Company Reports

T-Mobile's first-quarter results provided further evidence that competition in the US wireless industry remains rational. The firm increased expectations for 2024 profitability and free cash flow while leaving its postpaid phone customer forecast unchanged, despite starting the year off well. Management expects customer growth to slow over the next couple of quarters as it begins implementing "rate plan optimizations," and it now expects average revenue per postpaid account to grow about 3% during 2024 rather than 2%. T-Mobile also agreed to enter the fiber network business, investing $1.5 billion through 2028 for a 50% stake in Lumos, a private telecom firm serving the Carolinas and Virginia, with plans to reach 3.5 million homes. The move fits with management's stated strategy to invest selectively in fiber, but it also only addresses a tiny sliver of the country and doesn't alter our view of the firm. Our T-Mobile fair value estimate remains $175.

T-Mobile’s brand and reputation, coupled with its strong network and spectrum position, should enable it to continue gaining market share. We also expect a rational competitive landscape will allow the firm and its rivals to steadily, if modestly, increase prices, supporting profitability and expanding cash flow.

T-Mobile continues to lead the U.S. wireless industry in customer additions while growth in revenue per customer lags AT&T and Verizon. Management didn’t directly respond when asked about potential phone plan price increases in 2024. Instead, it highlighted the “unprecedented value” customers now receive while hinting at “optimization” opportunities, like the changes in its autopay discount policy implemented in 2023. The firm increased the price of its fixed-wireless broadband offering last week, which it expects will modestly slow customer additions to the service in 2024. Management’s forecast for 2024 also calls for phone customer growth similar to 2023. Even with these limitations, T-Mobile expects accelerating wireless service revenue growth. We still expect the firm to grow increasingly comfortable in taking steps to increase revenue per customer as competition in the wireless industry remains rational. We are leaving our T-Mobile fair value estimate at $165 per share.

T-Mobile’s strong brand and reputation, coupled with its strong spectrum position, should drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable cash flow.

T-Mobile delivered another solid quarter, with continued market share gains and margin expansion. Management also provided a high-level view of 2024, indicating that it should meet profitability expectations presented at its 2021 investor day and that capital spending may decline modestly versus 2023. We had expected greater margin expansion next year. We suspect management plans to prioritize customer growth over price increases to a greater degree than we'd assumed, offsetting some of the benefits from the recent workforce reduction. We are maintaining our fair value estimate at $165 per share.

Dish Network has filed the necessary FCC paperwork to gain approval to exercise its option to acquire T-Mobile’s 800 MHz spectrum licenses. The FCC paperwork is largely a formality, but the filing may indicate negotiations have grown tense between the two firms. Dish almost certainly wants to acquire these licenses, and we suspect T-Mobile would like Dish to buy them, but Dish doesn’t have the capital to easily fund the $3.6 billion purchase price. We believe it is in both firms’ interest to find a creative solution to this situation. Whether this move stems from Dish sensing a deal is within reach and trying to push T-Mobile to agree to specific terms or from T-Mobile losing patience in negotiations, a resolution appears to be near.

T-Mobile continues to perform well, driving solid margin gains and cash flow growth while taking wireless customer share. Our fair value estimate remains $165 per share. While we believe T-Mobile shares are undervalued, we prefer Verizon and AT&T based on valuation.

T-Mobile’s strong brand and reputation, coupled with its strong spectrum position, should drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable cash flow.

Amazon’s potential entrance into the wireless resale business, as Bloomberg News has reported, reflects a risk to our view of the wireless industry. However, we expect the carriers will remain rational, and our fair value estimates on Verizon, AT&T, T-Mobile, and Dish Network are unchanged.

T-Mobile posted solid first-quarter results amid generally slowing wireless industry growth, taking share from Verizon and fending off cable competitors. The firm modestly increased expectations for full-year customer additions, as it typically does each quarter, but didn’t change its view that revenue per phone customer, or ARPU, will be flat in 2023. We are disappointed that management wasn’t willing to increase ARPU expectations given the launch of the high-priced Go5G rate plans last week, but T-Mobile is often conservative with its forecasts. We are maintaining our $165 fair value estimate.

T-Mobile’s strong brand and reputation, coupled with its strong spectrum position, should drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable cash flow.

T-Mobile will acquire Ka'ena Corp., parent of Mint Mobile, for up to $1.35 billion in a combination of cash and stock, bringing on the actor, famous co-owner and Mint brand ambassador Ryan Reynolds in a "creative role." The transaction ensures that Mint will remain exclusively on the T-Mobile network and prevents the brand from ending up in the hands of rivals that could have used it to threaten the competitive balance among T-Mobile, Verizon, and AT&T. Our T-Mobile fair value estimate remains $165 per share.

T-Mobile’s fourth-quarter results and 2023 forecast weren’t radically different than our expectations. Profitability and cash flow should take another leap forward this year as the Sprint integration costs wind down and the cost savings fully materialize. Surprisingly, the firm expects to spend only $9.4 billion-$9.7 billion on its network this year, down from nearly $14 billion in 2022. We’ve been expecting capital spending to decline as integration and midband spectrum deployment wrap up, but not quite to that degree. Our fair value estimate remains $165.

T-Mobile’s strong brand and reputation, coupled with its strong spectrum position, should drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable cash flow.

The big three U.S. wireless carriers struck a generally optimistic tone at an investor conference this week. We expect Verizon, AT&T, and T-Mobile will post steady results for the fourth quarter, with modest industry growth and expanding cash flows continuing into 2023. We believe the three carriers’ shares are undervalued, with Verizon trading at the steepest discount to our fair value estimate.

T-Mobile regained the lead in the U.S. wireless industry during the third quarter, adding more postpaid phone customers than any other carrier. The firm clearly benefited from the price increases Verizon and AT&T implemented earlier this year. More impressive, in our view, profitability increased nicely as the bulk of the Sprint network decommissioning has been completed. We have increased our margin estimates modestly, lifting our fair value estimate to $165 from $155. We believe the shares are undervalued, though not to the same degree as rivals like Verizon.

T-Mobile’s strong brand and reputation, coupled with its industry-leading spectrum position, provides it with an opportunity to drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable, if modest, cash flow growth.

T-Mobile not only dominated Federal Communications Commission spectrum auction 108, but it did so at a great price, spending only $304 million to solidify its hold on the EBS portion of the 2.5-gigahertz spectrum band. The small sum is a modest positive for valuation, but we’re leaving our fair value estimate at $155 per share for now. For context, T-Mobile’s spectrum spending in 2022 will total about $7 billion, split between an earlier, more traditional spectrum auction and an agreement to acquire licenses it is currently leasing from investment firm Columbia Capital.

T-Mobile continued to execute well during the second quarter, and management again raised expectations for the full year. The firm again displayed the best balance of customer growth and pricing improvements among the three major carriers, producing industry-leading wireless service revenue growth. We are maintaining our $155 fair value estimate, leaving the stock modestly undervalued.

T-Mobile’s strong brand and reputation, coupled with its industry-leading spectrum position, provides it with an opportunity to drive strong revenue and profit growth over the next couple of years. Longer term, we expect a rational competitive landscape will allow the firm and its rivals to deliver stable, if modest, cash flow growth.