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T-Mobile US Inc TMUS

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Morningstar’s Analysis

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T-Mobile Shows Pricing Stability As Magenta Max Gains Adoption; Shares Modestly Undervalued

Analyst Note

| Michael Hodel, CFA |

T-Mobile delivered solid third-quarter results amid a competitive environment that remains somewhat challenging. Our $135 fair value estimate is unchanged. While we believe AT&T shares offer better value, T-Mobile is starting to look attractive as well, in our view, amid a broad sell-off in telecom shares in recent weeks. We continue to believe the U.S. wireless industry is healthy, with recent promotional offers importantly revolving around phone offers rather than discounted service. On that point, T-Mobile modestly increased expectations for revenue per postpaid phone customer, expecting this figure to hold steady in 2021 versus 2020 rather than decline slightly.

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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 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 68 million postpaid and 21 million prepaid phone customers, equal to nearly 30% of the U.S. retail wireless market. In addition, the firm provides wholesale service to resellers.

12920 SE 38th Street
Bellevue, WA, 98006-1350
T +1 425 378-4000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2019
Stock Type Speculative Growth
Employees 75,000