T-Mobile US, Inc. (NASDAQ: TMUS)
T-Mobile is a leading American wireless network operator that has its headquarters in Washington D.C. The company was founded in 1996 and the name was also used by subsidiaries in other European countries. It has been under the ownership of Deutsche Telekom since 1999. The company has recently secured its first-ever investment grade rating. Having recently released a great Q2 report, T-Mobile has seen an increase in hype by 83% over the last day, encouraging investors to wonder what makes the company so hyped. Currently shares of T-Mobile trade at $144.88.
Solid financials amongst companies of its kind, brilliant net additions and a long-term vision make T-Mobile a stock to look out for, here is an explanation of why.
T-Mobile US reported stellar second-quarter earnings results last week, which was quite the opposite of reports from its biggest competitors in the wireless industry.
The company added 1.7 million postpaid customers, including 723,000 postpaid phone customers. This was the company's best second-quarter postpaid subscriber growth ever and net additions were more than AT&T and Verizon's Q2 additions combined according to management.
Last quarter, it added 560,000 net new customers, which will likely prove to lead the industry. T-Mobile ended Q2 with over 1.5 million home internet subscribers, well on its way to its goal of 7 million to 8 million subscribers by 2025 all of which only help their revenue situation.
T-Mobile's home internet service additions are part of its strategy of increasing revenue per account and making its service stickier. The metric increased 2.8% better than AT&T and Verizon despite the carrier's promise not to raise its rates on customers, as its competitors did last quarter.
T-Mobile was the only one of the three major carriers to see a year-over-year improvement in its churn rate.
It raised its expectations for net postpaid subscriber additions, EBITDA, and free cash flow. The company expects free cash flow when including payments for merger-related costs to be between $7.3 billion and $7.6 billion for the full year. That's a 33% increase from 2021.
Although it may seem like you can’t go wrong with T-Mobile, it is very important to take a balanced approach towards your investments and consider the drawbacks of taking a position in the company right now.
T-Mobile had a lower postpaid phone churn rate than AT&T and Verizon too, it fell by 7 basis points to 0.80%. Although this indicator did poorly, management attributes this performance to higher net additions.
T-Mobile does not pay a dividend on common stock.
With excellent second-quarter results and having outperformed its competitors, T-Mobile is doing very well for itself. However, there are metrics where it hasn’t performed the best and drawbacks too. Given its most recent activities, it seems like the pros outweigh the cons and imply that it’s worth considering taking a position in T-Mobile immediately.
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