T-Mobile had another good quarter, reporting 1.9 million total net additions in the fourth quarter, the 27th quarter in a row where it had more than 1 million total net adds.
The company reported 1 million branded postpaid phone net additions and postpaid phone churn of 1.01% in the fourth quarter, ending the year with a total customer base of 86 million—an increase of about 53 million since T-Mobile launched the “un-carrier” theme in 2013.
T-Mobile noted that it accomplished all this while working to close its acquisition with Sprint—which remains in limbo as the companies fight more than a dozen states in court—and launching its nationwide 600 MHz 5G network.
The fourth-quarter figures are preliminary and T-Mobile said it will report final results in February.
.@TMobile’s preliminary Q4 & full-year 2019 customer numbers are out today and they are FANTASTIC. Huge shout out to all the customers who’ve seen what we’re doing & joined the movement🙏🙏🙏— Mike Sievert (@SievertMike) January 7, 2020
T-Mobile’s results reinforce the notion that Sprint needs the merger more than T-Mobile does. For the third quarter of 2019, Sprint reported losing nearly 300,000 phone subscribers alongside profit losses and revenue declines.
T-mobile's shares were up this morning, trading at one point around $79.22.
Analysts at Raymond James today reiterated their "strong buy" rating on the stock based on the pre-released fourth-quarter operating metrics.
“We feel the T-Mobile story of expanding network coverage via low band spectrum and the related increase in marketable PoPs will lead to continued strong growth in customers, revenues, EBITDA, and free cash flow while we await the court decision on the State Attorney General lawsuit against the T-Mobile/Sprint merger,” wrote Raymond James analyst Ric Prentiss. “As a result, we continue to like TMUS on both a stand-alone and merger basis and reiterate our Strong Buy rating.”
Before T-Mobile released its latest metrics, analysts at Cowen earlier this week said they believe T-Mobile will experience greater upside in 2020 if the T-Mobile/Sprint deal is denied than if it goes through.
“Despite spending much of the last 21 months in stock purgatory as investors await a deal decision, the company has continued to execute and is now generating significant FCF [free cash flow] yet trades at just 7.0x 2020E EBITDA on a standalone basis,” they wrote. “While the company will still need to attain more spectrum if the deal is denied, the company in our view has more than enough debt capacity and FCF generation to also institute a buyback in a no deal scenario which it has hinted it would do.”
If the deal is denied, “we believe it would prove a buying opportunity as we estimate the stock is currently worth $96 on a standalone basis. We’d also be surprised if we get through 2020 without reports that Cable is interested in acquiring T-Mobile, which T-Mobile itself acknowledged during the trial is the likely end game. Oppositely, we would still be positive on TMUS if the deal was approved considering the significant synergies (+$43B NPV), however we think investors would initially take a more cautious view until they get a better sense how the integration is going and start to see said synergies, which would limit upside.”
If the deal is denied, the Cowen analysts noted, Sprint has indicated that if it was to remain separate it will reduce the areas to which it focuses and become a somewhat super regional provider.
Final arguments in the trial are scheduled for January 15, with a decision by Judge Victor Marrero possible by mid- to late February.