T-Mobile Puts Up a Fight in the Tough Competition
Some sectors in the U.S. economy are as competitive as wireless telecom. The main streets and shopping malls beyond the nation are dotted with retail mobile phone outlets. Also, the internet has given the phone plan pricing in fully transparent and consumers remarkably knowledgeable. Commodification, at the same time, id rife, and services offered by the major carriers are virtually alike. However, T-Mobile continues to climb up no matter how hard the competition goes.
T-Mobile's Record Results
In the third-quarter earnings call of the firm last month, CEO John Legere revealed that the company announced the stellar results across the board. "We delivered a number of Q3 records, including record low branded postpaid phone churn, total revenues, adjusted EBITDA, net income, and free cash flow," Legere stated. Aside from the announcement of whopping results, T-Mobile will quickly expand subscriber numbers, as the proposed merger with Sprint got the approval of the U.S. Department of Justice last month. Based on Legere, the merger would one day generate $43 billion in synergies. And next month, their 5G capability is expected to live. And it's no surprise that analysts consensus ranks T-Mobile as a strong buy. And even after spending billions on getting ready for the launch of 5G technology and fighting for market share in a very tough market, underlying financials for T-Mobile remains undoubtedly strong. For Q3, EBITDA of $3.4 billion, up 5% year-over-year, was another record high, and net income of $870 million gained 9% over the last year. The firm presented these results despite a period characterized by a brutal price war among the major carriers. Meanwhile, operating cash flow was $1.7 billion, climbing 91% year-over-year. Cash flow growth means that T-Mobile can further win in the market and aggressively invest in developing its new 5G network. This is already live in 8,300 cities and towns, 48 states, and Puerto Rico.
Share of Improving Market
Slowly, the U.S. wireless market is changing into an oligopoly. And this is why T-Mobile's merger with Sprint is still under scrutiny by some state attorneys general. After the merge, T-Mobile, together with Verizon and AT&T, will manage almost 98% of the market, which will hit more than $200 billion in annual revenues soon. And there is no one more motivated to finish the merger as fast as possible and deposit the check from T-Mobile than Sprint shareholders. Tokyo-based Softbank Group, the one holding 72% of Sprint, is bleeding cash. Following the emergency bailout of WeWork, SoftBank now has an $18.5 billion exposure to the struggling office leasing giant. In brief, SoftBank is itching to pocket the $26.5 billion they will receive after the merger eventually closes. The merged firm will be goliath and able to slug it out with the other Big Three carriers. T-Mobile will add more network transmission capacity by 14 times, with more than $40 billion invested in building out a national 5G network. Post-merger, T-Mobile will arise as the nation's second-largest carrier in terms of subscriber numbers. By that time, T-Mobile will begin to challenge the largest carrier, Verizon, as the market moderately shifts to the 5G network.
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