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T-Mobile US Inc TMUS

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Morningstar’s Analysis

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T-Mobile Starts 2021 on a Strong Note, as Expected; Shares Fairly Valued

Analyst Note

| Michael Hodel, CFA |

T-Mobile posted solid first-quarter results, leading the wireless industry in terms of net customer additions. As is typical, management increased expectations for 2021 versus guidance provided a quarter ago, taking its estimate of customer growth, profitability, and cash flow up. We recently sharply increased our expectations for the firm, pushing our fair value estimate to $130. We don’t expect a significant change to our estimates, and we view the stock as fairly valued.

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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 Mar 31, 2021
Fiscal Year End Dec 31, 2019
Stock Type Speculative Growth
Employees 75,000