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T-Mobile US Inc TMUS

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T-Mobile Does a Great Job Adding Customers Amid Sprint Integration; FVE to $108

Analyst Note

| Michael Hodel, CFA |

T-Mobile posted solid results for its third quarter, with revenue jumping versus the prior period (its first with Sprint in the fold) on good customer growth, an increase in revenue per customer, and inclusion of wholesale revenue from Dish Network. Profitability was also stronger than we had expected, as merger-related cost savings are materializing sooner than anticipated. After reviewing our model, we are increasing our fair value estimate to $108 per share from $98, leaving the stock modestly overvalued, in our view.

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Company Profile

Business Description

Deutsche Telekom merged its T-Mobile USA unit with prepaid specialist MetroPCS in 2013, creating T-Mobile US. Following the merger, the firm provided nationwide service in major markets but spottier coverage elsewhere. T-Mobile has spent aggressively on low-frequency spectrum, well suited to broad coverage, and has substantially expanded its geographic footprint. This expansion, coupled with aggressive marketing and innovative offerings, produced rapid customer growth. With the Sprint acquisition, the firm's scale now roughly matches its larger rivals: T-Mobile now serves 65 million postpaid and 21 million prepaid phone customers, equal to nearly 30% of the retail wireless market. In addition, the firm provides wholesale service to resellers like Tracfone.

12920 SE 38th Street
Bellevue, WA, 98006-1350
T +1 425 378-4000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type Classic Growth
Employees 53,000