7 billion at the end of 2025, recognised over about 24 months.
    T-Mobile US, Inc. Form 10-K for fiscal 2025 (year ended 31 December 2025) - Item 1 business, the single Wireless segment, competition and the revenue lines with their drivers. — FY2025 · publ. 11 February 2026 · source ↗
  4. ReportedT-Mobile funds part of the book in the bond market: it issued $2.0 billion of asset-backed notes secured by $2.6 billion of instalment receivables.
    T-Mobile US, Inc. Form 10-K for fiscal 2025 (year ended 31 December 2025) - Item 1 business, the single Wireless segment, competition and the revenue lines with their drivers. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedT-Mobile financed $3,958 million of devices in the June 2026 quarter, more than the $3,524 million of equipment revenue it recorded.
    T-Mobile US Investor Factbook for Q2 2026, Form 8-K exhibit 99.2 - quarterly revenue lines, postpaid accounts, churn, ARPA and its drivers, upgrade rate, bad debt, margins, balance sheet and leverage ratios - quarterly revenue lines, operating income, net income, Core Adjusted EBITDA, cash flow, bad debt and margins. — Q2 2026 · publ. 23 July 2026 · source ↗
  6. ReportedT-Mobile financed $3,958 million of devices in the June 2026 quarter, more than the $3,524 million of equipment revenue it recorded.
    T-Mobile US Investor Factbook for Q2 2026, Form 8-K exhibit 99.2 - quarterly revenue lines, postpaid accounts, churn, ARPA and its drivers, upgrade rate, bad debt, margins, balance sheet and leverage ratios - quarterly revenue lines, operating income, net income, Core Adjusted EBITDA, cash flow, bad debt and margins. — Q2 2026 · publ. 23 July 2026 · source ↗
  7. ReportedThe upgrade rate reached 3.8% in the fourth quarter of 2025, and each upgrade starts a new instalment plan and, often, a new set of bill credits.
    T-Mobile US Investor Factbook for Q2 2026, Form 8-K exhibit 99.2 - quarterly revenue lines, postpaid accounts, churn, ARPA and its drivers, upgrade rate, bad debt, margins, balance sheet and leverage ratios - postpaid accounts, account churn, ARPA and its drivers, and the upgrade rate. — Q2 2026 · publ. 23 July 2026 · source ↗
Sources
Generated October 6, 2026