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T-Mobile Investors Could Be In For An Interesting Second Half

Courtesy of Benzinga.

Credit Suisse analyst Matthew Niknam spoke with T-Mobile US Inc (NASDAQ: TMUS) this week to get a better sense of where the third largest U.S. telecom company is headed for the remainder of 2017.

“Bottom line, we came away positive on [T-Mobile's] ability to execute amidst an increasingly challenging competitive backdrop,” said Niknam in a note.

That said, the analyst’s rating and price target remained unchanged at Hold and $69.

3 Catalysts

Despite seasonally slower volumes all-around in the second quarter and increased headwinds from aggressive postpaid phone competition from Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) unlimited plans, the analyst expects T-Mobile to maintain its market share, while several second half 2017 catalysts could drive prepaid growth.

  • The release of the iPhone 8 should drive more consumers to switch to T-Mobile, as indicated from historical data.
  • Progress on the company’s build out of the new 600 MHz spectrum will improve coverage in under-penetrated regions.
  • The company should see greater B2B growth, a space in which T-Mobile’s current share is less than 5 percent.

In The Long-Term

“[T-Mobile] has leveraged aggressive network investments and a unique customer value proposition to grow share in recent years,” said Niknam

These investments have driven its scale, which should soon become apparent in the form of a free cash flow ramp up. Niknam believes that catalysts have been delayed though, due to heightened defensive strategies from competitors.

Finally, despite swirling rumors of a merger between T-Mobile and Sprint Corp (NYSE: S), it seems doubtful that the Federal Trade Commission would allow one to go through.

Related Links:

Pitting 2 Telecom Names Against Each Other: Expect AT&T To Underperform Verizon

Stating The Obvious: A Successful Time Warner Acquisition Will Be A Game Changer For AT&T

Posted-In: Credit Suisse Matthew NiknamNews


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