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T-Mobile adds stock buybacks to financial momentum, albeit without DT

According to T-Mobile networking chief Neville Ray, the operator passed a major milestone last week. Speaking at the recent Mobile Future Forward event hosted by Chetan Sharma Consulting, he said the operator's market cap positioned T-Mobile not only as the biggest wireless network operator in the US but also the biggest in the world.

"That was the milestone we passed last week," he said. Indeed, T-Mobile's market cap on Friday (September 9) totaled around $183 billion, above Verizon's $177 billion, AT&T's $121 billion, Vodafone's $35 billion and China Mobile's $139 billion.

"And the last 10 years obviously has been a massive transformation of the T-Mobile business," Ray said, noting that the operator was the fourth-largest wireless operator in the US market roughly a decade ago, with relatively uninspiring prospects.

Today, T-Mobile's situation is clearly much different. And in recent weeks the operator has been shoring up its overall financial position in the market.

For example, according to company executives, T-Mobile is well on its way through its massive 5G network upgrade effort. More recently, it bought extensive 600MHz licenses from Columbia Capital for $3.5 billion, it spent $304 million in an FCC spectrum auction, and it sold its legacy wireline business to Cogent in a transaction valued at $1. T-Mobile also made major eSIM and satellite announcements ahead of Apple's iPhone 14 unveiling this week that included both of those technologies.

And now T-Mobile is embarking on a stock repurchasing program that's roughly four months ahead of schedule. Earlier this week, the company's board authorized a $14 billion stock buyback effort over the course of the next 12 months, which can include up to $3 billion through the end of 2022.

"The initial authorized program is sooner and bigger than we had expected in the near-term, which is positive for value creation," cheered the financial analysts at Raymond James in a recent note to investors.

However, the financial analysts at New Street Research noted that Deutsche Telekom (DT) has "no present intention" to participate in the buybacks. That comes as a surprise considering DT recently agreed to the sale of a stake in its European cell tower business, money the company was widely expected to use to increase its stake in T-Mobile from around 48% ownership to more than 50%.

The New Street analysts speculated that there may be a variety of complex financial reasons why DT seems to be sitting on the sidelines, at least for now. But they reiterated their belief that DT will eventually increase its ownership in T-Mobile above the halfway point.

Meanwhile, for its part, T-Mobile in July raised virtually all of its financial and customer expectations for 2022. Specifically, the operator now expects net postpaid customer additions of between 6 million and 6.3 million throughout 2022, an increase from its prior guidance of 5.3 million to 5.8 million. The carrier also raised its 2022 expectations for earnings and free cash flow.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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