Expanding Market Grip and 5G Leadership Boost Revenue Prospects

What are the underlying business or industry changes driving this perspective?

• T-Mobile's progress in small markets and rural areas, achieving a significant increase in household share, suggests potential for sustained revenue growth and market penetration, impacting revenue positively.
• The robust performance in the T-Mobile for Business segment, securing high postpaid phone net additions and new enterprise customers, indicates opportunities for further revenue expansion, especially from high-value organizational customers.
• T-Mobile's advancing 5G network leadership and infrastructure, highlighted by network enhancements and partnerships like SpaceX for direct satellite to cellular communications, provides a foundation for new service offerings and customer growth, potentially boosting revenue and subscriber base.
• Strong growth in broadband customer additions, becoming one of the largest ISPs in the nation, signifies potential for increased revenue streams from the expanding broadband market, contributing to overall service revenue growth.
• The successful integration of the major telecommunication merger, leading to significant synergies, operational efficiencies, and a streamlined network expansion, sets a base for improved net margins and earnings due to cost savings and operational efficiencies.

How have these above catalysts been quantified?

• Analysts are assuming T-mobile US's revenue will grow by 3.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.6% today to 15.6% in 3 years time.
• Analysts expect EPS to reach $13.19 ($13.6 billion in earnings) by about February 2027, up from $7.01 today.

What could happen that would invalidate this narrative?

• The expectation for a moderation of the industry's growth rate in 2024 could imply a potential risk to T-Mobile-s revenue growth.
• Any softening in the postpaid add market may negatively impact T-Mobile's net addition numbers, potentially affecting its revenue and market share.
• The reference to potential investments or M&A, especially in the context of fiber, suggests there could be significant capital outlays which might impact free cash flow availability for shareholder returns.
• The company-s plans regarding capital allocation, including maintaining or adjusting the buyback program in the face of M&A opportunities, could influence its leverage and financial stability.
• Dependence on the performance and strategic decisions within the competitive and regulatory landscape of the wireless industry could introduce uncertainties affecting T-Mobile-s long-term financial performance, including its ARPU and overall earnings.