Research

TMUS – Market expectations are for record-high Uniform ROA, but management appears concerned about the Sprint integration, their mobile phone business, and their industry position

October 1, 2020
  • T-Mobile US, Inc. (TMUS:USA) currently trades at historical highs relative to UAFRS-based (Uniform) earnings, with a 53.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about their Sprint integration, their mobile phone business, and industry position
  • Specifically, management may lack confidence in the new T-Mobile’s ability to continue leading the industry in post-paid growth, and in their ability to provide a high-capacity connection, as well as an easy-to-manage setup for their customers. They may also lack confidence in their ability to continue capturing synergy opportunities, especially from the Sprint merger. Moreover, they may have concerns about the performance of their mobile phone business, as well as the impact of their wireless’ business performance on their mobile business. They may also lack confidence in their ability to improve digital performance, efficiently transition Sprint customers to Voice over LTE (voLTE) with the help of handset compatibility, and set up more locations to serve more customers. Management may also be exaggerating their position as the leading growth company in the industry